CHECK AGAINST DELIVERY
It is so wonderful to be here in person.
And that is where I want to start today – with how great and how novel it is for us to be here in person and en masse.
Because that novelty is a reminder of just how hard the past two years have been.
Let’s remember, a little more than two years ago, we were in the throes of the deepest recession since the Great Depression.
Our economy had contracted by 17 per cent. Three million Canadians had lost their jobs, and our government had just deployed wartime spending to prevent a complete collapse.
In the aftermath of 2008, our economy remained sluggish for years. The Depression scarred an entire generation.
In June of 2020, looking ahead with history as your guide, you would have been forgiven for expecting the worst.
Instead, we have recovered 117 per cent of the jobs that were lost during the darkest months of the pandemic, compared to just 96 per cent in the United States.
And instead of persistent unemployment, that rate is today just 5.1 per cent – a record low. Young people, Indigenous Peoples, women, and new Canadians have particularly benefitted from the strong job market.
This is the strongest jobs recovery in the G7, and Canada’s real GDP is 1.8 per cent above where it was in those awful first weeks.
But if the data is so rosy – if the rebound is so strong – why don’t we feel very good? Why are Canadians so worried?
Everyone here knows the answer – inflation.
Jobs are plentiful and business is booming, but it is also harder for a lot of Canadians to pay their bills at the end of the month.
I rode my bike here today, and my husband and I are raising three kids in downtown Toronto without owning a car. We can do that because there is a subway station barely 200 metres from our front door, and our kids walk to school.
But the house I grew up in in Peace River, Alberta, is about 10 miles from town, and I got my driver’s licence the day I turned 16 – as did every other kid in town.
I understand keenly that millions of Canadians drive a long way to the store, and that today, they’ll wince when they fill up their tank and when they buy their groceries.
And I know that many of them are asking what their government is going to do about it.
So that is what I want to talk about here today.
The pandemic has been – we hope – a once-in-a-generation crisis.
But like any major crisis, this one has after shocks, and inflation is chief among them.
Inflation is not a made-in-Canada challenge, and it is actually less severe here than among our peers.
Inflation in Canada was 6.8 per cent in April.
It was 9 per cent in the United Kingdom, 7.4 per cent in Germany, and 9.2 per cent across the OECD.
In the United States, it was 8.6 per cent in May.
This is clearly a global phenomenon – one driven by factors that no single country is responsible for, and that no single country can insulate itself from.
We know the causes.
First: the pandemic. The shift in demand from services to goods it triggered and the resulting supply chain snarls, which I heard about very personally just this morning at a family-run hardware store in my neighbourhood.
China’s COVID-zero policies have made those worse.
And then, Vladimir Putin illegally invaded Ukraine, forcing up the price of food and fuel.
Here in Canada and around the world, that means higher prices at the checkout counter and higher prices at the gas pump.
Canada doesn’t have a say in Beijing’s public health measures, and we clearly aren’t consulted when the Kremlin makes its war plans.
No single country can solve these global problems.
But what we can do is help Canadians weather this newest storm, just as we’ve done over these past two years: With a plan.
We will take real and tangible steps to help get inflation under control and to make life more affordable for Canadians.
And here, in five parts, is how we are going to do it.
First, let me start by recognizing the central role of the Bank of Canada.
For more than three decades, it has been the Bank’s responsibility to tackle inflation here in Canada. I reaffirmed this central mandate in December.
The Bank has begun the work of bringing inflation back within target, and it has the tools and the expertise it needs to keep inflation from becoming entrenched.
In reaffirming our triple-A credit rating after I tabled the April budget, S&P specifically cited the strength of Canada’s government institutions as one reason for our exceptional rating.
At this time of global economic and political volatility, undermining Canada’s fundamental institutions – very much including the Bank of Canada – is highly irresponsible, not to mention economically illiterate.
But while fighting inflation is the central bank’s job, good government policy can make it easier by tackling the supply constraints which are driving the rise in prices.
Which brings me to my second point.
A labour shortage – and of workers with the right skills – is constraining the world’s industrialized economies. Canada is no exception.
Addressing this shortage was one of the fundamental goals of our April budget. Our plan to do so is part of a set of measures that Janet Yellen, the U.S. Secretary of the Treasury – whom I’ll have the pleasure of welcoming to Canada on Monday – has described as “modern supply-side economics.”
Modern supply-side economics borrows the supply-sider’s key insight – that increasing supply is fundamental to growth – but it takes a progressive, people-centred approach.
It is about investing in the heart of a thriving economy: people, Canadians.
We are doing this by investing in immigration, skills, child care, and housing.
On immigration, I have good news. At a time when the world’s major economies are desperate for skilled workers, Canada has had, since 2016, the fastest growing population in the G7.
In 2021, we welcomed 405,000 new permanent residents – the most of any year in our history – and we aim to attract 451,000 annually by 2024. In the first six months of 2022, we have already welcomed 204,000 new permanent residents.
At a time when most industrialized countries are growing increasingly hostile to immigration, Canada’s unique commitment to multiculturalism is a competitive advantage and an engine of economic growth.
In the budget, we also set out to invest in the workers who are already here.
That means ensuring our skilled trades workers can afford to travel to the parts of Canada where their services are desperately needed.
It means investing in the skills and the training that workers will need for the good-paying jobs of tomorrow, and supporting union-based apprenticeship training to bring more people into the trades.
And it means programs like the Canada Workers Benefit – providing more than $3.6 billion in estimated support this year – which will make life more affordable for our lowest-paid – and often most essential – workers.
On child care, the economic argument is clear; it is economic malpractice to force women to choose between their family and a career. Early learning and child care is feminist economic policy in action.
And so – despite legitimate concerns about whether we could actually do it – we have already signed agreements on early learning and child care with every single province and territory.
We are building an affordable, universal system of early learning and child care at precisely the right moment – a time when our economy greatly needs every mother who wants to go to work as long as she has the comfort of knowing that her children are being well cared for and well taught.
And our plan makes work – and life – more affordable for middle class Canadian families.
It means a reduction in fees of fifty per cent by the end of this year. In three years, child care will cost an average of just $10-a-day right across the country.
As Canada’s workforce grows, we will also need more homes.
But today, we are not building them fast enough.
That is why perhaps the most significant commitment we made in the budget was to double the number of new homes we will build over the next ten years – the federal government; provinces and territories; cities and towns; the private sector and non-profits all pulling together to build the homes a growing country needs.
Taken together, immigration, housing, skills, and child care are, quite clearly, social policies. But they are economic policies, too.
This set of measures will help drive our continued economic growth in a way that fights inflation by increasing the supply of the workers – and homes – that we don’t have enough of.
The third part of our plan to combat inflation is fiscal restraint.
We spent an extraordinary amount of money to make it through the pandemic. Eight out of every ten dollars invested to rescue Canadians and the Canadian economy – more than $300 billion – was deployed, rightly, by the federal government.
But there is no such thing as a blank cheque. Our ability to spend is not infinite. That was true when interest rates were at historic lows in the spring of 2020, and it is most certainly true today.
Canada has the lowest debt-to-GDP ratio in the G7, and as the Bank of Canada withdraws monetary stimulus, our government is likewise withdrawing fiscal stimulus. Our rate of fiscal consolidation is tied with the United States for the fastest in the G7.
I am determined to see our debt-to-GDP ratio continue to decline and our deficits continue to be reduced. Our pandemic debt must – and will – be paid down.
In tabling the budget in April, I reaffirmed this as our fiscal anchor, and I committed to a review and a reduction of government spending, because that is the responsible thing to do.
I know that my fiscal prudence surprised many in this room. Yes, I do read your predictions.
This fiscal restraint was very intentional. At a time when inflation was elevated, we knew we needed to be careful not to increase aggregate demand. As interest rates were set to rise, we understood the importance of maintaining Canada’s triple-A rating.
Even as I say that, though, I can hear the gentle mockery – or maybe not-so-gentle mockery – of the people I went to public school with.
They would tell me that you can’t fill up a truck with a triple-A rating.
And they would be right. Which brings me to my fourth point: making sure there are enough good middle-class jobs for Canadians.
For most Canadian families, paying the bills starts with having a good job.
That is why our relentless focus during the pandemic was on jobs – on keeping businesses afloat and on keeping workers on the payroll.
I noted earlier that our unemployment rate is today the lowest that it has ever been, and that we have recovered 117 per cent of the jobs that were lost in the spring of 2020. Our labour force participation rate is near record highs.
At the peak of the pandemic, it was reasonable to fear that our young people would become a lost generation, with lives forever stunted by coming of age in a depressed economy. Yet today, by contrast, they are graduating into the hottest labour market in decades.
Instead of a labour market permanently scarred by COVID, we have the strongest jobs performance ever recorded by Stats Canada.
That was not preordained. It is the result of deliberate government policy and a relentless focus on jobs.
This means – as we face elevated global inflation – that more Canadians have a better job than ever before.
Which brings me to my fifth point – helping Canadians directly with the challenge of affordability.
Some are calling for new government spending, whether through tax expenditures or direct payments.
On that point, I have good news.
Because of investments we have already made in the last two federal budgets, a new set of measures is coming into force right now to help the Canadians who need it most.
This is $8.9 billion in new support for Canadians this year. This is our Affordability Plan.
This Affordability Plan includes:
- Enhancing the Canada Workers Benefit – at a cost of $1.7 billion in new support for workers this year – to put up to an additional $2,400 into the pockets of low-income families starting this year;
- A ten per cent increase to Old Age Security for seniors over 75, which will provide up to $766 more for more than three million seniors this year;
- A $500 payment this year to nearly one million Canadian renters who are struggling with the cost of housing;
- Cutting child care fees by an average of 50 per cent by the end of this year, with savings for a family here in Toronto of up to $6,000;
- Dental care for Canadians earning less than $90,000, starting with hundreds of thousands of children under 12 this year; and
- The indexation to inflation of benefits including the Canada Child Benefit, the GST Credit, the Canada Pension Plan, Old Age Security, and the Guaranteed Income Supplement. The federal minimum wage, which we increased to $15/hour, is also indexed to inflation.
For a couple here in Ontario, with an income of $45,000 and a child in daycare, this Affordability Plan could mean about an additional $7,600 above existing benefits – more than 16 per cent of their annual income – this fiscal year.
A single senior with a disability, in Quebec, could benefit from over $2,500 more this year than she received last year.
A recent graduate living in Alberta could receive about an additional $1,600 in new and enhanced benefits this year, compared to last year.
The measures in this Affordability Plan represent entirely new support for Canadians who need it the most right now; $8.9 billion that they did not receive last year.
But for the fiscal hawks among you, fear not.
This is new money for the Canadians receiving it this year – but we built these measures into our last two budgets.
They have already been accounted for in Canada’s AAA-rated fiscal framework and in the economic projections that many people in this room have made.
Now, given the uncertainty in the global economy, would it be wise for me to stand here and rule out the need for further support in the future? Of course not.
But many of the most vulnerable Canadians are receiving more financial support now than they did last year, and they will continue to receive new support in the weeks and months to come.
For the Canadians who need it most, this will make their lives more affordable at exactly the right time.
The five points I have spoken about today – respect for the central role of the Bank of Canada; investing in people; fiscal restraint; good jobs; and a new Affordability Plan – will help sustain the robust recovery we have made from the COVID recession.
Our plan will help tackle inflation and make life more affordable for Canadians.
I am confident that our plan is the right one.
But I do not underestimate the economic difficulties and uncertainty of the months to come.
We have been through two years of remarkable turbulence. Our challenge now is to land the plane.
A soft landing is not guaranteed. But, fortunately for us, there is no country in the world better placed than Canada to achieve one.
That is certainly the view of the IMF, the OECD, and Moody’s, which have all recently predicted that Canada will have the strongest real GDP growth in the G7 this year – and next year.
They are right to be bullish on Canada.
Despite unprecedented emergency spending, our finances are and will remain sustainable.
We have a diverse, growing, and supremely talented population. We are a country where skilled workers want to move, and we are a people who welcome them.
As the world undergoes the most profound economic shift since the Industrial Revolution, we are also investing urgently in the green transition.
Climate action is no longer a serious political debate; it is an economic necessity. The global economy is changing, and our customers around the world have clearly decided that you cannot pollute your way to long-term growth and more good-paying jobs.
A national price on pollution is the most effective market incentive for climate action, and ours puts more money into the pockets of eight out of every ten families here in Ontario.
And from building batteries for zero-emission cars, to investing in carbon capture, utilization, and storage, we are ensuring that Canada will be at the vanguard of – and that Canadians will benefit from – a changing global economy.
The April budget included measures ranging from a new Canada Growth Fund that will help attract the investments we need to build a cleaner and more prosperous Canada, to an innovation and investment agency that will help our traditional industries thrive in a changing global economy, and our small businesses continue to grow and create good middle-class jobs.
We are working out the details of these plans now because we are serious about tackling the productivity challenge that is Canada’s Achilles heel.
Now, as I look around this room, I can see enthusiasm for the concept and a lot of skepticism about whether we can get it done.
Fair enough! Canadians have been handwringing about productivity for at least three decades, and we can’t seem to make a difference.
So, to build your confidence, let me give you three examples of big things, big changes, that our government has accomplished.
We have a carbon price that has been upheld by the Supreme Court and is lauded as a model by the IMF. We have a technology sector here in Toronto that is outpacing Silicon Valley. We take it for granted now, but it wasn’t so long ago people thought that would be impossible. And we showed them we could do it. And of course, we have a national child care program – something that had been long promised – for 50 years it was promised but never delivered.
Major change is possible. We have shown that during these past seven years. On productivity, do not doubt our commitment.
I began by describing the hostile global forces making life harder here in Canada. I am going to conclude by talking about how a dramatically changing world offers truly historic opportunities for us here in Canada, tomorrow and in the years ahead.
The hopeful and entirely open post-Cold War world order that we tried to build starting on November 9, 1989 – the day the Berlin Wall fell – ended on February 24.
In its place, we have entered a period of friend-shoring; one in which our allies know that it is worth spending a little more to build their supply chains with other democracies.
The world’s democracies have grown more united in the face of Russia’s illegal invasion of Ukraine, and as they have grown more united, Canada absolutely stands ready to provide our allies with the resources they need. I think it really is our job, we need to do it, and we will.
Europe is determined to wean itself from Russian energy – a huge, huge shift – but its people must still heat their homes. These past months have reminded us that security includes energy security, and Canada is working to ensure it for our democratic partners.
We have a wealth of the critical minerals and metals that our allies need for everything from phones to electric cars, and our hardworking farmers grow the food that can help feed a world threatened by Putin’s blockades.
We are the only G7 country with trade deals with all of our G7 allies – and that is a partnership more important in the days to come than it has ever been before.
The future of the global economy does not belong to those who believe that the size of their armies, or the harshness of their censors, or even the extent of their natural gas reserves will allow them to act with impunity.
The good jobs and prosperity of today and tomorrow belong to the workers who are the heart of the world’s democracies. And nowhere will that be more true than here in Canada.
We know that the road ahead will be bumpy and that we cannot see around every corner. If the past two years have taught us anything, it is that we would be naïve to expect otherwise.
But for all the challenges we face today, Canada remains the best place in the world to live, to work, and to raise a family.
Ensuring that remains true for our children will continue to be our focus, my focus, in the weeks, months, and years ahead.
A Canada where life is more affordable; where everyone can earn a decent living for an honest day’s work; and a Canada where nobody gets left behind.