The Honourable James Flaherty, Canada's Minister of Finance
Flaherty cited years of balanced budgets, surpluses used to pay down Canada's debt, and a sound banking system as major reasons why Canada was in a stronger fiscal position heading into the financial crisis than many of its G7 counterparts. He credited the centralized supervision of Canadian financial institutions, conducted by the Office of the Superintendent of Financial Institutions, as a primary reason why Canada avoided the banking crisis faced by the United States.
Like almost all other G20 countries, said Flaherty, Canada developed a comprehensive stimulus plan to guide the country through difficult economic times during the economic downturn. This spending was only meant to be temporary, he said, noting that Canada aims to cut its deficit in half by 2012 and return to balanced budgets soon after to maintain fiscal sustainability.
Canada, said Flaherty, is also working hard to achieve a favorable business climate as part of the government's strategy to create more jobs and attract more investment. To this end, Canada has worked to reduce business taxes from a level of 22 percent in 2007 to its present rate of 16.5 percent. Canada's goal is to reduce federal income business tax to 15 percent by 2012 and have provincial rates of no more than 10 percent, which would give Canada the lowest business tax rate of any G7 country.
Additionally, said Flaherty, the Canadian Government has cut tariffs and continues to promote free trade in an effort to make Canada one of the most attractive places in the world to do business. Flaherty also said Canada plans to implement the Basel III Capital Framework—a set of financial standards agreed to by all G20 nations—far ahead of the 2019 deadline. Doing so, he stated, will help encourage foreign investors to spend in Canada.
Despite a strong economic outlook, Canada faces its own economic challenges, particularly the rising value of its currency, struggling provincial economies, and mounting household debt.
Flaherty maintained that sustained global economic stability and growth will require a coordinated international effort to achieve.
Drafted by Ken Crist
David Biette, Director, Canada Institute