Comments by Thomas d’Aquino on the Autumn 2004 Economic Update by Finance Minister Ralph Goodale

November 16, 2004

The following are comments by Thomas d’Aquino, President and Chief Executive of the Canadian Council of Chief Executives (CCCE), in response to the Autumn 2004 Economic and Fiscal Update by Minister of Finance Ralph Goodale before the House of Commons Standing Committee on Finance:

“Finance Minister Ralph Goodale was right on the money when he said that running surpluses, paying down debt and cutting taxes have given Canada the best economic and job growth in the G-7.  What is disappointing is how little he said about what needs to be done to reinforce this virtuous circle.

“Despite all the good news Canadians are hearing today, the minister recognized that Canada’s economy faces some real risks.  The sharp rise in the Canadian dollar is slashing profits for many exporters even as they face an urgent need to invest in new technology to improve their productivity.  Meanwhile, high oil prices together with huge trade and budget deficits and rising interest rates in the United States threaten to cut demand in Canada’s biggest export market.

“The degree of uncertainty in the economic outlook means that Finance Minister Goodale is absolutely right to stick to his guns in defending fiscal prudence and the benefits of continuing to pay down the federal debt.  His fiscal projections also underscore the importance of delivering in full on the planned $12 billion spending review and reallocation exercise – and indeed of making such review a permanent part of the budget cycle.

“However, the government also needs to do more to strengthen Canada’s competitiveness and ensure that the good news keeps coming.  In particular, we need to see a much better balance between increased spending and further tax cuts.  Dollar for dollar, no fiscal measure would be more effective in helping Canadian communities to attract new investment and companies to boost competitiveness and create jobs than a further significant cut in corporate tax rates.

“If the government fails to reinvest some of the current record flow of tax revenue into the kind of tax cuts that will be most effective in ensuring continued strong economic growth, it will not be able to sustain the heavy commitments it has made and intends to make across a wide range of social programs.”