Providing a New Direction for Middle Class Jobs and Growth

April 30, 2015

I am delighted to be back at the Canadian Club here in Toronto. Thank you for hosting us today.

Last week something very funny happened to me right here in Toronto. Just down the street in fact, at the Intercontinental Hotel. That’s where I witnessed one of the best comedy performances I’ve seen in years. Seriously folks, nobody at Yuk Yuks can compare for sheer comic relief with Stephen Harper’s finance minister announcing that he will introduce balanced budget legislation.

I mean, really? After seven consecutive deficits and adding $160 billion to the national debt — on the eve of an election — Stephen Harper is going to get tough on deficits.
This legislation is so tough that going forward if a government fails to balance the books in any time period outside of a recession, the prime minister and cabinet ministers will have their pay docked by five per cent.

By investing in infrastructure, people and skills, innovation and science, and relationships, a Trudeau government will be investing in jobs and growth for middle class families.
-Scott Brison

Why start there? If the legislation was applied retroactively the payroll savings for Harper and his cabinet would really add up — they could spend more on advertising — as if the 750 million dollars they’ve already spent on government advertising wasn’t enough!

Today I want to discuss a subject the prime minister is trying to distract us from, the Canadian economy.

Stephen Harper boasts that Canada came through the 2008 global financial crisis better than many other countries. He may be right that Canada performed better, but he is wrong to take credit for it.

There are three main reasons why Canada survived the financial crisis better than our peers.

  • Prime Minister Chretien and Finance Minister Martin stood firm against the global trend of bank deregulation. As a result, Canada has the strongest banking system in the world.
  • Harper inherited the best fiscal situation of any incoming government in the history of Canada. The Chretien and Martin governments eliminated a $43 billion deficit and paid $80 billion down on national debt. By the fall of 2008, even before the global financial crisis, Harper’s fiscal policies had put Canada on the edge of deficit.
  • Natural resource oil and gas revenues helped pick up the slack when manufacturing faltered. No politician can take credit for putting oil and gas under the ground in Saskatchewan and Alberta. And we all know that it was Danny Williams who put it under the water off Newfoundland and Labrador. Although I have it on good authority that Brian Tobin had a lot to do with it.

C’est grâce à son régime bancaire solide, à sa situation financière relativement solide également et à sa richesse en ressources naturelles que le Canada a traversé la crise financière mondiale de 2008.

A strong banking system, a comparatively strong fiscal situation, and our natural resource wealth helped get Canada through the 2008 global financial crisis. Good government, incidentally a Liberal government, was responsible for Canada’s banking system, and relative fiscal strength. Good luck was responsible for our natural resource wealth. Since the financial crisis Canada’s economic performance has faltered — even before oil prices plummeted in late 2014.

That’s why for over two years Justin Trudeau and his team have focused on the challenges faced by middle class families in a slow growth economy.

Today I’m going to discuss with you the economic record of Stephen Harper. More importantly, I’d like to discuss the economic challenges faced by Canadian middle-class families, and how a Justin Trudeau government will address them with a plan for jobs and growth.

We all know that Stephen Harper’s three point economic plan has been oil, oil, and oil.

Harper put all of our eggs in one basket, and now that basket has crashed to the floor. Stephen Harper and his finance minister were caught so flat footed when oil prices dropped that they had to delay the budget.

During periods of volatility, governments have a responsibility to provide certainty. Delaying a budget until well into the next fiscal year does not instill confidence. And a finance minister who has only participated in Question Period five times this year is a minister who not only lacks a serious plan, but is also one who doesn’t have any answers. Let’s consider our fundamentals.

When Mr. Harper assumed office in 2006 he inherited a $13 billion annual surplus – the best fiscal situation for an incoming government in modern times. But, in less than three years the country was back in deficit, and that was before the start of the 2008 economic downturn. Since the Harper government came to power Canada has had an average annual economic growth rate of less than 1.8 percent. That’s the worst growth record of any prime minister since the 1930’s.

If things weren’t bad enough, just two days ago the Bank of Canada said the Canadian economy had zero growth in the first quarter. They have downgraded their growth projections for this year to an anemic 1.9 percent.The CIBC says job quality is at a 25-year low and declining, a StatsCan survey released last Friday reported that another 28,000 full-time jobs had disappeared. Growth in middle class family incomes is flat compared to 30 years ago. Income growth has averaged just less than half a percentage point per year. Household debt is at a record high. Two-thirds of middle-class parents are worried about affording post-secondary education for their kids. Adult children are moving back in with their parents as they just can’t get started on their own in such a weak economy. And ominously, national surveys show a majority of Canadians believe the next generation will actually be worse off than their parents.

Les Canadiens ont besoin d’un nouveau gouvernement avec un plan pour l’emploi et la croissance.

Canadians need a new government with a new plan for jobs and growth. Quick one-time asset sales to pad the books — like selling the GM shares right before the budget — isn’t a plan. It’s desperation. Showering voters with cheques in the weeks before an election isn’t a plan. It’s simply crass election politics to buy peoples votes with their own money. And back-end loading the funding for the Building Canada Fund isn’t a plan. It’s just irresponsible. The cities and provinces urgently need help to fix their crumbling infrastructure. How has the federal government responded? The feds effectively cut the Building Canada fund by 90 per cent over the next two years, just to create a notional budget surplus on the eve of an election.

Harper focuses on what may be good politics for him and his party — but it’s largely bad for the country.

In addition to cobbling together an illusory pre-election surplus, the Conservatives need to pay for income splitting and the doubling of the Tax Free Savings Account limit. Neither of these gimmicky changes help the middle class, nor do they do anything for jobs and growth.

The proposed doubling of the contribution limit to the Tax Free Savings Account, like income-splitting, disproportionately benefits a limited number of higher-income earners. And when these high-income earners retire, the higher limit will cost tens of billions of dollars each year. Middle class Canadians — the same ones who can’t benefit from higher contribution limits — will be the ones left paying for it. It’s another example of how this government is out of touch and out of ideas.

In addition to my responsibilities as Liberal Finance Critic, I’m co-chair with Chrystia Freeland of Justin Trudeau’s Economic Advisory Council. We’ve engaged some of the best minds to tackle some of Canada’s biggest challenges and to seize Canada’s biggest opportunities. From time to time, some of these non-partisan economic thinkers tell the leader “the right policy to solve this problem is this, but it would be tough politically to do it.” The leader often politely but firmly tells them, “I want your economic advice, not your political advice. Once we know what the right thing to do is, we can figure out the politics later.”

For two years, Justin Trudeau has listened to, and focused his thinking on, Canada’s struggling middle class. For two years, Justin Trudeau has been calling on the Harper government to introduce a plan for jobs and growth. Au cours de la dernière année, nous avons travaillé avec les meilleurs et les plus brillants pour développer le plan libéral pour l’emploi et la croissance. Over the last year we’ve been working with the best and brightest to build our Liberal plan for jobs and growth for middle class Canadians.

Investing in Infrastructure

We agree with David Dodge, the International Monetary Fund, and the Bank of Canada that with historically low bond yields, negative real interest rates, a flatlined economy and a stagnant job market, that this is the best time in our generation to fix Canada’s crumbling infrastructure. Governments in the UK and Australia are leading the way, building infrastructure with public investment partnered smartly with global providers of capital. They are even working with Canadian pension funds, like the Canada Pension Plan Investment Board, OMERS, TEACHERS, and AIMCO.
Canada has the greatest concentration of expertise in the design, construction and financing of infrastructure in the world. That expertise is helping to build new infrastructure around the world, but we need to harness that expertise to build infrastructure here at home.

In addition to cobbling together an illusory pre-election surplus, the Conservatives need to pay for income splitting and the doubling of the Tax Free Savings Account limit. Neither of these gimmicky changes help the middle class, nor do they do anything for jobs and growth.
-Scott Brison

Infrastructure investment today creates jobs and growth leading to more liveable communities and a more competitive economy. And that means greater middle class prosperity, increased productivity, and even more jobs and growth in the future. Manufacturing workers lose wages when their assembly lines shut down because the parts they need are stuck in transit. Commuters are frustrated when they spend hours each day in stop-and-go traffic, or on congested public transit. The Canadian economy takes a hit when we cannot get people and goods to where they are needed in a timely manner.

Our public infrastructure is approaching a breaking point. Half of it is expected to reach the end of its useful life by 2027. Our total infrastructure deficit is now estimated to be as big as $570 billion. Fixing our national infrastructure will require a national conversation with true partnerships across all levels of government and business.

Un plan national pour moderniser notre infrastructure représente une occasion inouïe pour l’économie canadienne. Il y a également un gros risque à ne rien faire et à laisser la situation se détériorer davantage. A national plan to modernize our infrastructure represents a tremendous opportunity for the Canadian economy. There is also a big risk in doing nothing and allowing the situation to deteriorate further.

Investing in People and Skills

To fix Canada’s infrastructure we need to equip Canadian workers with the skills to get the job done. We have a jobs-skills mismatch in Canada resulting in jobs without people and people without jobs. A Liberal government will work with the provinces to restore the honour of professional trades and ensure that people get the skills they need.

Even if you’re one of the fortunate young Canadians who has the skills required to participate fully in today’s workforce, the technical skills needed today will be different from those you need in five years. The old days of graduating from university or college, entering the workforce, and working doing roughly the same thing, often for the same employer for 30 years, and then retire with a defined benefit pension plan and a gold watch are over.

Yet the way governments help finance post-secondary education and skills training is still locked into an old paradigm that no longer exists.

Prime Minister Justin Trudeau will meet with the premiers and work with the provinces to ensure that middle class Canadians can skill and re-skill for the jobs of today — and the jobs of tomorrow — throughout their career and life cycle.

Summer jobs for students play a critical role in providing early work experience to young Canadians. Today across Canada young Canadians are struggling to find a summer job. They face a tough market, and it doesn’t help that the number of jobs created by the Canada Summer Jobs program has been cut in half since 2005. And, as a massive partisan Conservative ad blitz hits the airwaves later this month to sell the budget, remember, a single $100,000 economic action plan ad airing during the NHL playoffs could help create 32 student jobs!

Invest in Innovation Science and Data

Not only will a Trudeau Liberal government invest in jobs for young people today, we will also make the critical investments in innovation, science, and data to create the jobs of tomorrow.
According to the OECD, Canada used to rank in the top-ten countries for total investments in R&D. Not anymore. And that’s the result when you close research facilities and cut support for science.

In addition to restoring the Labour Sponsored Venture Capital Tax Credit, we will work with innovators in biotech, IT, and cleantech. We will bring the 3Es of energy, environment, and the economy together to restore Canada’s environmental reputation and make Canada a global leader in the green economy.

In the age of meta-data, smart governments and smart businesses invest massively in getting the best information in order to make the best possible decisions. I can only think of one organization in the world that over the last ten years has chosen deliberately to reduce both the quality and quantity of data it gathers from which to make decisions. That organization is the Harper government. They got rid of the long-form census and replaced it with a voluntary national household survey that manages to be both more expensive and less reliable.

A Justin Trudeau led Liberal government will bring back evidence based decision making to replace the Harper regimes decision based evidence making.

Un gouvernement guidé par les sciences et les données probantes dans ses décisions sera bon pour les entreprises, bon pour les familles de la classe moyenne et bon pour l’économie canadienne. A government guided by evidence and science in its decision making will be good for business, good for middle class families, and good for the Canadian economy.

We also need to invest in good relationships.

Investing in Relationships

The biggest reason why Prime Minister Harper, a PM mono-focused on oil, has been incapable of getting even one pipeline approved under his watch is his failure to build relationships. Brian Mulroney is right when he says “the top foreign policy priority of a Canadian prime minister is to have a personal relationship with the President of the United States.” Mr. Mulroney would have gotten Keystone XL approved with President Reagan. Jean Chretien would have made it happen with President Clinton.

Whether its Keystone XL, or Buy American protectionism, or Country of Origin Labeling (COOL), Harper’s sulphuric relationship with Obama renders him incapable of defending Canadian jobs.
Harpers relations with Mexico aren’t any better. Canada’s abrupt imposition of visa requirements on Mexico helped toxify that relationship too. And for the icing on the frigid cake of Harper’s cool relations with our NAFTA partners, Harper cancelled the Three Amigos conference in Ottawa in February. But it is not just relations with our NAFTA partners that have suffered.

A Trudeau government will have to rebuild Canada-China relations that have been diminished by Mr. Harper. Foreign investment including Chinese investment can help create jobs and growth in Canada. Mulroney, Chretien, and Martin got that, and so does Justin Trudeau. Mr. Trudeau was the first federal leader to endorse the CNOOC-Nexen deal, weeks before Mr. Harper announced federal approval, while muddying the waters, and creating uncertainty for future Chinese investments in Canada. He rejects Mr. Harper’s position of making Canada’s foreign investment rules deliberately opaque.

Mr. Trudeau understands that ambiguous rules might make the Prime Minister’s political life a bit easier, but it comes at a cost. That cost is borne by Canadian businesses who are looking for investment, and Canadian workers who need jobs. Ambiguous rules post-CNOOC-Nexen have created a chill on Chinese investment. Chinese investors are as allergic to uncertainty as Canadian investors.

In today’s economy, making it harder for the Chinese to invest in Canada is nonsensical. Many of you today are business people. You understand how important relationships are to the profitability of your business. With a small open economy dependent on trade and investment, Canada needs a Prime Minister who understands how important relationships are to the Canadian economy. Comme premier ministre, Justin Trudeau établira les relations qu’il faut pour défendre les intérêts économiques du Canada.

Justin Trudeau as Prime Minister, will build the relationships we need to defend Canadian economic interests.

By investing in infrastructure, people and skills, innovation and science, and relationships, a Trudeau government will be investing in jobs and growth for middle class families. It’s clear that Canada needs a new plan for the economy. One that’s fairly built around the middle-class and all those working hard to get there. One that’s focused on growth for today and tomorrow. One that restores confidence among Canadians that their children and grandchildren will always be able to do better than the generation before.

Canadians are an energetic, ambitious and open people. They deserve an energetic, ambitious and open government.

With his plan and his team, Justin Trudeau will provide Canada with renewed hope for a better future and a plan to achieve it.

Thank you.