Canada Finance Chief Says Recovery Showing ‘Good Signs’
Canada’s top finance official visited New York Monday, delivering a triumphant message that flagged the relative health of his nation’s economy and public and private finances.
In his remarks, Canada Minister of Finance Jim Flaherty also emphasized what his nation considers prudent financial reform, arguing taxes on capital and on financial transactions are incorrect and would not be implemented in his country.
The official spoke at an event held by the Canadian Association of New York. His stance was notable for its confidence, when considered against the caution seen in the words of other world financial leaders, who are in many cases facing huge and hard to address government budget deficits, along with sluggish progression.
In his remarks, Flaherty said in Canada, “relatively speaking, we have sound monetary strength” and that this among other factors is a “competitive advantage” for the nation on the global economic stage. He said “we reckon the economic recovery is showing excellent signs, but it is still fragile,” and because of this “we are going to continue to run a deficit and stimulate the economy.”
But even with the still tender state of Canada’s economy the conservative finance minister said balanced budgets are “very close,” and will likely happen around 2014 or 2015, amid a steady reduction in government red ink.
Flaherty prominent the recent rise in energy and commodity prices had “made some pressures” on the Canadian dollar, but he added “that’s to be expected.”
The finance chief also said in Canada’s economy, “quite frankly, there’s no evidence of a bubble” in housing prices, and government actions have already been taken to counter any unnecessary speculative endeavor. Looking yet to be the official projected “excellent demand” for Canadian new home production.
The finance minister’s confidence in Canada’s economy extended southward. Flaherty called recent economic data out of the U.S. “encouraging” and flagged what he sees as a “restoration” of business confidence across North America.
In his remarks Flaherty reiterated his opposition to any forms of tax increases, and he argued that based on the relative resilience of Canada’s banking system over the course of the crisis, his nation’s way of watching over banks warrants global attention.
To that end, Flaherty argued in favor of limiting borrowing levels, or leverage, at financial institution. Regulation needs to make sure financial institutions bear the cost of their own failures, he argued.
Consistent with his opposition to higher taxes, Flaherty fretted about certain developments in the global conversation about reform.
“I reckon the thoughts that are being promoted by some in Europe, capital taxes and taxes on financial transactions, are mistaken, and Canada will not follow that course. I expect the United States will also not follow that course,” he said.
His opposition could seal the doom of the proposal in light of the fact that many financial leaders believe the arc of financial regulatory reform must be harmonized across borders. If one nation were to tax financial transactions, it’s likely investors will incline to markets free of the tax, thereby blunting the tax and harming only the government imposing it.
Flaherty said there had also been excellent demand for recent government bond offerings.