DATE: February 26, 2014
LOCATION: Château Laurier, 1 Rideau Street, Ottawa, Ontario
PRINCIPALS: The Honourable Tony Clement, President of the Treasury Board
SUBJECT: President of the Treasury Board of Canada Tony Clement delivers a speech entitled: “Fairness for all Canadians” to the Economic Club of Canada.
Hon. Tony Clement: Natasha, thank you so much and good afternoon everyone. Thank you to the Economic Club of Canada for being our host today and of course to the sponsors. This is really a great institution and one that helps us have the dialogue that we need as politicians not only in the national capital but elsewhere on these key economic issues.
Thanks to the sponsors. Thanks to the Club and thank you all for being here. I would like to give special notice to a couple of my colleagues, Senator Oh and MP Mike Wallace from Burlington is here as well. Thank you colleagues for being here. That is to all of you for spending a bit of time with me today. It’s great of course to be here. As Keith Richards once said, it’s great to be anywhere.
As President of the Treasury Board I’m usually in a small windowless room with a big red felt pen going no, no. I’m really very popular around the Parliamentary district. It is of course important to talk about our economic future because it is so integral to the lives of Canadians and indeed important to our economic future as well.
Of course Canada remains and should remain one of the most successful nations but we have to in order to do that, in order to ensure that is the case, understand where we came from and of course have as a government have an idea of where we’re going. When I look at my own experience as an immigrant to this country, coming here when I was four years old with my parents of course and they shared with me their beliefs for a better life.
We were economic migrants I guess. My dad and my mom eventually wanted to work hard. They wanted to raise their family. They wanted to be part of the community and they chose Canada to do that. To my great pride they did that. Of course I didn’t know too much about what was going on as a four year old but I knew we were going to a different country and I remember some of the choices we had to make when I was a kid before we got o the plane.
Of course I was allowed one suitcase worth of stuff. I had to choose between toys. I remember being a bit bummed out over that because why did I have to leave one toy behind. For me that was the choice I had to make. My parents had to make a lot of other tougher choices of course to start their lives over again in this new country. That is the Canadian dream and we all share it whether we were born here or whether we came here from somewhere else.
Indeed those dreams of achievement and the pride we take in them are part of our Canadianness if I can put it that way. Of course we were talking about around the table about the Winter Olympics in Sochi where we saw our Olympic champions. I’ve got one in my own community of Huntsville, Dara Howell, who won a gold medal in free style skiing. We see all of them accept their medals or even just place or take pride of course in the hard work they gave us that in many cases got them to the podium.
I think that was just another manifestation of the pride we have in our country. More broadly than that of course we want our country to achieve great things. We want the people of our country to achieve great things. We want everyone to succeed. I’m going to tie that in a little bit to a couple of things that I’m working on starting with of course Economic Action Plan 2014, our budget.
We have been focusing on the things that I think matter in terms of how we get to our goals, how we can succeed as a country. Of course one of the primary things we focused on is reducing the deficit and balancing the budget. This was continued in the latest budget and what I want to do is highlight some of the key measures that will help our Canadian businesses to grow and of course help our country to grow as a consequence of that.
To begin with just a little bit of the numbers. Our deficit is expected to decline to $2.9 billion this fiscal year and we are looking forward to a surplus of more than $6 billion next fiscal year, that is to say 2015-2016. That’s even after taking into account the $3 billion annual adjustment for risk, kind of a rainy day fund if you will. As we saw most recently in some of the flooding in Calgary or other national disasters, other things that come along that require our attention. It is always good to have some funds in reserve without it impacting on the fiscal balance of the nation.
I think that is a prudent and wise thing to do. At the same time I want to stress again the federal transfers that provide important income support to individuals, old age security comes to mind, employment insurance, those kinds of things as well as of course major transfers to other levels of government, most particularly our provinces including those for social programs and healthcare, all of those continue to grow.
I know we’ve had some controversy here in Ontario with our provincial friends in government who are trying to attest to otherwise but the facts of the matter are very clear. Transfer payments continue to grow. Indeed in the province of Ontario our transfer payments have grown by 76% and have grown by about $19 billion. That’s billion with a “b”.
Certainly that has not been affected by any of our constraining of spending. I want to stress this as well. Returning to a balanced budget is not an end in itself. It does provide a host of benefits that go well beyond the bottom line. I might be preaching to the choir a little bit here but when you balance your budget it frees up tax dollars that might otherwise be spent on interest costs and of course then you have a choice.
You can lower taxes or you can invest in priorities of Canadians. Balancing the budget also helps keep interest rates low and it instils confidence in investors and consumers and of course it’s those dollars that truly spur economic growth and job creation in our market economy. Balancing the budget also strengthens our country’s ability to respond to longer term challenges such as population aging and unexpected local economic shocks.
It helps of course ensure fairness and equity for generations of Canadians to come, that intergenerational equity if you will because it avoids future tax increases or reductions of services that might impact our children or our grandchildren. In short balanced budgets signal stability and they pave the road to prosperity. Of course we are taking concrete actions to help businesses and the Canadians that run them as well and of course smaller businesses in particular are crucial to our long term prosperity.
What I want to do is talk a little bit about how we’re doing that specifically because I think one of the things that I think is important not only lowering taxes but also being aware that sometimes it’s those things like red tape that constrain the ability of our smaller businesses to succeed as well. I have the responsibility which I’m proud to have in government to be responsible for reducing red tape for small businesses because the Treasury Board happens to be the venue at which we pass regulations that might have an impact on small businesses.
What have we done recently? I was proud to have introduced in Parliament just recently, just last month, a bill that will enshrine the one for one law in law. The one for one rule is very important because it controls the administrative burden for businesses by having and requiring regulators to remove a regulation each time they introduce a new one. That’s the one for one rule.
We decided to beta test before the regulation so for about a year and a half now, close to two years actually since April 2012 we have had this on the books as a policy of government. Indeed the results are in. The administrative burden on businesses in Canada was reduced by almost $20 million by December of 2013. It translates in small businesses to about 98,000 hours of time saved because we reduced those regulations. We reduced the red tape for them.
The one to one rule is important because it forces government to think of before they add a new regulation that has an impact on small business to think of ways they can reduce the burden in some other area not involving health or safety I might add but in some other area that can reduce the burden on our small businesses. It is working very well.
This is part of a more general plan we have called the red tape reduction action plan designed to increase Canadian competitiveness of course and also help our businesses to invest, grow, create jobs, in other words do the things they do best. We are working on ways to reduce business irritants in areas ranging from tax and payroll to labour and trade and we have been introducing time saving measures across the board like single windows and electronic submissions to a greater extent than hitherto, again saving time for our small business owners so they can concentrate on wealth and job creation.
It tries to make the regulatory process as pain free as possible. I believe it’s one of the more important things we can do to help businesses to thrive and particularly in this time where we still have some of this global economic uncertainty around us. What are we doing for the next year? We’re going to continue to cut red tape and we’re going to continue to implement system wide reforms and actions targeting specifically issues that frustrate business and stifle innovation.
We continue to reduce for instance the red tape for tax compliance. In fact we’re already well down that road. We want to make it as easy as possible for businesses to prepare, file and pay taxes. Hands up everybody who loves paying taxes, not too many takers but at the same time if there are ways that we can make it easier for folks to comply we remove a lot of the irritations that come along with having to pay taxes.
We’re proposing to cut the maximum number of payments that more than 50,000 businesses have to prepare and to submit to the CRA and in doing so eliminate the requirement for more than 800,000 payments. I think that’s good in and of itself.
Of course we recognize that taxes in and of themselves do absorb dollars that could be used by business owners to seize opportunities. We have committed in the budget to further tax relief for small businesses following the return to balanced budgets. In the meantime we think that we have found a way to help small businesses in a way that’s meaningful and tangible for them.
Let me talk about another thing that I’m involved in as President of the Treasury Board, open data. I believe that this is directly connected as well with how our economy can create new wealth and spur innovation. I’m pretty excited to be part of this. I think it is important to have a champion in government when it comes to open data. I just want to give you a little bit of a primer on what that means and why it’s important.
Open data is basically a term that applies to the big data of government. You’ve probably heard the term big data before, these large amounts of information that are being collated and collected, usually for good, sometimes not so good but we’re talking about the good big data. Of course governments have been collecting data for a long time. In fact one of the more dramatic lines when I’m talking about open data is since the dawn of time, since civilizations have emerged and collections of individuals have invented government, government has been collecting information on individuals.
That has always been until this moment in time in the history of civilization it has always been a one way street. Governments collect information. They hold information. They hoard information. They use it for their purposes and nobody else’s purposes. That’s been the history of government until the year, until the time in which we live today. That has meant a real sea change. In fact I’d call it a revolution in terms of the thinking about government and the possibilities revolving around open data.
What that means is that open data can be used to help Canadians expand the reach and effectiveness of government programs but also help citizens, help non-governmental organizations understand society more generally but also what government is doing and how that can be interacted with. Think of it as a locked vault that we had in the past where the government held the key to now we’re opening up the vault.
We’re starting to publish all of this data in a way that is consistent with national security of course and privacy concerns but there’s a lot of data you can publish while still meeting those concerns. What does that mean? It means that the economic value of that data can now be tapped. By making it freely available to Canadians as we are doing it means that it can be reused for commercial purposes, for scientific purposes, for research purposes.
It’s a very exciting time. I really do believe that this I’ve called it before Canada’s 21st century natural resource. We have been very successful in encouraging all the government departments and agencies to publish the stuff online. We have a portal called data.gc.ca. We have published over 200,000 data sets so far free, freely available for all of those purposes, commercial, scientific, research, what have you, societal.
We have now signed on to the idea that it’s open data by default. Whereas before Tony Clement continuing to encourage all of my colleagues around the Cabinet table to keep publishing more data sets and having to prove to them why they have to do it, now the onus is reversed. The data will be published unless they can convince me that it shouldn’t be published for some public policy reason.
There’s going to be tens of thousands, hundreds of thousands of data sets that will be published in the future and can be used for various beneficial purposes. I’m really excited about what’s happening this weekend because this weekend I will be in Toronto joining students and tech entrepreneurs and we will be kicking off the first government sponsored appathon or hackathons, whichever term, there are two terms out there.
It’s called the Canadian Open Data Experience or CODE for short and it is a 48 hour coding challenge that will result in open data being used and turned into beneficial user friendly apps to use that data. You’re probably thinking to yourself, how would that work? What’s the advantage for the economy? I’ll give you a couple of examples on your smart phone right now how government data is being used in useful apps.
You’re a Canadian so you probably have a weather app because we all care about the weather in this country. All of the data on your weather app comes from open data supplied by the government of Canada by environment Canada. It wouldn’t exist were it not for the Environment Canada weather services. If you want to get from point A to point B by a public transit route, the best bus route or if you’re in a larger centre the best rapid transit route, that’s all open data supplied by a municipality.
This is all valuable information that has been given to you. You downloaded an app so some smart guy or gal has figured out a code to release that information to you for your use that you can use it to make your life just a little bit simpler, to maybe get from point A to point B a little bit quicker, pick up the kids from hockey practice without running into a blizzard or whatever it is.
That is a result of open data. What we’re doing is we’re challenging these coders to come together and come up with more apps. We’re doing this over a 48 hour period and it really will be exciting to see these mostly young people, I should say, who are participating. When we started the appathon in our wildest dreams we thought this is the first one. We’ve got some cash and prizes by the way because that’s important. I always mention the cash and prizes.
We’ve got some great sponsors like Open Text and Google Canada and IBM and so forth. We’ve got a $25,000 first prize. It’s real money for these 19 year old kids. The key thing is they are participating. We thought maybe we’d get a hundred people registered because this is the first appathon the government of Canada has ever done. Four weeks ago we reached a hundred. Well maybe we’ll get 200 that will register. Two and a half weeks ago we went past 200. We’re now past 600, 600 applications and I’m told that these appathons most people apply in the last 48 hours. We could well be close to 1,000 applicants across the country from coast to coast to coast who are participating in this appathon.
It’s been just fantastic, a great part of my job is to go around and I was trying to sell the appathon. I was going to the computer science departments and mathematics departments of our universities and colleges across the country. I used to go to the poli sci department but this is new ground for me to talk to these coders about our appathon. I’m very, very excited about it. I wanted you to be excited about it too because I think it shows the opportunities for economic growth and innovation in our country.
It’s something that can be spurred on by a simple thing that is actually run like open data. It’s out there. It’s revolutionary. You’re going to hear more about it. You can maybe say I heard it here first. This Clement guy was babbling on about open data but you’ll be hearing more about open data and big data as prime movers of economic growth in our country in the future.
I do want to talk about strengthening expenditure management a little bit too because I think it’s important that we be effective and efficient with tax dollars. Canadians want to get more value for their tax dollars. We understand that and I’ve got a little bit of reporting to give to you. Obviously spending on government programs is always a big issue but it is projected to decline steadily over the next few years and to fall below pre-recession levels. All of that big bump up that we had to get over the recession, to prime the pump as it were, we’re one of the first jurisdictions to actually project to get down below pre-recession levels again.
Direct program spending has fallen for three consecutive years. That’s the first time that has happened in decades and in 2012-13 was more than $5 billion lower than in 2009-10. That’s a record we’re proud of. It speaks for itself. As part of the three year operating budget freeze we put in place in 2010 we also led by example. We froze the salaries of the Prime Minister and the Cabinet Ministers, members of Parliament and Senators, sorry gentlemen.
We also put a ceiling on the overall budgets of Ministers’ offices. That freeze on operating spending was reintroduced for another two years in last October’s Speech from the Throne. This will encourage quite frankly our departments and agencies to continue to find new ways of doing business and being more efficient with their existing resources. We also put a cap on travel and hospitality costs within the public service and strengthened the rules around these activities.
Again there were a few complaints but it’s the right thing to do. What’s more, two years ago we launched a major review of departmental spending which is still ongoing. It was a big job that required all departments and agencies to examine and report to me and my committee on every function and activity within their organizations. We wanted to ensure relevance, effectiveness and value for money.
That review helped us refocus what the government does by reducing programs and functions that can be delivered in other ways quite frankly or in some cases eliminating them altogether. It also helped us to take significant steps to modernize and streamline the government’s back office particularly in new technologies. Already this heavy lifting was well worth it with this review exercise. Parts of it are still ongoing but so far we have found over $5.2 billion in annual ongoing savings which includes a reduction in federal employment of about 19,200 individuals.
These spending reductions are contributing to a more productive, efficient and responsive government and I believe it has helped us get to the target on the balanced budget course over the next few months. I’m also proud to say that we’re the first government to tackle the issue of MP’s pensions. For the first time Members of Parliament will pay 50% of the cost of their pension plans and at the same time their retirement age will jump from the current 55 to 65 years of age.
Once fully implemented the contributions of MPs will nearly quadruple from $11,060 per year to $38,796 per year. We’ve also made of course changes to public sector pensions as well for public sector employees. We moved to have public servants pay for half the cost of their pensions by 2017 and increased the retirement age for new hires from 60 to 65 as well.
Together all of these measures will save $2.6 billion over five years between now and the end of 2017-2018. We’ll achieve annual ongoing savings of about $900 million. I’m also as you may know proposing to move to equal cost sharing for the voluntary supplemental healthcare coverage of retired public servants. As you know budget 2014 announced the government’s intention to pursue changes to the voluntary supplemental public service healthcare plan to ensure comparability with supplemental healthcare plans offered by large employers in other public and private sectors.
The changes proposed by the government will ensure that the plan is affordable and sustainable for public servants and retirees and of course for taxpayers. I think we have some folks from the National Association of Federal Retirees here with us today. I’m glad you’re here. Can you put up your hands? Welcome. I’ll just go through the process a little bit because this is still in negotiation.
The forum for negotiations regarding this voluntary supplemental public service healthcare plan is something called the Partners Committee of the National Joint Council. The Association that is represented here is a participant in the Partners Committee and those discussions I should signal remain very important as we work to shape the future of the plan. I want to state publicly that I look forward to continuing our work with the Association regarding the plan in a proper setting which of course is the Partners Committee.
I’m still hopeful that we can get a mutually agreeable resolution on some of the issues. I understand that the Partners Committee will be meeting again in the coming days. I look forward to their deliberations. This of course I’ve already stated publicly that we want to make sure that if this is a burden on some retirees who have a very low fixed income, there are measures that we can do to contain a provision to protect low income individuals and I believe that we look at the balancing act that we always have to do as employers but also those who are there to protect taxpayer dollars.
We can find a way to get to both a fiscally responsible but also fair provisioning for both current and past government employees. I’ve also announced the intention to introduce short and long term disability plans that will help public servants get healthier quicker and back to work sooner. I’ve got to tell you. Our current plan is very outdated and it functions poorly.
For example, public servants would need to bank 13 weeks of sick days in order to take care of a serious short term health issue. Over 65% of government employees do not have enough banked sick days which is the current system to address short term illnesses, leaving them quite frankly without a safety net which is neither fair nor efficient for the taxpayer. For employees who have suffered from health issues or are suffering from mental health issues which is a growing portion of the issues that are the afflictions, having to wait until they have banked enough sick days is both unfair and unsustainable.
Our goal has got to be to ensure public servants have a healthcare benefits system that works for them while also protecting taxpayers who are footing the bill. We know there’s still more to do but we are leaving no stone unturned in our effort to reduce government spending. We are going to be putting in place new measures to improve government spending decisions and strengthen our ability to contain costs.
I have the support of the Prime Minister on these matters and it is part of our focus to continue to contain those costs and to keep the focus on job creation in the private economy while keeping taxes low. Sometimes good economic management requires tough decision. Frequently it requires tough decisions. It requires a focus on priorities and it requires sound judgment.
I just want to say because I’m not only a public servant but a politician. These things don’t just happen by themselves. Justin Trudeau is on the record as saying that budgets balance themselves. I’ve got to tell you, that isn’t the way it works. The way it works you’ve got to continually make the decisions. You’ve got to continue to have a focus because once you put your foot on the gas pedal all of the bad habits that inflict governments, they start to ramp up again.
Let me just tell you this. Budgets don’t balance themselves. We saw this weekend at the Liberal Party Convention I might add parenthetically and editorially that what you’re seeing is a shift in the Liberal Party paving the way with their American and other foreign advisors to having a policy that is basically ignoring the virtues of balanced budgets, going back to higher deficits again and of course the taxes that attend with higher deficits.
I think they’re 180 degrees in the wrong direction which is probably why I’m not a Liberal. I’m a Conservative. There will be a real choice to be made in the next election on fiscal issues, I can assure you of that. In closing let me leave you with this thought. I am an optimist about Canada and Canadians. Canadians can achieve great things. What matters clearly is our determination, our dedication and indeed our ability to go beyond and to tackle the challenges that face us.
That’s why we’re pulling out all the stops as a government to help everyone succeed. We are balancing the budget. We’re reducing the deficit. We are stimulating job creation and growth. We’re investing in innovation and opening up new markets for our products and services. We’re creating a high performing and productive public service.
That, ladies and gentlemen, is the way forward. It will ensure that our children and our grandchildren will enjoy all the benefits that we enjoy and more and that Canada remains a beacon to the world.
Thank you very much.