Speech to OSCE on Canada’s Response to the 2008 Global Economic Crisis
Thank you for this opportunity to speak about Canada's response to the 2008 financial crisis.
I am pleased to see the link between economic relations and the global geopolitical equilibrium in the report.
Certainly, all countries are part of the global economy, and our interconnectedness means that circumstances - economic or otherwise- in any one country can have great effects on many others. This is as true now as it was in 2008.
In response to the global financial crisis the leaders of the G20 held its inaugural meeting in 2008 and - with that meeting - the G20 became the premier forum for international economic cooperation.
Weak underwriting standards, unsound risk management of practices, increasingly complex financial products and excessive leveraging were identified as root causes but other underlying factors spoke to a lack of sufficient macroeconomic policy coordination and inadequate structural reforms.
As such, the proposed international solutions focused on developing a coordinated policy response to the crisis, and making reforms to strengthen financial markets and regulatory regimes so as to avoid the reoccurrence of such a crisis in the future.
The International Monetary Fund, the OECD and the World Economic Forum have all commented favourably about the strength of Canada's banking system, pointing to properly implemented rules as well as effective supervision and oversight by the Office of the Superintendent of Financial Institutions. This also was a key reason why the effects of the crisis in Canada were less pronounced than in many other Nations.
Of course, like a number of countries worldwide, Canada's federal government took decisive action during the crisis to stimulate its domestic economy in order to support economic growth.
Nearly 2% of our GDP was left in the hands of consumers in the form of tax cuts, an amount that by 2015 was equivalent to nearly $7000 for a family of four, money which they spent in their own communities for their needs. These and other tax measures had reduced our tax burden to where now, it is at its lowest rate in over 60 years. We have increased the median wage by 8.3%; lowered the poverty rate by 8.8%; we have taken hundreds of thousands of low income Canadians of the tax roll all together, and have created the wealthiest middle class in the world. As a matter of fact in 2014, the United Nations said our government’s policies had brought more than a hundred thousand children out of poverty!
In addition to these grass roots investments in communities the government also used targeted infrastructure stimulus funding, which included the provincial and municipal governments, to identify and ensure that public needs were also being addressed. A process that continues to this day.
These prompt and enduring fiscal and monetary policy actions, our determination to return our budgets to a surplus position, coupled with actions from our Central Bank -the Bank of Canada- regarding overnight interest rates meant that Canada was able to quickly gain a sound footing and was therefore put in a position to grow, to take advantage of trade and commerce opportunities and to proudly contribute to the wellbeing of our global partners.
I am interested in hearing how other countries were able to manage this global economic crisis.