Minister of Finance Jim Flaherty delivers a speech at a luncheon hosted by the Ireland Canada Business Association
26th August 2010
I appreciate the work that’s being done by the Ireland-Canada Business Association maintaining the tradition and helping to establish relationships, maintain relationships, foster interaction between Ireland and Canada, particularly interaction that leads to economic growth. We have a lot in common, as was mentioned. We share the constituency at the World Bank at the IMF where Canada is proud to work with Ireland, particularly in the last few years which have been very difficult, as you know, internationally. Michael Horgan, the Deputy Minister of Finance is here.
For generations, Irish immigrants and their descendants have helped build Canada not only with their hands and their hearts but also with their brains. The Canadian Pacific Railway was the great nationbuilder in Canada which was built largely by Irish laborers, immigrants to Canada, back in the latter part of the 19th century. That is one of the great links that made Canada a country from coast to coast
In a relatively small city there were 38,000 Irish famine immigrants who came to Toronto and about a thousand of them died and many of them were children and many of them are buried in Mount Pleasant Cemetery in Toronto. There was a lack of commemoration of this. As I say, the private sector, the group of Irish Canadians raised more than a million dollars. The Irish government at the time agreed that they would make a contribution to match any contribution that the Government of Canada would make. So we determined that we would make a contribution of half a million dollars and the Irish government matched that. That was the first time I’m told that the Irish government had made an expenditure like that outside of Ireland or the UK to commemorate the famine.
In trade – and now I’ll do some of the business part of this – last year Canada exported over half a billion dollars worth of goods to Ireland and imported almost $2.2 billion from Ireland. Last year direct investments by Irish companies in Canada totalled some $1 billion in Canadian – I’m using Canadian dollars but they’re not so bad these days, there was a time, the Canadian peso, I remember that yes, unkind I thought by some Americans – $1 billion Canadian. Canadian companies invest about $23 billion in Ireland, so we have a bit of an imbalance here that we should work at. Both our countries profit of course from this trade.
I would say that Canadians of Irish descent have made more than their share of contributions to Canada, to Canadian history, to Canadian economic growth. They have punched above their weight. In fact, Canada has been punching above its weight internationally, particularly in the course of the past two or three years. Our economic performance leading up to the crisis of 2008 and afterwards has reflected the fact that we’re capable in the Canadian economy of punching above our weight.
Canada is punching above its weight in worldwide weight class. Canada played a pivotal role in drawing out a roadmap to global economic recovery both in what we did to prepare prior to the downturn, and the way we responded after it arrived at our shores.
Let me talk a little bit about Canada. The recession came from without, not from within. The decline in our economic output was the smallest in the G7. In August 2010, now, we have recovered almost all the jobs that we lost during the course of the recession, about 400,000 jobs. The IMF expects that Canada will be the fastest-growing economy among the G7 economies during this year, 2010. The United States is still struggling, as you know, and that’s a major worry for the Canadian economy because we still have about 75% of our exports going to the United States. That’s becoming more balanced over time. We’re negotiating a free trade agreement now with the EU which is going well, as well as our expansion of trade with Asia.
Ordinary Canadians deserve a lot of credit for this. Our consumer demand went down of course during the course of the recession, but it has come back well in Canada which is a marked difference from what has happened in the United States.
One of my heroes, Robert Kennedy, once said, and this is about ordinary citizens, he said most of our fellow citizens do their best and do it the modest, unspectacular, decent, natural way which is the highest form of public service. Those of us in public office need to remember that I think from time to time.
We did prepare well. Ireland had prepared well as well I think from the meetings I’ve had this week. We ran balanced budgets in Canada for about 10 years. In the first three years of our government we paid down... with our surpluses we paid down about $40 billion of public debt. That made it possible when the bad times came to have an extraordinary response in Canada. And this was a difficult time. I’m sure it’s been very difficult here for elected officials. You’re in office, a recession comes, it’s difficult times, you see it happening, we listened closely to business especially small and medium-sized businesses which are very important in Canada. It was apparent in December 2008, although we didn’t have the data yet, you always see the data later on, but it was apparent then listening to Canadian business people that we were in a deeper dive than many people thought.
So we decided as a federal government that we would act boldly, that we would act quickly. We did the earliest budget in Canadian history. Our fiscal year runs to the end of March each year. We did the budget on January 27th, 2009. We had a large stimulus plan. It meant that we went from balanced budgets to running a deficit, a single-year deficit of in excess of $50 billion to be followed by another large deficit, moving back to balanced budgets over the course of the intermediate term.
We did this because of two major concerns. One, a deeper longer recession. In retrospect we can look back now and say three quarters and we came out and we’re coming out of it fairly well. But at the time, the darkest time, that wasn’t at all clear. And secondly, the fear of large unemployment. Our unemployment rate did go up significantly. It went up over 9%, has come back down to 8% now, 7.9%/8% now. But that was in part due to the Economic Action Plan that we brought in. The Department calculates that we gained about two additional points of GDP growth following the end of the recession in 2009 because of the public stimulus that we put into the economy in three ways, lowering taxes, helping out with Employment Insurance, retraining people and so on, and then public infrastructure stimulus.
We had the cooperation of the provinces. Canada is a federation, as you know, with 10 provinces and three territories. They all cooperated, so we were able to reach our G20 agreed goal which was 4% of GDP over the course of two years, in fact a little bit better than that. And not only that, but the public service responded extremely strongly in Canada and were actually able to get the money out the door, which isn’t that easy to do in a large organization, during the course of 2009 and this year.
Our relationship with the United States is important. The unemployment rate traditionally in Canada has been higher than the American unemployment rate. Today, the unemployment rate in Canada, as I say, is around 8%. The American unemployment rate is about 9.5%. This hasn’t happened in a generation, since 1975, and I attribute this to the economic fundamentals that we have within Canada, running balanced budgets, moving back to balanced budgets, and strength in our finance sector which I think has
I’m looking forward to relative stability I must say. Certainly the Canadian economy is performing relatively well. What we anticipate is modest growth, moderate growth over the course of the rest of this year and into 2011 consistent with what the IMF has said about Canada.
. I thank you for your cooperation of this week and educating me about Ireland and Canada and the business associations there. I look forward to supporting those relationships certainly in the best interests of Canada, and as Canada is in a free trade agreement as you know with the United States and Mexico, the North American Free Trade Agreements, so Canada is a great platform in which to do business. In the Americas we focus on our trade as well with South America, with the great emerging economies of Brazil as well as Chile and Argentina in South America. So Canada is a great place from which to do business.
I think we can take some confidence from the fact that this crisis has produced some opportunities and that the opportunities internationally have been seized. We’ve come quite far, we’ve achieved quite a bit and to fall back into complacency now, to allow the global economy to go back into turmoil would be a grievous error. We continue to talk to each other regularly and I anticipate that we will continue to see the kind of international cooperation that we’ve seen that has helped us begin to exit from the crisis of the past couple of years.
For Canada and Ireland and all nations I think it’s clear that our work is not finished. We are not out of the woods yet. We have to be carefully monitoring that which we see to make sure that we do not slide backwards into any sort of double-dip. I thank you for the invitation to be here today. I feel I’m welcome in Ireland, as does my family and I thank you again for those hurling sticks for my sons. Thank you very much.