Speech

From the Prime Minister's Web Site (http://www.pm.gc.ca/)

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PRIME MINISTER STEPHEN HARPER ANNOUNCES MAJOR REDUCTION IN FEDERAL DEBT WILL ENABLE TAX CUTS

September 27, 2007
Ottawa, Ontario

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Good day, ladies and gentlemen.

Thank you all for joining us here for today's important announcement.

I'm sure we've all heard the saying about the inevitability of death and taxes.

In Canada, for far too long, the same thing could be said about debt and taxes.

During the last half of the 20th century, successive federal governments borrowed hundreds of billions of dollars to finance often out-of-control spending.

By the 1990s, Canada had built up one of the highest debt-to-GDP ratios in the industrialized world, and because nearly 40 cents of every tax dollar were being used just to pay interest on the debt, Canadians were also saddled with a higher tax burden than any other non-European OECD country except New Zealand.

In retrospect, the recklessness of our policymakers in accumulating all that debt seems almost incomprehensible.

Canadians don't ever want to go back to those days.

They want our government to control spending and set aside money every year to pay down the national mortgage.

They want us to lift the load off our children and grandchildren.

Paying down the national debt will not be quick or easy, but there is a real, tangible reward – because less debt means savings in interest payments.

And under the tax back guarantee our government legislated in budget 2007, every time we reduce the debt, the interest savings will go back where it belongs – in the pockets of hardworking Canadian taxpayers.

Today, Jim Flaherty and I are pleased to release the final Annual Financial Report of the Government of Canada for 2006-2007.

Despite some of the economic challenges of which we are all aware, this report confirms Canada's economy has posted another very strong year.

With the economy finishing impressively at year-end, the government took in more tax revenue than expected.

And through prudent, focussed spending, the government also spent less than we budgeted – 700 million dollars lower than we had projected even in the March budget.

As a result of these and other developments, we reduced the national debt by over 14 billion dollars last year.

That will reduce our interest costs by nearly three-quarters of a billion dollars, and thanks to our tax back guarantee, those dollars will be returned to hardworking Canadian taxpayers in personal income tax cuts.

That's three-quarters of a billion dollars returned to taxpayers every year in perpetuity.

But, we need to be very clear about this: we cannot become complacent about the continued growth of our economy.

The recent volatility in financial markets needs careful management – some sectors of our economy, like Canada's forestry industry and central Canada's manufacturing sector, are facing tough times.

There is weakness in some of our export markets.

At the same time, strong growth in other areas is driving up the cost of living.

Houses are becoming more expensive – and very expensive for the budgets of some working families.

Ladies and gentlemen, it's important in these challenging times, to keep making the right decisions – sometimes difficult decisions – on economic issues.

We must have sound, long-term economic management to keep the Canadian economy competitive in the world marketplace.

We have to keep our spending prudent, keep reducing the debt and keep lowering taxes for individuals, businesses and families.

That's why we are moving forward with today's good news for taxpayers, which is even better news for the taxpayers of tomorrow, our children and our grandchildren.

Thank you.

And now I'd like to invite the Minister of Finance to share some more detail on the Annual Financial Report.

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The Prime Minister's Office - Communications
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