Two Canadas: The Devolution Debate
Publication:
The Empire Club of Canada Addresses (Toronto, Canada), 15 Oct 1996, p. 138-149


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Savage, The Honourable John, Speaker
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Text
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Speeches
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Rex Murphy's exploration of our Canadian identity. Canada's identity entwined with our sense of family. The unanswerable question: what it means to be a Canadian. "Two Canadas: The Devolution Debate" referring to the Canada that has and the Canada that has not. The speaker's belief that we ignore these two Canadas today at our peril, and that fairness is the only acceptable way to deal with this family situation. Hearing about this topic in the 60s and 70s as "economic disparity." How and when this phrase faded from our national political lexicon. Professor Thomas Courchene's controversial paper on re-balancing federal-provincial social responsibilities as a defining moment. Response from Nova Scotia and five other have-not provinces. The richer provinces out of touch with their poorer relations. Consequences if every have-not province paid full faire for its social programmes. Consequences if the richer provinces have substantially better social programmes than those in poorer provinces. The disparity that already exists between Ontario and Nova Scotia, with exemplary figures. The issue of equalisation factors in terms of cash transfers for social programmes to the provinces: a discussion of alternatives suggested by Ontario and the speaker's response to them. The misconception that Nova Scotia doesn't pull its financial weight in the Canadian family and that continued help from Have-Canada will merely perpetuate our dependence. Figures on federal expenditures and revenues for Nova Scotia. Nova Scotia's economic importance to Canada. An analysis from Statistics Canada on inter-provincial trade with some revealing figures. Details of Nova Scotia. Indications of Nova Scotia's economic future. The Sable gas project and its economic value. Controversy over two competing proposals for the pipeline which will carry the gas to markets in the United States. The political nature of the issue. The need for Nova Scotians to receive maximum benefits from its off-shore resource in terms of jobs. Back to Mr. Rex Murphy's exploration of the Canadian identity. Some comments from Mr. Harry Hayward, a volunteer with the Brandon War Museum. An indication that Canada's national family ties are more real, deep and abiding than we care to admit. The speaker's conviction that we will be guided by mutual goodwill and fairness, which is, after all, the Canadian way.
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15 Oct 1996
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English
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Full Text
The Hon. John Savage, Premier of Nova Scotia
TWO CANADAS: THE DEVOLUTION DEBATE
Chairman: Julie Hannaford, President, The Empire Club of Canada

Head Table Guests

Jan Dymond, Vice-President, ZED Communications and a Director, The Empire Club of Canada; Lindsay Mount, OAC Student, Riverdale Collegiate Institute; The Rev. Bill Middleton, Minister, Armour Heights Presbyterian Church; Larry Stout, Broadcaster and a Director, The Empire Club of Canada; The Hon. Dianne Cunningham, Minister of Intergovernmental Affairs, Government of Ontario; Peter Godsoe, Chairman and CEO, The Bank of Nova Scotia; Mary Byers, Author, Historian and a Director, The Empire Club of Canada; Clifford J. Shirley, Associate Governor, Dalhousie University and former Vice-President, CIBC; Philip J. Olsson, Vice-Chairman, RBC Dominion Securities Inc.; and The Right Honourable John Turner, P.C., C.C., Q.C., Partner, Miller Thompson and Honorary Life Director, The Canadian Club of Toronto.

Introduction by Julie Hannaford

On October 10, 1996, The Empire Club of Canada launched its series on global banking. The focus of the mini-series is whether Canada and Canadian investment banks in particular can compete in a North American and international market. Concurrently, The Canadian Club of Toronto, celebrating its 100th anniversary, has launched a series of addresses by Canadian prime ministers entitled "Canada in the 21st Century: Pride, Progress and Potential." This series will provide a retrospective and a perspective on the issues facing our nation, in the past and in the future.

It is therefore both timely and appropriate that our two clubs look at Canada from a further perspective, namely, an inter-provincial and intra-provincial perspective.

In addressing our Club today on the Devolution Debate, Premier Savage offers just that perspective and insight.

It is also my pleasure to welcome Premier Savage back to The Empire Club. On December 2, 1993, Premier Savage addressed The Empire Club at the threshold of his office as Premier of Nova Scotia. In his address in December, 1993, Premier Savage outlined his plan for governance in the nineties. Premier Savage's address was frank, hard-hitting, and ambitious. It foreshadowed the reforms and initiatives which visited Canada and Ontario several years later. The Premier's plan for the province involved downsizing of bureaucracy, reform of health care, and in particular, pharmacare, economic development, and the positioning of Nova Scotia and the Maritime provinces, as equal players in a global playing field levelled by the private sector.

Having met and even bettered many of the goals which he set for himself and Nova Scotia, Premier Savage addresses our two Clubs, not only as a leader with ambitious goals, but also as a statesman, who has weathered the storms of dramatic change.

Perhaps the best explanation for Premier Savage's determination, success, and ability to weather those storms associated with dramatic change comes from his background. It is said in politics that there are those who live to serve, and those who serve only so that they may lead. It is rare to find a person who leads from a background of true dedication to service and thereafter leads from a perspective of that service. A tour of Premier Savage's biography explains the mettle from which Premier Savage has steered the province of Nova Scotia through the storms of the last three years.

As a family physician, Premier Savage served his community in Wales, and at the same time became involved in pre-marriage and marriage counselling course development. In Canada, he served at the Dartmouth Medical Centre and taught at Dalhousie Medical School. At the same time, he was a founding board member of Big Brothers and Sisters of Halifax/Dartmouth, as well as the Halifax Diocese Development and Peace Organization.

Travel for Premier Savage at least during the eighties, meant travel to places not usually listed in the vacation brochures. On two occasions during the eighties, Premier Savage travelled to Nicaragua, as part of a team delivering medical aid. He visited El Salvador for two weeks, as part of the Oxfam Canadian Mission for Peace. He has been involved in establishing community centres for treatment of alcoholism and drug dependency, has introduced programmes involving environmental initiatives in the third world, and led Nova Scotia in the development of funding for initiatives in literacy.

As a physician, Dr. Savage expanded the meaning of medical service to include a commitment to the community in which the physician serves the patient. As a politician, beginning with his election as Mayor of Dartmouth in 1985, he brought the concept of community service to the forefront, not only by means of the initiatives he promoted, but by serving as an example of the way in which activism benefits the community; as a premier, he has set goals and implemented initiatives by attacking those problems which those of lesser spirit might have allowed to go to the bottom of the agenda. He has done so, because he has been a true participant in getting things done.

In order for our market leaders to compete effectively in global markets, and in order for our leaders to steer Canada into the 21st century, we need a better sense of how we as provinces inter-relate and interact. Premier Savage's address today transcends the issue of the particularised issues between Quebec and the rest of the country, and deals with the more uneasy issues involving the provinces that have, and those that do not. This is not an easy topic to address. There is no person better qualified however to address this uneasy issue.

Ladies and gentlemen, please join me in welcoming to The Empire Club of Canada and The Canadian Club of Toronto, The Honourable John Savage, Premier of Nova Scotia.

John Savage

News addicts and television watchers here may recall seeing Rex Murphy's foray into the Canadian identity jungle last month. Ponderously titled, "Searching for a Sense of Country," it was one of those earnest probes into our national psyche. The intrepid Rex emerged from the tangled brush with such a grab bag of ideas, comments, and opinions that even he had difficulty bundling the unruly lot into an intelligible conclusion.

Rex was left asking himself, "Is the chase worth the quarry?" and responding, "there is a core here of attitude, temperament, a special mix of history and experience--even in our clumsy and sometimes reckless politics--that is finally recognisably our own and worth keeping."

Frankly, I don't think Canada is nearly as impenetrable as the media and other national hand-wringers maintain. As with most nations, our identity is entwined with our sense of family. Canada, after all, is a family.

To be asked what it means to be part of that national ménage is not much different from being asked what it is to be a Jones, a Murphy or a Savage. These questions are fundamentally unanswerable although, if pressed, we resort to the same well-worn and inadequate touchstones--membership by birth or adoption, traits and heritage different from the neighbours, geographic location, socio-economic standing, and expectations.

And that brings me to my theme, Two Canadas: the Devolution Debate. What I have in mind here are not the uneasy relations between Quebec and the rest of the country, or even the contentious issues that beset aboriginal-non-native dealings. I'm referring to the Canada that has and the Canada that has not.

I'm convinced if we ignore these two Canadas today, we do so at our peril. Further, I believe fairness is the only acceptable way to deal with this family situation. Otherwise we risk turning it into one of those latent dysfunctions that will eventually cause disquiet.

You'll recall we heard a great deal about this topic in the 60s and 70s under the heading "economic disparity." As transfer payments and policies to encourage regional economic development took root, the phrase faded from prominence in our national political lexicon. With its retreat seems to have gone a certain appreciation of its dynamic, at least as far as the have-provinces--Ontario, Alberta and British Columbia--are concerned.

That realisation has grown with increasing regularity in the current discussions on the devolution of some federal activities and programmes to the provinces. I'm talking here about federal involvement in matters of exclusive provincial jurisdiction, as outlined in our constitution--matters related to health care, education and social welfare responsibilities.

Most recently, the Two Canadas asserted themselves in August at the First Ministers' Meeting when, as Newfoundland Premier Brian Tobin so succinctly put it, "Courchene was thrown from the train."

While not on the official agenda, Professor Thomas Courchene's controversial paper on re-balancing federal-provincial social responsibilities gave us a defining moment. For the first time Nova Scotia and five other have-not provinces voiced a resounding and harmonious "no" to the Courchene scenario in which Ottawa would completely get out of social programmes like health care and turn its cash transfers into equalised tax points for the provinces.

The fact that Have-Canada, particularly Ontario and Alberta, would even bring Courchene's provocative paper along as a non-agenda item is troubling. It suggests the richer members of our Canadian family are out of touch with their poorer relations; that Ontario and Alberta don't fully appreciate the implications of what Courchene is suggesting, and that perhaps Nova Scotia has been remiss in not providing more enlightenment on the subject.

The plain truth is Nova Scotia can't afford to let Ottawa vacate the social welfare field because, on its own, our province doesn't have the money to bankroll a takeover. Ontario, Alberta and British Columbia do. Consequently we still see a role for the federal government in developing national standards, provided they are achieved in consensus with the provinces. From past experience we know how unilateral action by the federal government in these matters can undermine provincial priorities by diverting our comparatively modest resources from our objectives.

It should be remembered that if every have-not province paid full fare for its social programmes, this country's existing disparities would be greatly magnified. The result--more discord, bickering and resentment--would undermine our need for greater co-operation, so vital today for our national well-being. As our east-west economic links slacken to take advantage of the continental north-south pull, it's generally agreed we must maintain social bonds, like medicare, which Canadians recognise as national family traits--as entitlements of citizenship and unifying features of this country.

But this shouldn't mean Canadians in richer provinces should have substantially better social programmes than those in poorer provinces--unless of course you want two classes of citizenship in this country. I'm certain Canadians won't buy that. And if they did Have-Canada, let me tell you, would end up regretting it. Imagine the strain on Ontario's financial resources if Canadians from provinces like Nova Scotia started flocking here for better medicare or enriched social services!

You'll recall British Columbia caught a preview of that nightmare not long ago, when Albertans on pared-down social assistance headed to the West Coast where the benefits were more generous. The result wasn't pretty--for either province. Population migrations of this kind upset the economic balance. People should move to take advantage of jobs and economic opportunity, not social benefits. That only stands to reason because we need tax revenue from jobs and economic activity to sustain social programmes.

Disparity, as we all know, already exists between Ontario and Nova Scotia. Last year your annual average unemployment rate was less than nine per cent, ours was slightly over 12 per cent. Weekly average earnings last year were estimated to be 25 per cent higher in Ontario than Nova Scotia. Annual personal disposable income for Ontario residents exceeded the Nova Scotian figure by more than $3,000.

As a result our social programmes in Nova Scotia aren't exactly like yours here in Ontario. They aren't as rich. But they're comparable and equitable. We've been able to keep them that way because of a system of federal equalisation payments which have been coupled with cash transfers for social programmes, containing in-built equalisation factors.

Ontario argues these equalisation factors should be scrapped from our social programmes and integrated into the formula for equalisation payments. We can't go along with that idea; we'd be financial losers in the formula's renegotiation and we know it. Courchene's scenario, turning cash transfers into equalised tax points, falls far short of the mark too. Our social programmes would suffer. They couldn't be sustained in an equitable way with Ontario's, Alberta's or British Columbia's programmes.

Further, Ontario is captivated by the notion that it should get 100 cents back in benefits for every dollar it puts into the kitty for national social programmes. If we adopt that kind of attitude, we won't have to worry about the consequences of a Canada without Quebec; we'll already be on the way to disintegration. Moreover the idea just doesn't make sense from the standpoints of functionality or fairness. Consider how the principle would work in employment insurance! Nova Scotia, where unemployment is high, would collect disproportionately smaller benefits compared to provinces where unemployment was low. Let me put it to you this way: if you were living in a sparsely populated hurricane belt, would you be satisfied if your insurance agent offered you hurricane insurance with benefits tied only to the premiums collected in your immediate area? Of course not!

We understand Ontario's frustration at seeing money go out of the province at a time when it could use the dollars at home. But Ontario is part of a national family in which the members have a long-standing tradition of taking care of one another in the name of the common good.

Some fallacies, unstated but widely assumed, can get in the way of a proper debate on this subject. Among these misconceptions are the notions that Nova Scotia doesn't pull its financial weight in the Canadian family; that we aren't much of a factor in the central Canadian economy; and that continued help from Have-Canada will merely perpetuate our dependence.

These ideas are simply false! We are pulling our financial weight. Federal taxes collected in Nova Scotia as a proportion of personal income were the highest in Canada in 1993. We are much less dependent on federal spending that we once were. Federal expenditures on goods and services in Nova Scotia experienced the fastest decline in all of Canada from 1980 to 1994. At the same time federal revenues from our province have soared.

In 1980 net expenditure--that is all the money Ottawa sent to Nova Scotia minus all the money we sent back--was 41 per cent of Nova Scotia's gross domestic product or GDP Then, because we began to get less and send more to Ottawa, the next expenditure figure dropped to just under 19 per cent in 1994. That's more than a 50 per cent drop in this dependence measurement in less than a decade and a half. This data, of course, doesn't reflect the substantial hits we took in the 1995 and 1996 federal budgets. Those factors are expected to send this measurement of dependence plummeting even further.

It isn't true either to say we aren't economically important to central Canada. It may interest you to know, that Statistics Canada recently released an analysis of inter-provincial trade which, while based on 1990 data, revealed some intriguing trade patterns. Nova Scotia's inter-provincial imports were worth $6.5 billion, nearly twice as much as our exports.

Slightly over half the value of those imports came from Ontario. Quebec was next in line at 24 per cent and the Atlantic region stood third at 18 per cent. By comparison, 42 per cent of our exports stayed in Atlantic Canada with the remainder split closely between Ontario and Quebec. We're an important market to central Canada. Our biggest import item was automobiles. Now tell me that isn't important to the Ontario economy!

Nor is it correct to suggest help from Have-Canada is merely perpetuating a syndrome of dependence. Our province lost close to 5,000 federal jobs in the last five years, far more in percentage terms than any other part of the country. In fact 16 per cent of all federal cuts in Canada since 1990 have been absorbed by Nova Scotia. We estimate that the cumulative effect of federal cuts to Nova Scotia will top $2.5 billion by the turn of the century. The burden of picking up the slack has fallen to our private sector and it has risen to the challenge. A good example is this past August when the public sector was found with 8,000 fewer jobs compared to the same month last year. While public-sector employment fell, private-sector employment was up by 6,000.

As a provincial government we've been responsible. We've aggressively slashed our spending to cope with a deficit which, at more than a half a billion dollars a year, was out of control when we came to power in 1993. We balanced our operating budget this year-12 months sooner than we originally anticipated. We've brought in legislation to outlaw deficits in future years and we've targeted our net direct debt for demolition. Suffice it to say if we could get rid of our net direct debt, now an estimated $8.43 billion, we'd be a self-sufficient province. We're working on it!

Beyond that, we're doing what we can to help our private sector expand and generate economic activity. And there are signs our strategy is working. As of January this year we had the lowest unemployment rate and the highest job growth in Atlantic Canada. In July only five major centres in Canada had a lower unemployment rate than Halifax.

More encouraging, our economic future holds signs of new wealth. If current plans come to fruition about 30 per cent of Canada's oil and gas production will come from the east coast within the next five years. I'm thinking of the combined effect of Hibernia and Terra Nova off Newfoundland and Sable gas off Nova Scotia. These projects represent a big potential plus not only for the ,Atlantic region, but for our national economy. Canada could expect to realise more income from energy exports and experience less reliance on imported fuel.

The Sable gas project has a value of at least $3 billion. The consortium developing the project, led by Mobil Oil, will make a final decision on the project about a year from now. A joint federal-provincial review panel is up and running and has started the public-hearing process. My government obviously has a great deal of interest in the project. We have made it very clear that Nova Scotians must receive maximum benefits from our offshore resource or the gas will stay in the ground.

While we wait for the Sable consortium to give the final go-ahead to the project, there is controversy over two competing proposals for the pipeline which will carry the gas to markets in the United States. One group wants to ship the gas directly to the United States through Nova Scotia and New Brunswick. The other proposal would see the gas go through Quebec before heading south of the border.

Unfortunately, the routing of the pipeline has become a political issue because of the Quebec government's interest in the project. I have said repeatedly the decision is best left up to the National Energy Board. Ottawa now agrees. But that's where the debate should stop. I would argue that it is inappropriate for any one in the federal government to comment further--to argue the merits or demerits of either pipeline proposal. Let's let the regulatory agency do its work and keep us politicians away.

I reiterate, Nova Scotians must receive maximum benefits from our off-shore resource in terms of jobs. We anticipate that the Sable offshore project will play a significant part in our desire to reach greater economic independence. In the meantime, we remain vigilant in our efforts to ensure that any changes to existing federal-provincial fiscal arrangements don't penalise any one part of the country.

Ontario, with a government centred in one of Canada's richest cities, doesn't argue about the principle or the need to equalise services in the province's less affluent north. The Ontario government strives to make its services as uniform and accessible as it can for all provincial residents. Federal transfer payments simply allow Ottawa to perform that same function on a nation-wide basis.

In all these matters, I am again reminded of Rex Murphy's exploration of our Canadian identity. One of the people he talked to was Harry Hayward, a volunteer with the Brandon War Museum. He was quite critical of Canadians and said, "I think we've become very self-centred and selfish, since probably the 60s. It's me, me, me--and we're not worried about anybody. I'm not worried about you; I'm worried about me."

Well that's how it can appear at times, because we all come to the family table as individuals with our own pressing concerns. Only through the give and take of discussion do we begin to perceive the family welfare as greater than our own.

Mr. Hayward seemed to sense this. He said, "I think we're a great country. We have a great history. We've done a lot of difficult jobs together." Mr. Hayward remains concerned about our future but he says, "I'm a typical Canadian. Ah well, I guess it'll get sorted out somehow".

Such blind faith is characteristic of Canadians. It's an indication that our national family ties are more real, deep and abiding than we care to admit--even to television personalities. And it's in this spirit that I too believe we'll get these issues sorted out. Moreover I'm convinced the outcome will be guided by mutual goodwill and fairness. It's the Canadian way.

The appreciation of the meeting was expressed by The Right Honourable John Turner, P.C., C.C., Q.C., Partner, Miller Thompson and Honorary Life Director, The Canadian Club of Toronto.

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Two Canadas: The Devolution Debate


Rex Murphy's exploration of our Canadian identity. Canada's identity entwined with our sense of family. The unanswerable question: what it means to be a Canadian. "Two Canadas: The Devolution Debate" referring to the Canada that has and the Canada that has not. The speaker's belief that we ignore these two Canadas today at our peril, and that fairness is the only acceptable way to deal with this family situation. Hearing about this topic in the 60s and 70s as "economic disparity." How and when this phrase faded from our national political lexicon. Professor Thomas Courchene's controversial paper on re-balancing federal-provincial social responsibilities as a defining moment. Response from Nova Scotia and five other have-not provinces. The richer provinces out of touch with their poorer relations. Consequences if every have-not province paid full faire for its social programmes. Consequences if the richer provinces have substantially better social programmes than those in poorer provinces. The disparity that already exists between Ontario and Nova Scotia, with exemplary figures. The issue of equalisation factors in terms of cash transfers for social programmes to the provinces: a discussion of alternatives suggested by Ontario and the speaker's response to them. The misconception that Nova Scotia doesn't pull its financial weight in the Canadian family and that continued help from Have-Canada will merely perpetuate our dependence. Figures on federal expenditures and revenues for Nova Scotia. Nova Scotia's economic importance to Canada. An analysis from Statistics Canada on inter-provincial trade with some revealing figures. Details of Nova Scotia. Indications of Nova Scotia's economic future. The Sable gas project and its economic value. Controversy over two competing proposals for the pipeline which will carry the gas to markets in the United States. The political nature of the issue. The need for Nova Scotians to receive maximum benefits from its off-shore resource in terms of jobs. Back to Mr. Rex Murphy's exploration of the Canadian identity. Some comments from Mr. Harry Hayward, a volunteer with the Brandon War Museum. An indication that Canada's national family ties are more real, deep and abiding than we care to admit. The speaker's conviction that we will be guided by mutual goodwill and fairness, which is, after all, the Canadian way.