is to invest the contributions in markets, in order to generate the best possible returns. these changes mean that canadians no longer have to worry about the sustainability of their cpp and qpp pensions. third, governments have improved the efficiency of their tax and spending programs. i know that you are familiar with the major federal and provincial efforts to make direct government spending more efficient. although more work always needs to be done, governments in canada have also undertaken significant structural changes to our tax regime. they have reduced distortions in the personal income tax system and implemented the goods and services tax to replace the outdated manufacturers sales tax. structural reform has also included changes to canada's corporate tax regime — changes that, when completed, will eliminate the federal capital tax and reduce the average statutory corporate tax rate in canada to a level that is below current u. s. rates. of course, there are other structural improvements left to be made. i'm sure many of you have views and suggestions about how to make them. you have been discussing some of them here today. in my view, it is critical that canada's private and public sectors continue to work together to further improve the structure of our economy and increase our ability to adjust to changing world economic conditions. sound fiscal policy now, the key to good economic performance is sound macroeconomic policy. the bank of canada is responsible for monetary policy. but monetary policy operates within a larger macroeconomic context. so, let me start with fiscal policy. for canada, the commitment to the principle of sound fiscal policy has meant putting our public debt, as a proportion of gdp, on a sustainable downward track. many of you remember the difficult and unpopular decisions that had to be taken by federal and provincial governments during the 1990s to achieve this goal. those efforts are paying off. today, not only does canada have one of the lowest debt burdens in the g - 7, but, as shown by the arrows in chart 4, that burden is expected to continue to decline. the federal government has paid down almost $ 50 billion of its debt — bringing it down from a high of almost 70 per cent of gdp in 1996 to about 45 per cent in 2002, as illustrated in chart 5. thus, the vicious circle of rising deficits and debts of the 1970s and 1980s has become a virtuous circle of balanced budgets and falling debt. program spending for all levels of government has dropped from 42 per cent of gdp in 1993 to 34 per cent last year, as

david dodge : focusing on the long term remarks by mr david dodge, governor of the bank of canada, to the canadian council of chief executives, washington, d. c., 7 april 2003. * * * thank you for the invitation to join you this evening. it was exactly a year ago that i met with you in montreal. it has not been an easy year. all of you have been running companies and making decisions under very uncertain conditions. you have had to deal with corporate and accounting issues. markets have been volatile. and geopolitical events have shaken confidence. at times like these, it's easy to get caught up in trying to make one's way through current events that cloud the outlook. but the present uncertainties make it even more important to maintain a focus on strategies that will promote the health of businesses over several years — not just over the next few months or quarters. the same holds true for economic policy - makers. failed experiments in previous decades have taught us that, in times of uncertainty, it is extremely important to stick to policies that will foster long - term economic growth. a longer - term focus many of us in this room have reached a stage in life where we have at least two pairs of glasses — one for close - up, and one for distance. we're acutely aware that wearing glasses to focus on something very close makes us lose perspective on things further away. and if we focus only on the here and now, we can lose sight of the future. we need a set of economic bifocals, if you will, to see the impact of current events, as well as the best path to future prosperity. tonight, i'd like to speak about that longer - term economic vision. through more than a decade of macroeconomic reform, we canadians have created a framework to meet both immediate and longer - term challenges. even as short - term events have buffeted our economy, we have followed four key long - term policy principles : trade liberalization, structural reform, sound fiscal policy, and low inflation. recent canadian economic performance demonstrates the merit of continuing to set policies with a longer - term view. short - term adjustments are sometimes unavoidable in the face of extraordinary events — and we've had more than our share of extraordinary events in the past few years! but, on the whole, these basic principles have stood canada in good stead through the recent difficulties in the world economy. let me talk