Mr. Speaker, Mr. Speaker of the Senate, Prime Minister, hon. members of the Senate and hon. members of the House of Commons, thank you for that incredibly warm welcome. As you said, Stephen, this does remind me of home. It is just a little bit bigger and a lot better behaved.
I thank you for the great honour you have bestowed upon me by inviting me to speak before this historic Parliament.
Perhaps I should have proceeded that with the warning Winston Churchill gave during one of his wartime broadcasts when he said:
“Be on your guard, because I am going to speak in French.”
Let me begin in this place by paying tribute to Jack Layton. I offer sincere condolences to Olivia and his family. His energy and his optimism were above politics, and I know he will be missed by all those who serve here.
One of the things I am finding about this job is that whichever country I visit, members of the royal family have got there first. I think the Duke and Duchess of Cambridge, or Will and Kate as you call them here, have set the bar pretty high this time, but it is a symbol of the importance of the relationship between our two countries and the long-standing affection that our people show toward one another that the young royal couple chose Canada as the destination for their first ever overseas visit and that the people here gave them such a warm reception. Sadly, I will not be landing a helicopter in a lake or wearing a stetson, and I am sure Prime Minister Harper will be disappointed that he will not be able to challenge me at rodeo either.
As the author Brian Lee Crowley has set out, there is a strong argument that the 21st century could well be the Canadian century.
In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis. Canada got to grips with its deficit and was running surpluses and paying down the debt before the recession, fixing the roof while the sun was still shining. Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.
The way in which you have integrated people from many different backgrounds into a mature democracy is, I believe, a model from which we can all learn, and Canada is now preparing for a better future. Alberta is the jurisdiction with the best educational results of any English-speaking jurisdiction in the world.
From BlackBerry to Canadarm, the robot arm used on 90 space shuttle missions, yours is a home of innovation and technology. In fact, BlackBerry presented Her Majesty the Queen with one of its smart phones when she visited last year, but, unsurprisingly, Her Majesty had one already.
Canada displays moral clarity and political leadership. Canadian servicemen and women have made extraordinary sacrifices in the defence of liberty and democracy, yet while some countries do a little and talk a lot, Canada is self-effacing and self-sacrificing in its contribution to the fight for a better world, so it is a privilege for me to come here today and to honour what you have done.
It is also a great pleasure to be standing here with my colleague and friend, Prime Minister Harper. I have seen at first hand over the last 16 months his outstanding leadership, not least at my first G8 and G20 summits in Muskoka and Toronto last year. Then, as now, the focus of much of our efforts was on the two issues that concern our people most: keeping them safe and getting them jobs.
This evening I want to focus my remarks on how we can work together to address some of the issues of the global economy, but let me first say something about security.
We have all suffered from Islamic extremism and violence. I have just come from the United Nations, where I argued that the events we have seen this year in North Africa and the Middle East offer a massive opportunity to spread peace, prosperity, democracy and, vitally, security, but only if we work together to seize the opportunity and to support the Arab people as they seek to fulfill aspirations for a job, a voice and a stake in their society.
Our two countries have always been prepared to bear the burden and pay the price to make our world safer and to defend our way of life.
The Peace Tower in this building commemorates the 67,000 Canadian lives lost in the First World War alone. Britain owes an incredible debt to the Canadian armed forces, and I want to pay tribute to them today.
Through two world wars, Canada was there. At Vimy Ridge, Passchendaele and Ypres, Canada was there. At the Somme, when our forces together suffered the worse losses in history, Canada was there. In fact, it was after the Somme that Lloyd George wrote:
The Canadians...played a part of such distinction that thenceforward they were marked out as storm troops....Whenever the Germans found the Canadian Corps coming into the line they prepared for the worst.
In our darkest hour in World War II, Canadian naval forces helped to keep the sea lanes open during the Battle of the Atlantic, running convoys across the Atlantic week after week, braving mines, submarines and blacked-out silent ships, all of which proved absolutely fundamental to our ability to survive as an independent country.
On Juno Beach, it was the 3rd Canadian Infantry Division and the Royal Canadian Navy that achieved such a remarkable triumph on the first day of those vital Normandy landings and which on D-Day got further inland than any of the five other invasion forces.
Today Canada is as vital and influential a military partner as it has ever been. As partners and founder members of NATO, our forces have been proud to serve alongside each other in international operations from Bosnia to Sierra Leone, and most recently from Afghanistan to Libya.
In Afghanistan, it is Canadian and British forces that have fought alongside each other in the south, in the very toughest part of the country, where few other nations would follow.
Today, Canadian personnel are engaged in vital work training the Afghan National Security Forces.
In Libya, it was a Canadian general, Charles Bouchard, who commanded the NATO operation, and brave Canadian pilots who played such a vital role in protecting civilians and helping the Libyan people to liberate themselves.
Amidst all this, I believe there could not be a more fitting tribute to the brilliance of Canadian forces and our pride at standing side by side with them than the recent renaming of the maritime command and air command as the Royal Canadian Navy and the Royal Canadian Air Force.
Prime Minister Harper and I will always ensure that Britain and Canada keep our defences strong, but we also understand the impact we can have to punch above our weight in the world to help achieve freedom, democracy and security. It is not just about military might alone, but about diplomacy, aid, culture, the promotion of our values. Britain is pleased to support the Muskoka initiative on maternal and child health launched under Prime Minister Harper's leadership at the G8 last year, and we are investing in programs to save the lives of 50,000 women in pregnancy and child birth and to stop a quarter of a million newborn babies dying needlessly.
Of course at a time when finances are tight, people question whether we should keep our aid commitments. I say yes. We need to be able to protect military power to protect our security and defend our values, but it is even better to mend the broken states and to act to stop problems before they come to our door, whether that is waves of illegal migration, the spread of diseases or new threats to our national security.
Take Afghanistan: If we had put a fraction of our current military spending on Afghanistan into helping Afghanistan develop 15 or 20 years ago, just think of what we might have been able to avoid over the last decade.
Or take Pakistan: Let another generation of Pakistani children enter life without a proper education or the prospects of a job and a head full of extremist propaganda and what are the risk in terms of mass migration, radicalization and even terrorism?
Britain and Canada have never turned away from the world, so it is right that we have met our aid commitments and I hope you will continue to join me in working with our international development partners, not just for the good of the developing world but for the safety and the security of us all.
Just as Britain and Canada have worked together for the world's security, so we must now work together on the biggest challenge this year: securing strong and sustainable growth in the global economy.
It is important that we are clear about the facts. We are not quite staring down the barrel, but the pattern is clear. The recovery out of the recession for the advanced economies will be difficult. Growth in Europe has stalled. Growth in America has stalled.
The effects of the Japanese earthquake, high oil and food prices have created a drag on growth, but fundamentally we are still suffering from the aftershocks of the world financial bust and economic collapse in 2008. That means families in Britain and Canada are facing a tough time.
I believe that Prime Minister Harper and I share the same analysis of what is wrong and what needs to be put right.
The world is recovering from a once in 70 years financial crisis and is suffering from debts not seen in decades. This is not a traditional cyclical recession, it is a debt crisis. When the fundamental problem is the level of debt and the fear of those levels, then the usual economic prescriptions cannot be applied. It is not simply a question of using conventional fiscal and monetary levers to stimulate growth until confidence and normal economic activity returns.
When households have borrowed too much, when banks are shrinking their balance sheets and rebuilding their capital and when governments are accumulating huge stocks of debt, the power of those traditional levers is limited.
The economic situation is much more dangerous and the solution for most countries cannot be simply to borrow more. Why? Because if the government does not have the room to borrow more in order to cut taxes or increase spending, people and markets start worrying about whether a government can actually pay back its debt. When this happens, confidence ebbs away and interest rates will rise, hitting people with mortgages and hitting companies that want to borrow to invest. We can see this happening right now in some European countries.
Of course there is a crucial role for monetary policy to help support economies in the short term and of course those that have room can use fiscal levers to do the same. Yes, demand matters but boosting it by undermining financial stability is self-defeating and damages the confidence on which economic growth depends.
A long-term solution must tackle the fundamental problem. We must address the problem of excessive debt. Let me say it again, it is a debt crisis.
Only when we properly recognize this can we begin to address banks which are too weak to pass on lower interest rates to businesses and households and consumers and businesses whose fear of debt mean then they do not want to borrow to spend.
Recovering from a debt crisis is both different and more difficult than recovering from a cyclical recession.
Ultimately, there are only three ways to deal with the overhang of debt: rescheduling them, writing them off or paying them back. Highly indebted households and governments cannot simply spend their way out of a debt crisis.
The more they spend, the more the debts will rise and the more the fundamental problem will grow. Instead, we need to confront the problems directly. I believe we need to do three things: get to grips with the debt and restore credibility and confidence; make it easier to do business and create jobs by freeing up our economies; and, in a global crisis, working together across the world coordinating our action, including boosting world trade, starting with the Doha round.
Let me briefly take each in turn.
First and foremost, we need to deal directly with our debts. In Britain, we have learned from Canada's own experience when you were able to take action to pay down debt. When our government took office in Britain in May 2010, we inherited the biggest budget deficit in our peacetime history. We faced the risk of rising interest rates, falling confidence and even questions about our credit worthiness as a country.
So we have taken some really tough decisions to rescue our public finances and we have begun to implement them. How fast we need to go will depend on circumstances. With a deficit that was forecast to be the highest in the G20 and ballooning debt, the U.K. has had to act quickly.
Britain's experience contained an invaluable lesson: it is possible to earn credibility and get ahead of the markets through decisive action. But, by its nature, a global crisis cannot be solved by countries acting alone. In a global economy, we need every country in the world to show leadership to address its problems. With others, we continue to argue that we need to increase global demand by rebalancing where surplus countries spend more helping deficit countries to increase their exports and grow faster. Of course this is vital and it will help the deficit countries to grow and to repay debt, but more spending by surplus countries will not on its own deal with the debts.
That brings me to the eurozone. I was an advisor in the treasury at a time when our currencies were fixed through the exchange rate mechanism in Europe. It failed, and it taught me that different countries sometimes need very different economic policies. So I do not support Britain joining the euro and I never will. However, Britain has a strong interest in the success of the eurozone, as we all do, because the problems in the eurozone are now so big that they have begun to threaten the stability of the world economy. Why? It is because the euro area is one of the largest markets in world and the euro is the second largest currency. While these problems are not being solved, while they grow, businesses do not invest and confidence is sapped in the euro area itself and increasingly worldwide.
Eurozone countries must act swiftly to resolve the crisis. They must implement what they have agreed. They must demonstrate they have the political will to do what is necessary to ensure the stability of the system. One way or another, they have to find a fundamental and lasting solution to the heart of the problem: the high level of indebtedness in many euro countries. And, whatever course they take, Europe's banks need to be made strong enough so they can help support the recovery, not put it at risk.
At the same time, we cannot put off the fundamental problem of the lack of competitiveness in many euro area countries. Endlessly putting off what needs to be done does not help. In fact, it makes the problem worse and it lengthens the shudder of uncertainty that looms over the world economy.
When we cannot cut taxes or increase spending to boost demand and when interest rates are already low, what is left to government is to take those simple, straightforward steps to boost the potential for growth. And we should remember that in the long term it is not fiscal policy that makes economies grow. It is making us more productive that is essential for our future long-term prosperity. That means making it easier to set up a new company, to employ people, to invest and to grow a business. This may sound simple but that does not mean it is easy to do. You quickly find you come up against all sorts of barriers, obstacles and regulations.
In Britain we are determined to address this. We are creating the most competitive corporate tax regime in the G20, cutting the time it takes to set up a business and reducing tax costs and regulatory burdens for new businesses. We are putting up every regulation on the Internet so people can clearly see what they are and which ones we can get rid of. We have issued a one-in one-out rule for regulation so that any minister who wants to bring in a new regulation has to get rid of an existing one first.
We are prioritizing science and infrastructure, reforming our education system and introducing new apprenticeships to help improve the skills of our young people. I am delighted that we are following in the footsteps of Prime Minister Harper in hosting the new WorldSkills summit in London next month, which will see 1,000 young people from over 50 countries competing to be the best of the best in 46 different skills, from robotics to web design.
I have argued that we need to get to grips with the overhang of debt in our national economies, that we need to make them more competitive, and also, that a global crisis cannot be solved by countries acting alone.
There are those who argue that international action requires new global institutions. I do not agree. It is not new institutions, it is political will we need and opportunities like the G20 to develop a consensus. We can have all the meetings, subcommittees and processes in the world, but if there is no political will, we will never tackle these problems and secure the strong, sustainable, balanced growth we need. That is why the political will of leaders at the G20 summit this November is so important.
Nothing sums this up better than the failure to get a global trade deal. I believe we have to re-fight the argument for free trade all over again. For me, there is nowhere better to do it than right here in Canada, a country built on trade.
The truth is, trade is the biggest wealth creator we have ever known and it is the biggest stimulus we could give our economies right now. A completed trade round could add $170 billion to the world economy, and yet, too many people still seem to believe that trade is a sort of zero-sum game. They talk about it quite literally as if one country's success is another country's failure. They think if our exports grow, then someone else's have to shrink; that somehow if we import low-cost goods from China, we are failing; as if all the benefits of China's exports go to China alone, when we actually benefit too, from choice, from competition, from low prices in our shops. The whole point about trade is that we are baking a bigger cake and everyone can benefit from it.
I come here to Canada to stand up for free trade, to promote more trade and more investment between our two countries, and with other countries around the world.
At the G20 in Cannes, we need to agree to a credible plan to take to the WTO ministerial in December as a basis for concluding the Doha development round. If we cannot get a deal involving everyone, then we need to look at other ways in which to drive forward with the trade liberalization that our world needs, ensuring the continued work of the WTO, preventing any collapse back into protectionism which would be disastrous, but going forward, perhaps with a coalition of the willing, where countries like Britain and Canada who want to can forge ahead with more ambitious deals and others can join later if they choose. Let us set an example to the world by concluding early next year the comprehensive economic and trade agreement between Europe and Canada which will deliver a huge boost in jobs for those on both sides.
Let me conclude by saying this. The relationship between Britain and Canada is deep and strong. At the Chateau Laurier Hotel in 1954, with the Second World War still in mind, Winston Churchill put it like this:
We have surmounted all the perils and endured all the agonies of the past. We shall provide against and thus prevail over the dangers and problems of the future, withhold no sacrifice, grudge no toil, seek no sordid gain, fear no foe.
Let us in this new century look to the future, secure in our joint values and seeking new opportunities. We are two nations but under one Queen and united by one set of values. So let us fear no foe as we work together for a safer and better world.
Thank you.
[Applause]
