The Canadian Economy: Successes and Challenges

Let's start by taking a close and hard look at the liberal economic record.

John Chretien was first elected Prime Minister and Paul Martin was first appointed Finance Minister in 1993. From where we sit today, it is sometimes easy to forget the fiscal mess that they inherited. But let me take a moment to remind you. The federal deficit that the Liberals inherited from the Conservatives was running at about $42 billion annually. The accumulated total federal debt was over $500 billion, giving Canada the ignoble distinction of having a higher total debt-to-GDP ratio than any other G7 country except Italy. At the time, almost 33 per cent of every federal tax dollar was going to service the interest payments on the debt. The possibility of tax reductions, much less new programme spending, was simply not on. From a fiscal perspective, Canada had already mortgaged the farm and everything else including the kitchen sink just to pay its bills. To make matters worse, unemployment was 11.4 per cent, with over 1.6 million Canadians out of work.

And this tough situation was reflected in how global economic markets viewed us at the time. In 1993, Canada was suffering from real long-term interest rates (the differential between absolute interest rates and inflation) of about 5 per cent, almost 2.5 per cent higher than those of our neighbour to the south. The Wall Street Journal, as you will no doubt recall, had begun describing Canada as being ""on its way to third-world status.""

How then should we measure the economic policy that the Liberals have pursued since 1993? What sort of report card should we issue? Objectivity and fairness demand that we apply the same tests that we have always used to measure the economic performance of our governments.

Since 1993, the Canadian unemployment rate has fallen from 11.4 per cent to 6.9 per cent, with the number of unemployed falling by more than 500,000. The economy has created a total of over 2,000,000 net new jobs since 1993, resulting in an increase in total employment since 1993 of 16.5 per cent.

Since 1993, the federal deficit of $42 billion annually has been converted into a projected surplus of more than $12 billion annually for the fiscal year 2000/2001 or a total improvement in the nation's annual bottom line of about $54 billion annually. These resources can now be allocated to tax reduction, debt reduction and critical new programme spending.

Since 1993, the Canadian economy has grown by almost 30 per cent. Over the period, our rate of GDP growth has exceeded that of every other G7 country except the United States. We were a very close second. Note too that this expansion has been achieved against a backdrop where Canadian government spending has represented a steadily shrinking proportion of our total economy. As a percentage of GDP, federal government spending in Canada has fallen from 21.8 per cent in

1993/94 to 15.6 per cent in the current fiscal year. Programme spending was 16.6 per cent of GDP in 1993-94 and is 11.7 per cent of GDP this year.

And we have achieved this level of growth without spurring another round of growth-eroding high inflation. Inflation has been well within the target band of 1 per cent to 3 per cent annually.

Total public debt in Canada has also fallen from 70.1 per cent of GDP in 1993/94 to less than 54 per cent of GDP over the same period. We should be able to achieve a debt to-GDP ratio of less than 50 per cent within the next two years just by balancing the books.

Our international balance of payments has improved dramatically too. Thanks to our booming performance as a trading nation, our annualised merchandise trade surplus has risen from $14 billion in 1993 to almost $50 billion. Over the same period, we have moved from a current account deficit of $24 billion in 1993 to a surplus of about $14 billion. The improvement in the situation of our international accounts is almost as remarkable as our fiscal reversal.

All of this enables us to respond to The Wall Street Journal today with a clear answer: ""Some third-world country!""

By any measure, the economic report card for this government can only be fairly described as excellent. I would ask you to judge it for yourself.

But, you might say, what about the Canadian dollar, which now stands at around 65 U.S. cents? You may be surprised to hear that the Canadian dollar is now the second-strongest currency in the world. Year to date we have lost 6 per cent against the U.S. dollar, but the Japanese yen has lost 7 per cent, the Swiss franc and the pound have lost 10 per cent, the euro has lost 14 per cent, and Australia and New Zealand have lost respectively 20 per cent and 23 per cent. To any objective observer, the story is overwhelmingly one of U.S.-dollar strength rather than Canadian dollar weakness.

As we enter the 21st century, Canada has finally got its fundamentals right. We have put in place the over-arching framework that, with proper continuing stewardship, will permit us not only to meet the challenges of an increasingly competitive and globalised marketplace but also to resume our agenda of building a more civilised and compassionate society.

This state of affairs has not been accomplished without pain. In addressing first things first, the Government of Canada has had to ask Canadians to bear a higher interim tax burden and reduced support for our social safety net. You cannot bring a nation back from the brink of bankruptcy without tough restructuring medicine. Canadians have understood that and supported that by electing and re-electing a fiscally responsible government.

I hope you can now understand why Stockwell Day is reaching back 20 years to attack the Liberal economic record. The fact is that the record that Canadians have to scrutinise in this election is the record over the past seven years. From any objective or fair-minded perspective, the performance simply does not support the case that Mr. Day has to make. The so-called `Agenda of Respect' clearly does not respect the facts of the economic record.

I have watched Canadian finance ministers closely for more than 20 years. I have no hesitation in saying that Paul Martin has surely to be regarded as the best finance minister this country has seen over that period. He took the tough decisions, rallied the consensus required to support them, and accomplished in seven short years what has to be regarded as nothing less than a full-blown fiscal revolution-a revolution that has recovered the economic integrity of the nation.

But he also accomplished that revolution because he had the unflagging support of his boss. There is a long list of former Canadian finance ministers who have had the intelligence, integrity and determination to set this country on a sound financial footing. What they lacked was a prime minister who would back them. I credit the Chretien-Martin team immensely for doing what was right for Canada, whether or not it was universally popular.

And I extend that credit to the choices they have made in recent weeks in the allocation of our fiscal surplus, where the focus has been balanced: significant but fair tax cuts for employees, corporations and investors to drive our competitiveness, meaningful debt reduction to strengthen our fiscal capacity, shoring up our health-care system with a much-expanded long-term funding commitment and, lastly, educating our work force for the challenges of the new economy.

Against this background of remarkable economic success, I believe there are now two principal challenges that confront Canadians in their pursuit of an even brighter economic future. The first challenge is one of profound change in the very structure of our economy--the so-called `new economy.'

The second challenge is a threat to the very core of our national ethics and our national vision-a threat to the very existence of the Canada that we and our ancestors have built up over the years. I refer, of course, to the Canadian Alliance.

In my view, everything we have accomplished over the past seven years can be quickly forfeited if we respond inappropriately to these challenges.

The first `challenge' to our continued economic success is the very item which the Prime Minister and Mr. Martin have now moved to the forefront of our political agenda-exploiting the opportunities of the new economy for the benefit of Canada and Canadians.

It is clear the new economy will be the principal driver of Canadian productivity, competitiveness and growth over the next several years. If we are to meet the challenge in this area, then it is equally clear that we need policies in Canada that will stimulate the sort of investment and human resources development that will provide the underlying infrastructure for entrepreneur-led growth.

For the new economy, the mini-budget and the Liberal platform were right on the money: reduced capital gains and corporate income taxes to encourage capital formation, plus income tax reductions and the elimination of the income tax surtax to encourage our best and brightest to stay in Canada; new money for basic research and a set of targeted policies geared to promoting computer literacy; training and private-sector investment in research and development. With these policies in place there is no reason why Canada cannot capture a disproportionate share of the global explosion in e-commerce and e-business generally.

And these framework or infrastructure policies for the new economy have to be supplemented by specific incentives to stimulate specific investments by our business community. Creative and innovative Canadian entrepreneurs ought not to be compromised in creating wealth because our capital markets happen to be smaller and less mature than those which have fuelled the technological explosion in Silicon Valley and Silicon Alley to the south.

It is easy for Mr. Day to say that he is going to stop so-called ""handouts"" to business. But it is also incredibly naive. If it had not been for the assistance from the federal government's technology partnerships programme, IBM would probably not have been persuaded to locate its global lab facilities in Markham rather than in Ireland. Would the Canadian Alliance have kissed goodbye to the hundreds of highly skilled, highly paid jobs and hundreds of millions of spin-off benefits that the IBM investment will bring to Canada and, more specifically, to the riding I hope to represent? Are they so removed from the competitive realities that drive global investment decisions that they would deprive Canadian communities of at least an approximately level playing field? You cannot compete in the global battle for leadership in innovation with baseball caps and brochures. We will need the muscle of all levels of government working together to secure our place in the new economy.

Mr. Day can talk about the brain drain all he likes. All I can say is that something must be draining from his brain if he thinks that investing in small but successful Canadian entrepreneurs and working to attract investment from the global technology gorillas is anti-business. Liberal policy in this area is not about picking winners from losers as the instrument of some corollary social policy. It is about backing and attracting companies, both large and small, which have already proved that their products and services are winners in the marketplace.

And the Liberal approach is not geared to specific companies or regions. There are a series of new initiatives that will benefit Canadian business broadly--policies of general application that our new economy entrepreneurs will be able to take advantage of. I am thinking of the capital gains rollovers for investments in small businesses with up to $50 million in assets, the reduction of capital gains inclusion rate to 50 per cent and the more favourable treatment of stock options. These are concrete measures that will make a vital difference in encouraging investment in new and growing businesses across Canada.

Ladies and gentlemen, the Canadian Alliance does not understand what it is going to take for Canada to win in the new economy. Mr. Day's free market ideological dogma on issues like strategic support for our high tech poses a huge challenge to communities all across Canada, like Markham, where the attitude is one of winning not whining.

Now let me turn to the broader threat posed by the Canadian Alliance. As an economist, what worries me most, and what I want to demonstrate clearly today, is the absolute lack of any semblance of responsibility in Mr. Day's fiscal plan.

I start here because, even if one is an ideological soul mate of Steve Forbes and Stockwell Day, one has to be concerned about an economic agenda that would quickly sacrifice all of the fiscal progress we have made. My objective is to demonstrate that the programme of the Canadian Alliance will either throw this country's books back into the realm of red ink from which we have been so recently rescued or force us to endure so much pain as a nation that the Liberal spending constraints on our social infrastructure over the past seven years will look like child's play.

The devil is in the details but, in broad outline, the story is quite simple. I begin with the projected fiscal surpluses as estimated by a panel of private-sector economists. These surpluses represent the funds available after implementation of the measures in the 2000 Budget as well as the expenditures related to both the recent health-care accord and the unemployment insurance initiative. They do not take into account the tax reduction measures announced in the October mini-budget or the spending commitments detailed in the Liberal platform document.

What the forecasts show is that the planning surplus for 2004-2005, when the tax reduction measures announced in the mini-budget and the spending plans outlined in the Liberal platform will have been fully implemented, is estimated at $7.0 billion. In the succeeding fiscal year (2005-2006), the planning surplus grows to $10.7 billion. The total of the planning surplus over the next four years is $40.7 billion.

Now, let's compare the cost of the measures in the mini-budget and the Liberal platform with the cost of Mr. Day's proposals.

Over the next four years, the tax reduction measures announced in the mini budget will cost $31.9 billion. The total cost of new tax relief and spending measures proposed by the Liberals in the mini-budget and the platform document over the next four years is $39.1 billion. That means that what the Liberals have promised is totally deliverable within the $40.7 billion forecast fiscal capacity of the government without having to eat into the reserves for contingency or economic prudence. Under the Liberals, the remaining forecast planning surplus would be $1.6 billion.

Let's take a detailed look at the annualised cost of the Alliance platform. Here is a summary:

According to the Department of Finance, the fully implemented cost of the Alliance proposals in 2004-2005 is $28.9 billion. But we are not quite done yet. The Alliance has also committed itself to legislated debt reduction of no less than $6 billion annually for a total cost to its programme of $34.9 billion annually. Since the Liberals are targeting to reduce the debt by at least $3 billion, this represents an incremental cost to the treasury under the Alliance of $3 billion. So the total incremental cost of the Alliance programme when fully implemented will be almost $32 billion annually. In round numbers, these spending commitments are more than four times the available planning surplus in 2004-2005 and more than three times the planning surplus in 2005-2006. Looked at another way, the cost of the Alliance platform commitments in one year is roughly equal to the cost of the measures announced in our mini-budget over four years. What a remarkable but telling coincidence.

Put simply, my friends, Mr. Day faces a fiscal shortfall of almost $25 billion in 2004/2005. No matter how you look at it, the Alliance platform threatens a whopping big deficit for Canada.

The only way that Mr. Day can get out of this hole and restore any semblance of fiscal balance to the equation is truly massive cuts in the expenditures of the federal government-cuts of a magnitude, I note, that he has not yet dared to talk about in this election.

We learned yesterday that the Alliance intends to release an explanation of the funding of the costs for its platform next Sunday. Is it not convenient that its explanation will not appear until after the leaders' debate?

In eager anticipation of its explanation, let me walk you through the numbers as I, and many other economists who are not politically affiliated, see them.

We start with the required cuts of $25.0 billion annually by 2004-2005. Where will the required cuts come from? The Alliance election platform document identifies certain categories of federal expenditure as ""wasteful spending areas."" The list of wasteful areas is incomplete, but it includes such items as Heritage (including the CBC), foreign aid, Public Works and the entire

Department of Indian Affairs and Northern Development. This is where the Alliance proposes to target its spending cutbacks. Well do you know what? It won't work.

The projected total cost of all the so-called ""wasteful spending areas"" in 2004-5 is around $17.4 billion. In fact, the Alliance has stated that the projected cuts from these ""wasteful spending areas"" will actually be $7.0 billion--a very large cut of some 40 per cent, the implications of which I hasten to add they have not come even close to explaining to Canadians. But even after that, they would still be about $18 billion in the red for 2004/2005.

Even if they reduced spending in these ""wasteful areas"" to zero, a feat which would be totally impossible given such considerations as the constitutional responsibility to maintain health care on Indian reserves, they would still have a shortfall of almost $8 billion.

With shortfalls of this magnitude, one can only conclude that the Alliance would have to cut deeply into core federal programmes, renege on their tax commitments, put the federal government back into deficit, or some combination of the three.

Mr. Day has sworn to protect programmes for the elderly, transfers to provinces for higher education and health care, statutory equalisation payments, defence and, more recently, unemployment insurance. Ladies and gentlemen, the Canadian Alliance simply cannot find $25 billion in savings from that portion of federal spending that Mr. Day has left ""unprotected.""

Either the tax- and debt-reduction policies that the Alliance has trumpeted as the cornerstones of its fiscal policy are totally empty promises or Canadians are in for the biggest bait and switch manoeuvre of our political history. Bait them with promises of tax cuts and switch them back to the harsh reality later. Either way, the fiscal programme of Mr. Day is totally lacking in credibility. Does he reject the private-sector economists' forecast? We do not know. Does he quarrel with the estimates of the

Department of Finance? We do not know. Do his plans make appropriate reserves for contingency and economic prudence? We do not know. What we do know is that he is not telling us until Sunday after the debate.

What we also know is that Mr. Day apparently intends to justify his plan by using fiscal 2005/2006 as the comparison year, even though it will be the year following what would be the next government's usual mandate. I have no problem with that and I am even prepared to concede that under the forecast he will have another $3.7 billion to play with in that year. But if that is his strategy, I hope he also remembers that he has already promised Canadians that he will introduce further tax cuts for the wealthy in year five-the full-blown flat tax that will cost the federal treasury another $4.8 billion. All together that makes the hole he has to fill another billion or so larger in 2005/2006.

To paraphrase another politician speaking in a different context, I would like to say this about the economic platform of the Canadian Alliance: ""It's about the numbers, stupid."" And Mr. Day's numbers simply do not add up.

I would now like to ask you to feast your eyes on one last chart. It shows federal government spending relative to the total size of the economy, commencing in 1947-48 and projected forward to 2005/2006 according to the private-sector economists. This chart will no doubt stun those of you who may have been poisoned by the propaganda of the right wing press. The size of the federal government today, as a proportion of the total economy, is less today than it has been at any time since 1949-50. Not only that, but the shrinkage from the most recent peak has all occurred since the Liberals took power again in 1993. Not only that, but the private-sector economists project continuing modest shrinkage over the next five years.

Yes, the Liberals are proposing strategic investments in key economic areas like basic research and key social areas like homelessness. I make no apology for that whatsoever. More importantly, the broad picture shows a relative size of government smaller than at any time in the lifetime of most of the people in this room including myself and it is not getting any bigger.

These facts are not celebrated by all Canadians, certainly not by all Liberals. But they are the facts nevertheless. The show how the current government got us out of the fiscal crisis it inherited from the Mulroney Tories. They also put the lie to the Alliance charge that the Liberals are guilty of profligate and wasteful stewardship of our national treasury.

Have the Liberals made mistakes? Sure they have. The HRDC mismanagement is the most obvious example and this is in the process of being rectified. The Prime Minister has admitted these mistakes and there are, no doubt, other areas where the record is less than perfect. But if you focus on the big picture, the conclusion that the Liberals can claim a stellar economic record is, I believe, compelling.

Why should you believe me on these numbers? Am I not tainted because I am running for the Liberals? A legitimate question. Let me give you three answers.

First, whether I am running for office or not, I value my reputation as an economist. The numbers I have given you are fully documented in the handout. I am staking my credibility on the numbers at least being in the right ballpark.

Second, the other day I was honoured and delighted to be the target of a custom-made attack from the Canadian Alliance which, of course, was out to destroy my credibility. My first critic, Mark Mullins, is truly in a class of his own. He has been assigned to do a job for Mr. Day. I respect that. Indeed, I empathise with Mark. Being the official spokesman for nonsense must be a truly lonely job.

The other two quotes came from respected bank economists, Warren Jestin and Rick Egelton. Both said essentially the same thing: that the Alliance programme is aggressive but doable. Well, of course it's doable if you are prepared to cut spending by $25 billion annually. So I have no disagreement with either Warren or Rick, for both of whom I have the highest respect as economists.

Finally, I would ask you to consider a list of reputable, non-aligned economists who agree that my numbers are at least in the right ballpark. Listen to what they have to say about the Alliance programme:

1. Norman Cameron, Professor of Economics, University of Manitoba:

""There is nothing wrong with the calculations [John McCallum has] done that I can see, except to assume the [Alliance's] six billion [dollar] debt reduction is over and above any margin of prudence. Your results do not hinge on that assumption however. The total cost of the Alliance plan will indeed require either a stronger economy than forecast, or some other cuts in spending not yet identified, or delay some part of their plan.""

2. Pierre Fortin, Professor of Economics, Universite du Quebec Montreal:

""If the Alliance fiscal plan were to be implemented, Canadians would have to suffer from a new round of very severe federal spending cuts: a huge transfer of wealth would have to be made from the middle class to the rich and super-rich; and the [relative] economic power of the Canadian federal government would drop to 60 per cent of that of the U.S. federal government.""

3. Mike McCracken, President, Informetrica, Ottawa: ""The possible imbalance in the Alliance programme by 2004/2005 is in the range of a shortfall of $20.65 billion, which suggests large cutbacks in discretionary spending."" 4. Marc Van Audenrode, Professor of Economics, Universite Laval:

""I have read John McCallum's fiscal projections and find them to be conservative, but prudent.""

Each and every Canadian is impatient to reap the fruit of the new-found health of our public finances. However, I believe that health to be still fragile and particularly vulnerable to an economic slowdown. It is therefore very important to my mind that, to further strengthen our public finance, the Government of Canada commits to a reasonable, but steady rhythm of debt reduction and gives itself some leeway to respond to economic contingencies (as the current government has done).

Although as a private citizen I would very much love to benefit from the Alliance's proposed (incremental) tax cuts, I do not believe the Government of Canada could afford them without either endangering the objective of reducing the debt at a steady pace or resorting to additional large spending cuts.

On my second theme, ladies and gentlemen, I therefore conclude that the Canadian Alliance is guilty of gross fiscal irresponsibility. This is not a question of politics, whether you are left wing or right wing, or even far left or far right. Whatever one's political affiliation, one should respect basic arithmetic. One should be numerate.

The Alliance platform is fundamentally dishonest. It is promising tax cuts far beyond its ability to deliver. Or it is disguising the draconian spending cuts that would be needed to deliver on its agenda. Mr. Day's so-called ""Agenda of Respect"" does not respect the basic ability of Canadians to add and subtract. Once the facts are out, the Canadian Alliance's fiscal plan cannot be good for markets either. If there is one thing that markets abhor, it is gross fiscal irresponsibility.

In the first federal election of the new millennium, at a time when people demand transparency and honesty, it is the Canadian Alliance that is trying to hoodwink Canadians. It wants to fool them by promising more than four times what they have to give.

I would like to conclude my remarks with what I believe is an important message to Canada's business community from someone who has the privilege to be the Chief Economist for Canada's largest bank, albeit on leave.

It is true that the Canadian Alliance is offering youthe better off in our society-more tax breaks in this election. I understand why those of you who are called upon to bear so much of the fiscal burden of this country would find the promise of even greater tax reductions, moving ultimately to the capitalist nirvana of a flat tax, an attractive political promise.

But what is the price of the Alliance promise? There can only be two answers. Maybe our national accounts will be plunged into another horrendous series of deficits. Fiscal irresponsibility in the past was at the root of the serious problems that we have just dug ourselves out of, and fiscal irresponsibility going forward will just as surely be the cause of our national undoing in the years to come. Or, more likely, the Alliance plan is a Trojan horse for a much broader, darker agenda than Mr. Day has yet dared to disclose. I put it to you that the only way Mr. Day can pay for the tax cuts he has promised is to destroy the social fabric of this country.

Where will another $25 billion in required annual spending cuts come from? Mr. Day and the Canadian Alliance owe all of us an answer. In the absence of a proper answer, Canadians are right to fear the worst. Will the savings Mr. Day needs to avoid bankrupting this country again come from privatising significant components of our health-care system? Will they come from abandoning the poor, the unemployed, the disabled and the elderly? Will they come from turning our back on native peoples and the environment we inherited? Will they harm the most dispossessed in our society-the children of our poor? Will they steal away the hopes of our young people for a quality education that will fit them for the challenges of our new economy?

Ladies and gentlemen, there is a much meaner and very foreign idea of Canada buried in the Canadian Alliance platform than has yet been recognised by our media and political commentators. In order for the numbers to work, I am convinced that there has to be a hidden agenda so massive that the very idea of Canada as we know it is at stake in this election. The cold, hard numbers lay the truth of that agenda bare for all to see. For me, the Canada I know and love is no less under attack by the Alliance today than it was by the separatists in 1995. There can be no better reason for entering politics than to stand up against those who want to take what you know and love away from you.

I know that all of you favour fiscal responsibility over irresponsibility. More than that, from my years on Bay Street, I know that many of you share at least some of the core values that have defined this country since the last great war and long before that: the celebration of diversity, universally accessible health care and education, a social safety net that serves as a springboard rather than a quagmire, a philosophy of sharing between our richer regions and our poorer, a reasonably progressive tax system, a role for government in supporting basic research and excellence in our universities, investment in innovation and training throughout our economy and a pervading spirit of social liberalism. These are the values that have civilised Canada. And I know that many of you would happily trade a more modest tax break for a more civilised Canada.

But my plea is not just at the personal level. It is to the leadership of our corporate sector as well. I have always believed that there is an unwritten contract between business and governments in this country. Business would support Canadians' vision of a kinder, gentler society in the northern half of. North America, so long as government did its part in creating a positive environment for business: fiscal and monetary discipline; a competitive environment, and a government that was not too large and meddlesome.

There have been governments of all stripes in this country who have breached this basic understanding over the years. But this Liberal government, under this Prime Minister and Finance Minister, has honoured its side of the bargain in spades.

Our fiscal house is now in order. Our core inflation rate is low and stable. Programme spending as a proportion of the total economy is at a lower level than it has been in my lifetime. Capital gains and corporate income tax rates are about to be slashed to levels that compare favourably with the United States. Personal income taxes have been lowered across the board and the income tax surtax levied on the most fortunate in our society has been eliminated.

I therefore ask you to reject Mr. Day and the Canadian Alliance. Do not sell out the soul of this country just for a bigger tax cut. That bigger tax cut will return us to an era of big deficits or it clearly implies policies that will rip this country apart. It is nothing more than the siren call of a party for the greedy.

Whether or not the Liberal party needs the support of the Canadian business community is not the issue. In this election, the Liberal party deserves the support of the Canadian business community because it has united the country around policies that are good for business without being unfair to ordinary citizens. As voting day approaches, I would ask you to consider that proposition and its broader responsibilities very carefully. I ask you to show all Canadians that our business community has a vision marked by its compassion for the challenges of our society as a whole.

The other night I was canvassing in Markham on a street where almost everyone I met was a new Canadian.

More than half the population of my riding consists of people who have departed their homeland to build a new life here with us in Canada. At just about every doorstep, I got a broad smile and an agreement to put a sign on the lawn. Not because of me-most of them did not know me from Adam-but because I was a Liberal. These people know that the Liberal party is their party, the party of new Canadians and open immigration, the party that welcomes them to our shores, the party that not only tolerates diversity but also really celebrates it, the party that believes in giving opportunity to those struggling to make their lives better. You don't have to say anything to make the point. You don't have to refer to any other party. Instinctively, everyone just knows what it is all about. I felt proud when we got 60 lawn sign requests in just over two hours, prouder still a couple of days later when I saw the street awash in Liberal red. At that moment, ladies and gentlemen, I knew that I would always be a Liberal.

And the Alliance? Will they really be able to meet their health-care promises when the rest of their programme puts them $25 billion in the hole? I doubt it. Will they really be able to preserve the principles of Medicare when they promise never again to withhold funds from the provinces? Absolutely not. And when they eliminate cash payments to the provinces entirely and replace these with a transfer of tax points, they will have given up the only tool we have to enforce national standards in health. Forever, my friends, I am with the Liberals.

And the Alliance? They have said they will finance their tax cuts for the better off by hurting society's weaker members-the homeless, aboriginal Canadians, aid to the poorest countries in our world, Atlantic Canadians. Is this our idea of social justice? Never, my friends. I am with the Liberals.

And the Alliance? They have said they will deal with the tough moral questions in our society-abortion, capital punishment, civil rights-by way of what will surely be an endless series of inherently divisive referenda. The Alliance hides its truly ugly underbelly under the smokescreen of popular democracy. My friends, this is not what our democracy is all about. It is a policy of abdicating leadership to extremists on every question--a proved recipe for continuing social disharmony, never-ending conflicts. My friends, I am with the Liberals.

And my friends, I can be a Liberal and still fight for more tax cuts when our fiscal capacity and our broader national priorities can accommodate them. For now I am proud to stand for a party that has shown it can manage our economy soundly and deliver, not as an opposition party election promise but as government policy, the largest tax cut in Canadian history.

Ladies and gentlemen, this is a great country. Our future is bright. Our economy is strong. Productivity is on the way up. Real disposable incomes are on the rise. The new economy is ours to unleash. Our society has the humanity and civility to make Canada the envy of the world.

This wonderful plateau we stand on today and the fabulous vision it presents for all Canadians in a new millennium is not a place we happened upon by accident. But now we have to step forward from that plateau. Will it be onward and upward with steady moderation or will we veer to the extreme right and over the precipice? Will we forfeit all that we have built by design through a single tragic electoral mistake? Will we allow ourselves to stumble blindly into an accident that is waiting to happen simply because we have failed to call our opposition politicians to the same standard of accounting that we expect of our governments? I am confident that we will not.

And for those of you who question whether what we do in Canada even matters in the context of our brave, new `globalised' economy, I would like to quote from a recent lecture given by the dean of Canadian economists and my good friend, John Helliwell, who said: ""Globalisation, to the extent it exists, does not pose a threat to the viability and independence of smaller countries.""

The implication of that statement, with which I wholeheartedly agree, is that countries like Canada--and their governments--still have the ability to make choices. Choices that can make an important difference in their societies. And if our governments still have the ability to make choices on important matters, they are also still capable of making mistakes.

So I repeat: the Canada we know today did not happen by accident. When we are asked to exercise our most sacred right as citizens on November 27, let us all-especially those of us who have been privileged to be a part of the success of the Canadian business community--remember that.

The appreciation of the meeting was expressed by George L. Cooke, President and CEO, The Dominion of Canada General Insurance Company and Past President, The Empire Club of Canada.