Yes. I think the only issue for Canada.... I agree with everything Professor Morck stated, but in terms of Canada, the issue of whether there's a structural deficit or not is something that we have to keep our eye on going forward.
It is true that Canada's finances.... In 1992-93, Canada had a horrible situation where our deficit in that one year alone was over $40 billion, almost entirely going to interest payments on the debt. What that means in real money is that in 1992 the Canadian government had to borrow $42 billion just to pay interest on the debt. So 25¢ of every dollar in tax revenue was going to finance the debt.
By 1997-98 we went into a balanced budget. We've had a balanced budget, and now that we've sort of had this global crisis and the Canadian deficit is up around $40 billion or $50 billion--I'm not sure what the last count was--I think the real issue we need to think about going forward is, once the economy does return to a normal path.... Whether the budget will be balanced or whether we'll have to make some structural changes to get us back to what we call a structural balanced budget, not a deficit, the jury is still out on that.
But I think what's very important, what's fundamentally important, is that this is an opportunity for Canada. Barack Obama said it best: “There's opportunity in every crisis.” Now is the time for Canada to look from a position of strength. We are admired globally for our fiscal responsibility and for the fact that the financial crisis essentially almost skipped Canada, had relatively little effect. We need to think about ways to make the Canadian economy more innovative and increase prosperity.
I just want to throw one number out. The prosperity gap between Canada and the U.S. is such that if we could close the prosperity gap between Canada and the U.S., raise Canadian incomes up to their U.S. levels, that would generate for the same tax rates--so leaving tax rates the same, closing the prosperity gap between Canada and the U.S.--so much additional tax revenue, it would wipe out the deficit. It would allow governments to have enough money to pursue a lot of the goals they want to pursue in a direct way, not indirectly by restricting foreign investment and so on.
Thank you.