OCTOBER 1, 1982
The Canadian Economy
AN ADDRESS BY The Honourable Joe Clark, P.C., Q.c. LEADER OF THE PROGRESSIVE CONSERVATIVE PARTY OF CANADA
CO-CHAIRMEN Peter Godsoe,
President, The Canadian Club of Toronto and
Henry J. Stalder,
President, The Empire Club of Canada
The guest speaker was introduced by Peter Godsoe, President of The Canadian Club of Toronto.
Mr. Chairman, ladies and gentlemen: I am here to talk about the Canadian economy--about what is wrong and what might be made right--but more particularly about what I believe to be some of the basic causes that made things go wrong, causes that I find in the public sector, not in the private sector, that I believe have to be addressed.
I will speak today of some of the forces that I believe I, as the Leader of the Opposition, have to fight. I think it will also be valuable if I identify what I see as quite fundamental, almost inspirational problems for the country--inspirational in that they inspire many of the other difficulties into which the present government has fallen.
The essential fact about the Canadian economy is not that things are bad. The essential fact is that things are much worse than they need to be in a country like Canada. Of course, we share the effects of world recession. Everybody understands that. But more important than the world weaknesses we share is the use that we are making of those special Canadian strengths that can lead this special country to recovery. We are part of the world, but we are not helpless in the world. We need to use our natural strengths. Instead, we have been wasting them.
You know the statistics of Canada today. Each working day, 2,200 Canadians who hold a job, lose that job. That means that there are 2,200 Canadians who were working yesterday who are not working today. On Monday, 2,200 people who are working today will not be working. In the last year, 573,000 working Canadians lost their jobs. I'm not talking about people who might want to come into the work force, but about people whose job was the basis of their own security, their own planning, whatever sense of the hope they brought to their families.
The rate of business failures this year has increased 40 per cent over last year and we have just recorded the largest number of farm failures in the history of this country.
Internationally, the European financial journal, Euromoney, compares the overall economic performance of various countries. That has helped me to put some things in perspective because in that comparison, Canada, in terms of overall economic performance, is in fortieth place. And we are behind, to name a few, Mexico, Belgium, Syria, and Papua New Guinea.
We are here to cure Canada's economic problems. In order to set things right, we have to understand what has gone wrong in the country. I want to address that question on two levels today: first, to identify what has gone wrong and how it can be set right; and then to suggest why the nature of the present government made those mistakes almost inevitable.
Essentially, the three fundamental policy mistakes that have deeply aggravated Canada's economic problems are as follows: The first mistake was for the Trudeau government to actively create the reputation that Canada is hostile to private investment and to private initiative. The National Energy Program contributed to that reputation. The extravagant use of FIRA contributed to that reputation. The Liberal budgets have contributed to that reputation.
In some quarters, as you know, that hostility to investment has masqueraded as an attempt to preserve Canadian control. Let's set that right immediately. In fact, the present government has acted just as aggressively against Canadian investors as it has against foreigners. The issue is not the nationality of the investment. The issue is the idea of private people making private plans for pursuing private ambitions, and making those grow into something great. It is the idea of ambition, not the nationality of investment, that the Trudeau Liberals oppose.
That was made dramatically clear in the Liberal budgets--which taxed employee contributions to private health plans and which, in various versions, attacked MURBS, RRSPS, IAACS, registered pension plans, attacked virtually every other instrument that encouraged individual Canadians to invest in the Canadian economy. So we have as a legacy a reputation in a country that was built on investment of being hostile to investment.
The second mistake is the Trudeau government's consistent attempt to impose centralized control in a country in which diversity and initiative are the essence of our nature. That blind centralism poisoned federal-provincial relations in this country; it killed the Alsands project, the Cold Lake project, the Judy Creek project, and several other endeavours in the energy sector that could have gone ahead with a better spirit of co-operation. It nearly split the country on the one issue that should unite us, the issue of the constitution.
Central governments that try to control too much inspire neither co-operation nor confidence.
The third mistake has been that the Canadian government, for a long time (with one brief nine-month exception), has treated its deficits too lightly. Our twenty-billion-dollar deficit today--if it is that low--is a result of three factors: the spending spree of the late 1960s and 1970s based on the apparent Liberal belief that the government governs best which spends most; the fact that government revenues fall and government expenditures increase when governments throw productive enterprises out of work and force productive people out of work; the fact that extravagance simply becomes a habit. I have spoken on other occasions of the immediate actions that a new government would take to restore confidence. We believe that confidence in Canada as a place to build and invest is the cornerstone of the economic recovery we seek.
Within weeks after Members of Parliament were formally declared elected, we would convene Parliament and introduce either a new budget or a comprehensive economic statement with four major goals.
The first would be to act immediately to re-establish Canada's reputation as a nation that welcomes and encourages private initiative. We would change FIRA--not eliminate it--to focus quietly on those major transactions which affect Canada's vital interests. We would replace the statist National Energy Program with energy incentives for the Canadian private sector. We would restore the Canadian tax incentives, now re-christened loopholes, which the Liberal budgets of November and June tried to strip from the Canadian system. In short, we would respect Canadian ambition, not restrict it.
Secondly, we would stop using interest rates to draw back the investment which the statist policies of the Liberals drive away. That would bring Canadian interest rates down.
Third, we would help the worst victims of the recession. That is the way we approached our responsibilities in 1979. We introduced a mortgage tax credit proposal that, if it were in effect today, would be paying up to $150 per month to the average Canadian with a mortgage. That means that a lot of people who have lost their homes would have their homes today; it means spin-off jobs through the construction industry, the furniture industry, the appliance industry.
We proposed an energy tax credit to help Canadians cope with rapidly rising energy costs. We introduced the small business development bond to help small business survive high interest charges. We would act in that spirit again to help protect the worst victims of the recession.
Finally, we would launch a comprehensive four-year program of deficit management. I have not had an opportunity to read anything but the headlines on the Economic Council of Canada report; they suggest in a limited context that we should not be preoccupied with the deficit. I don't want to comment on their report until we have read it, but I want to make it clear that we believe that a fundamental element of any program of economic recovery in this country has got to be for the government of Canada to get its own spending under control and we have to begin to get that deficit down and to spell out to Canadians how that deficit will come down. I have no doubt at all that some government spending can be stimulative but there is no doubt either that a massive deficit and no apparent attempt to cut it out will drive away and keep away investment which would be much more stimulative than government spending, if that investment felt it were welcomed and effective here in Canada.
Our goal will be to cut the deficit in half between 2.5 per cent and 3 per cent of gross national product. Our tool will be the weapons against waste that we introduced as a government: sunset laws to eliminate unnecessary programs; strict control of the spending and of the activities of Crown corporations; parliamentary control of public spending; privatization of some Crown corporations; elimination of the duplication of government services; overlap between federal and provincial authorities; stopping government waste.
That sounds like a familiar list--something anyone could say. I remind you that in nine months in 1979, my government cut Canadian government spending by five hundred million dollars. We just got started, and we want to continue what we started because we are convinced that a combination of growth in the private sector and restraint in the public sector can get our deficit down and keep it down.
Those changes, in our judgement, would move the nation toward economic recovery. I want to make the point today--in a sense the more important point--that the Canadian malaise runs deeper than a federal deficit, deeper than an unpopular federal agency like FIRA, deeper than a constitution which our most unique province declined to sign. In every modern country there is a sense that particular policies or particular agencies aren't working, but in Canada, to an alarming degree, there is a sense that our very system isn't working. That is the one idea which is common to the Pequiste in the province of Quebec, to the coal miner out of work in Cape Breton, to the bank teller whose job is literally disappearing to technology, to the newest, most freshly minted separatist in the province of Alberta, or to the rising tide of individuals who are not just angry but enraged about abortion or interest rates or crime or about some other singular question which our system was once considered capable of resolving and now is not.
We have had times of doubt before and all societies are going through some periods of some disorder but what is happening in Canada is different both because the dissatisfaction is so dispersed and because we are coming apart at the very time when naturally we should be coming together. That point, I believe, is important.
In recent years, this country has grown together but has been led apart because the national government of the day fails profoundly to understand the nation that Canada has become.
One of our comforting clichés is that Canada has always been difficult to govern because we are large in space, diverse in nature, and just a little adolescent. We are not quite fully formed, we are not mature enough to be allowed to grow without guidance. That has been the cliché. I suggest to you that on the record of the last ten years in Canada--whether in economic initiative, whether in the arts, in cultural work, wherever--it is time to re-examine that notion. We have been a young country for a long, long time. In the last few years we have grown up as a national community. Two dramatic regional examples: Quebec and the West. For generations, Frenchspeaking Quebecers looked inward to their culture, cloistered in their families, their church, their province. That era is over. The Quebecois now assert their pride as a people. Of course, one face of that assertion is separatism but at its core is a selfconfidence whose natural expression would not settle for a little place but which seeks a large country to grow in. In my native region, the West, we have been haunted for decades by the suspicion that we were not quite equal to Ontario. The new West, with its new wealth, feels equal today. It feels an equal partner, as Quebec in a psychological and cultural way, feels an equal partner. That sense of equality is what has made the difference. For different reasons, all the regions in the Canadian family now feel strong. To an increasing degree, our people feel we are a family together, a family of equals, each strong. What has gone wrong is that our government has not acted the way our people feel.
It is a government profoundly out of step with the people of Canada, not just out of step with our needs, but fundamentally out of step with our nature.
The Canadian government of the 1980s is responding to the Canada of the 1950s. Their preoccupations, the issues which really deeply animate them are--if you list them--to resist Quebec nationalism, to resist American values, and to fabricate a Canadian identity that we are too feeble, as a poor immature people, to develop for ourselves. What they have overlooked is that while they were wrestling with the ghosts of Maurice Duplessis and Dr. Strangelove, this country evolved an identity which includes a Quebec nationalism which is anxious to express itself as a part of Canada and an identity which includes the North American values of individual initiative that came with our pioneers to both sides of the forty-ninth parallel. Indeed, that is the very value that caused many of our people to leave the old world and to come here for freedom.
We have become a strong, confident, innovative country that wants to move forward but we are led by a government that is literally out of date and that keeps pulling us backward.
To make a point about the role of governments: with the creation of the CPR, the CBC, the Bank of Canada, the Wheat
Board, the Canada Council, the Ottawa government was an instrument of Canadian identity and Canadian confidence. What counted then was not that Ottawa acted but that Ottawa acted appropriately. The governments of those days understood the Canada of those days and government actions were an encouragement of natural forces, not an obstacle to them.
Contrast that with today. You look at Canada--what has been happening to us over the last few years--and you wonder if Lewis Carroll wrote the script for this country.
We have just spent nearly two years on a constitutional policy that excludes specifically the one province we are trying most to make feel at home. On the road to that process, we very nearly succeeded in dividing deeply the Canadian family--dividing us in the name of unity. We have an energy policy that dismantles our megaprojects and drives away the Canadian companies and the Canadian entrepreneurs who have been finding oil and gas for Canada.
We have an economic policy that frustrates domestic investment, that frightens foreign investment, and that forces hundreds of thousands of Canadians to lose their jobs.
That is happening because the government is governing against the nature of the country. It quite literally does not understand what is going on in Canada. If that would be unfortunate at any time, it is tragic now, when forces of regional pride, private ambition, and international circumstance converge to bring Canada both a maturity and an opportunity we have never known before.
The 1980s can be the decade of Canada if we get rid of a government of the 1950s.
I have spent the better part of my life in politics, in the belief that we in this country have an incredible potential and some very special responsibilities, and also in the belief that we live in a land that has been, literally, fabulously endowed.
Our common attitude is not one of anger and frustration. Our common attitude is a spirit of adventure and hope. At no time in our history has it been more crucial for us to understand who we are, what our real options are, and what our promise is.
I say this to you today, because I think two things are happening in the country that are dangerous. One is that beneath all of the problems we see--people losing homes, farms, businesses, and jobs--there is a deeper loss. There is a loss of faith, a loss of hope, a loss of the Canadian dream, the idea that a person could come here and build and have the opportunity to make something of his or her life, family, and future.
That has been the motivating dream of this nation and I see that leaking away as I travel across the country in these times. The second thing that is happening is that many people, acutely concerned about the state of the country, anxious to make any program work that looks like it is a step in the right direction, are suggesting that there might be some quick and easy fix. There aren't quick and easy fixes. There are, however, some basic principles to which we should return.
One is that governments should reflect the country, not frustrate it.
Another is that in a nation like this, we have to recognize that our fundamental reason for being and our fundamental force of growth has always been to encourage the ambition and the creative spirit of the individual, ordinary person. That is what this nation has been about.
A third is to recognize that while nations grow up a long time, they suddenly reach a point of adulthood. The adolescence is over. Canada, the adult nation, has arrived and we should be treated as an adult nation, a nation in which provinces and people are likely to make better the decisions that pertain to them than someone in Ottawa giving them guidance.
I am not here simply to criticize a specific policy or underline a specific failure of a government. I am trying to indicate something far more fundamental that has gone wrong.
We have a government that is out of touch with the country. I don't know how someone who is out of date gets over that.
I have a solution, but I don't think it will be accepted.
So we have to wait for a year, or two years, and I have to go on doing my job, but I think it very important that people beyond me and my party reflect upon the validity of the observation that we have a government preoccupied with responses to questions that no longer exist and that their preoccupation with those questions is creating new problems that are not natural here and that are causing deep frustration and a great erosion of hope.
At a time when that hope is eroding, when that sense of the strength of Canada as a place where dreams can be built on is slipping away, please do nothing yourselves to contribute to that. Please, at every opportunity, indicate to people who might be angry at the government that there is a difference between what the government has done and what the country can do.
Ours is not a land in which we should lose hope. It is very much a land in which we need to change direction but the direction should be toward respecting those instincts of Canadians to build. The direction should be toward encouraging Canadians again to move towards that goal of accomplishment, to mount their own ambition, and to do so knowing that we live in a land of boundless hope.
The appreciation of the audience was expressed by Henry J. Stalder, the President of The Empire Club of Canada.