Economic tough times to continue: former PM

PUBLICATION: GuelphMercury | DATE: 2009.2.7 | BYLINE: Rob O'Flanagan | SOURCE:

Remembered for his deficit-fighting policies as Canada's finance minister, and for a short stint as the country's prime minister, Paul Martin weighed in on the state of the global economic crisis in an interview yesterday.

Martin will visit Guelph next Friday, when he will be the honoured guest of Our Lady of Lourdes Catholic High School. The school will bestow its annual National Leadership Award on Martin, an honour previously pinned on former prime ministers Brian Mulroney and John Turner.

"I think we are in for a pretty tough time, certainly for the better part of 18 months," said Martin, who served as finance minister from 1993 to 2002, recording five consecutive budget surpluses and erasing a $42-billion deficit over the final years of his tenure.

"Given the increasing debt levels in the United States and the lack of adequate banking regulation, most knowledgeable people would have said this was inevitable," he continued. "I don't think anybody knew when it was going to happen. And I don't think that anybody knew it was going to be as serious as this."

Martin will address the Lourdes student body Friday, speaking about leadership and the meaning of the Canadian flag. The event is a commemoration of National Flag Day.

Martin suggested that being in school during these hard times is probably a good thing. The global economy should be in recovery by the time students graduate.

"From these kids' point-of-view, it's better that the world get it out of its system and get back on the road to recovery when they hit the job market," he said. "I think that's what is going to happen.

"I think we've got a very tough time ahead of us, but I am very optimistic about the future. And by the time they hit the job market we will have expunged the last vestiges of this."

Martin said he went through five financial crises as finance minister. He refused to deregulate banks in this country, fearing it would weaken the system.

He said he was not surprised the current financial crisis happened, given the overinflated housing market in the U.S. and the lack of regulation in the U.S. banking system.

But he was surprised by the severity of the downturn.

"If you had said to me that we would be seeing major banks and financial institutions in the United States being swallowed up and virtually taken over by governments, I would not have predicted that," he said.

Martin was critical of the economic stimulus package in the budget tabled last month by Prime Minister Stephen Harper's Conservative government. He said extending unemployment benefits, investing in universities, and short- and long-term infrastructure spending are very positive moves.

"But they are undercutting research and development funding," he said. "They are actually cutting back on that, and that is a major error."

Canada is shifting to a more knowledge-based economy, and future productivity and prosperity depends on infrastructure renewal and growth and research and development, he said.

Martin is co-chair of the $200-million Congo Basin Forest Fund, a project aimed at preserving the African rainforest in the fight against climate change.

He spends most of his time domestically on Martin's Aboriginal Initiative, a project he started to help Canadian aboriginal youth complete high school and pursue careers in the accounting field.

Martin is also involved in the Leaders-20 initiative to foster greater co-operation between world leaders to find solutions to the world's problems.

"There is no longer such a thing as a national economy," he said. "The economies are seamless, and yet there is not a global architecture out there to make the global economy work."