ALEXANDER PANETTA (CP)
Paul Martin promised he would lead a tight-fisted government that lowers
taxes and reduces debt, dismissing Prime Minister Jean Chretien's advice
earlier this week about freezing tax cuts and boosting social spending.
"Governments must never forget the lessons of prudent fiscal management," he
told a business audience Thursday. "That means always keeping a firm grip on
spending - especially in the uncertain times now facing the global economy.
"It is absolutely essential that we lower our national debt load in order to
keep our interest rates low, continue to lower taxes and keep the
flexibility we need to respond to an unpredictable international economy."
On Tuesday, Chretien told a Quebec audience that his successor should favour
social spending over tax cuts.
In his first major economic speech since leaving cabinet last year, Martin
said he wants the national debt to fall to a rate unseen since the late
1960s.
The former finance minister said the debt-to-GDP ratio must fall to 25 per
cent, down from from 71 per cent in 1997 and 40 per cent today.
It was a more aggressive target than the one endorsed by Finance Minister
John Manley, who has said it would take more than a decade to reach his
objective of just under 30 per cent.
Martin's speech focused on cutting-edge technologies as the key to economic
success in the 21st century.
He said fledgling industries need more money but added that governments
can't supply the funding alone.
"If government has a role to play, it must only be as a catalyst. It cannot
be the final answer."
For example, he said pension funds provide only 20 per cent of venture
capital in Canada while they provide about 50 per cent in the United States.
"I ask you this question: how can we build an economy in the 21st century,
if we rely on a concept of risk that dates back to the 19th century?"
Martin said the federal government must also help innovative companies to
flourish in sectors such as alternative energy, biotechnology and medical
services.
He did not provide funding targets, but used one example to illustrate his
point: the government could use some proceeds from the impending sale of its
remaining shares in Petro-Canada to support a foundation for ecologically
friendly technology.
He signalled that even universities must make the economic potential of new
technology a higher priority, and said Canadian universities do not work
closely enough together to pool information.
"That makes it more difficult for private companies to build partnerships
that weave together many ideas and bring them from the laboratory to the
marketplace."
Those policies will likely guide the next federal government.
This weekend, Martin is expected to learn that he will likely become the
next prime minister.
The Liberal party is holding three days of meetings to elect delegates for
its November leadership convention, and the scale of Martin's lead will
finally become apparent.
Martin got slammed for his economic speech by opponents on either side of
the political spectrum.
NDP Leader Jack Layton said it's now clear that Martin intends to lead a
conservative government. He called it the most right-leaning speech he has
ever heard any Liberal deliver.
"No wonder Wall Street likes him so much," said Layton, who watched Martin
speak in the packed hotel ballroom.
"This is not a Liberal speaking. If this is the new Liberal party, then
Canadians, watch out."
Layton said Martin's theme of reducing government's role would please
Republican U.S. President George W. Bush.
"This would be a government very much desired by a Mr. Bush - by the largest
corporations in the world."
But Martin's conservative opponents thought the opposite.
Canadian Alliance Leader Stephen Harper said Martin has opened the door to
major spending initiatives.
He said the speech contained "a throw-away line about tax cuts but all his
specific ideas were about how to spend money and how to interfere in
provincial jurisdiction."
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