Sure. Thank you.
Let me respond to a couple of points you made at the beginning about the adaptiveness. I'd just emphasize that a lot of companies have done a better job of adapting in terms of their output and their profitability, and part of that adaptation has involved layoffs. On the labour side, there are a lot more problems there than are on the company side.
Going forward, I'm really an optimist here, because one of the big benefits—David talked about this—of the lower Canadian dollar was allowing people and manufacturers in particular to buy machinery and equipment and pay for it with the higher, stronger Canadian dollar. I think we're at the early stages of seeing that machinery and equipment actually put in place, and of people knowing how to use it, and of seeing the productivity benefits. As you know, over the last six months we've had much higher productivity than in the previous year or so. So I think we're at the earlier stages of seeing the benefits of the higher Canadian dollar and of those purchases of machinery and equipment and productivity increases.
But your point on the U.S. economy is a troubling one. To a significant extent, in 2003 and 2004 our exporters were shielded from the effects of the higher Canadian dollar because the U.S. economy was booming. They lost on a relative price basis because of the exchange rate, but because the U.S. was so strong their exports weren't hurt so much. Now that shield is being removed, and we're forecasting the U.S. in 2007, 2008, and 2009 to have more like 3% growth, not the 4% they had before. But we're also not forecasting the Canadian dollar to move on average a long way away from 90¢ over the next couple of years either.
The budget adaptation.... Well, I talked about EI. In fact, I could give you a couple of things that may be well known to you. The unemployment rate in the eastern provinces has been higher than that in the western provinces every year, going back 20 years in every province. In the U.S., going back to 1995 and looking at the ten states with the highest levels of unemployment, there are only four of them in the top ten today.
The other thing not well known is this. Look at Saskatchewan. People don't understand. Saskatchewan's had a lower level of employment growth than every eastern province over the last decade—lower than every one—but they've had one of the lowest unemployment rates. Why? People get up and move when they're unemployed. So we have serious problems with people in the east staying in areas of unpromising labour markets. I'm saying that now in the west there's an unprecedented opportunity. Jobs are there.
The EI is a part of it. It's only a part of that point, but it's something in which we can do an adaptation and get to it.
The budget? I see the GST cut as $5 billion. It's an extremely expensive thing. It doesn't do much for productivity. I wouldn't say it has no productivity benefits, but it doesn't do much. If you were to take $5 billion and put it into corporate income tax cuts and investments or whatever, there would have been bigger productivity benefits. I think even Mr. Harper would agree with that. He didn't do the GST cut for productivity, but it came at a cost.