Recovery and the Canada Round: A Manitoba Perspective
The Empire Club of Canada Addresses (Toronto, Canada), 15 Apr 1992, p. 495-507
Filmon, The Hon. Gary A., Speaker
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A joint meeting of The Empire Club of Canada and The Canadian Club of Toronto.
Problems of the legacy of the Meech Lake Accord; problems with the national economy; problems with a deepening of the divisions among provinces and regions. Problems with political leadership of the country. Various other factors contributing to Canada's problems. Pessimism vs. optimism for Canada's future. Challenges to be faced. The presence of goodwill across Canada. Manitoba as a microcosm of Canada. Shared problems of Ontario and Manitoba. Choices to be made. A review of recent choices made by governments, and measures taken. Agreements and disagreements between levels of government. Equalization and support for equalization. Constitutional choices. A national consensus for fundamental reform of the Senate. The "Triple E" concept: Elected, Effective and Equal. Manitoba's perspective on equalization and on the division of powers. Hope for a consensus. Canadians first. Renewed confidence, renewed union to add to the momentum for recovery.
Date of Original
15 Apr 1992
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The Hon. Gary A. Filmon, Premier of Manitoba
Introduction: John F. Bankes
President, The Empire Club of Canada

The critical issue facing Canadians--up until this past Sunday at least--was whether the first general strike by players in the history of the NHL would leave the 1991-92 season incomplete. As pointed out in a recent Globe and Mail article, hockey fanatics from coast-to-coast were stricken with "get-a-life" syndrome. The couch potatoes among us contemplated seven weeks of prime-time television without the wisdom of Don Cherry! Fortunately, this issue has now been resolved and Canadians can once again turn their attentions to the economic and political issues facing the nation.

It was Wilfrid Laurier who said: "The 20th century belongs to Canada." As I was growing up in the 1950s and 1960s, my belief in this prophesy was unshakeable.

If Laurier were alive today, would he be disappointed? In a recent speech, Tom d'Aquino, President of the Business Council on National Issues, answered that question in the negative. According to d'Aquino:

(Laurier) would observe that Canadians occupy a land ... unmatched in its natural advantages, and one of the truly last frontiers in a crowded and largely impoverished world. He would be amazed to discover that quality of life here is among the highest anywhere, that we have benefited greatly from universal education and health-care systems. He would see that we have built a tolerant society respectful of human rights and the rule of law, and take a pride in the fact that Canadian citizenship is the fervent wish of millions throughout the world.

If Canada's political and social achievements would greatly impress Laurier, what would he think of our economic successes? d'Aquino continues:

With barely 27 million people, we have built the seventh largest economy in the world; on a per-capita basis, we enjoy the second highest income among the 24 nations which make up the OECD; ...our job creation record has been the best in the OECD during the past 30 years; we are members of the most privileged economic club in the world--the G-7 Summit Group of leading industrialized countries; and, as a major trading nation, we have forged with the United States the world's largest and most economically advantaged bilateral free trade area.

Yes, Canada's remarkable political and economic success, achieved within a federal system of government, would impress Laurier.

Today, however, this extraordinary country is facing serious difficulties. In our political life, cynicism, divisiveness and acrimony appear to have gained the upper hand. And, what should be a rational debate about how to shape our political picture, has become a "crisis" threatening the breakup of the country.

When asked how he felt after having listened to a Wagner opera, Mark Twain thought for a moment and allowed that, well, it wasn't quite as bad as it sounded! But, as pointed out in a recent Maclean's article, Canada's constitutional wrangle is just as bad as it sounds. And despite the apparent softening in the Quebec position, it isn't over yet.

The question is often asked of political leaders in this country: When are Canadians likely to see an end to the constitutional debate which, in a variety of different formats, has plagued this country since Confederation? I am reminded of a short story. The Canadian Prime Minister asks God two questions: "Will the constitutional debate ever dissipate? And, if so, when?" God replies: "The answer to your first question is probably; and the answer to your second question is not in my lifetime!"

If our body-politic is unwell, so is our economy. With 1.4 million unemployed Canadians, rising bankruptcies, and growing numbers on welfare, the human costs of the current recession are painfully evident.

What has gone wrong? What steps must be taken to put our political and economic house in order? How can our political leaders address the malaise troubling Canadians today?

We are very fortunate today to have as our speaker the Hon. Gary Filmon. From his vantage point as Premier of Manitoba, he will address us on the subject of Recovery and the Canada Round: A Manitoba Perspective.

By way of background, Premier Filmon is a native of Winnipeg. He is an engineer and businessman. Politics, however, have played an important part throughout his career. Mr. Filmon was a Member of Winnipeg City Council from 1975 to 1979 and was first elected to the Manitoba legislature in October 1979.

Leading up to his current position, Mr. Filmon has overseen a number of cabinet portfolios in the Manitoba Government including Consumer and Corporate Affairs, the Environment and Housing. His calling card these days reads: Premier of Manitoba, President of the Executive Council and Minister of Federal-Provincial Relations.

As many of you know, the Manitoba budget was tabled in the legislature on March 11. The budget was fiscally restrictive in profile. Deficit control was clearly a major focus in spite of still difficult economic times. Fiscal initiatives were directed toward improvements in competitiveness and productivity. Premier Filmon, in your meeting tomorrow with Premier Rae, we Ontarians hope that your Manitoba brand of fiscal responsibility rubs off on your Ontario counterpart.

Finally, The Empire Club has a long-standing tradition of welcoming its speakers to the lectern with the expression: "Break a leg!" The message is delivered, of course, with great affection. Premier, under the circumstances, perhaps such a greeting today may not be appropriate!

Ladies and gentlemen, please join me in welcoming the Hon. Gary Filmon.

Gary Filmon:

Ladies and gentlemen:

I very much appreciate the generous introduction and the chance to be with you today.

I should explain that the crutches are for an ankle I broke recently in British Columbia, not for sympathy as some of my political opponents have suggested. The good news is that I'm not supposed to stand on the ankle too long, so my speeches aren't too long these days either.

Though not too much has been made of it yet, the end of this month will mark the fifth anniversary of the Meech Lake Accord. Unfortunately, there won't be much celebrating.

The wounds Meech caused are still open and still potentially fatal. The national economy is anything but healthy, and it is deepening some of the divisions among provinces and regions.

The political leadership of this country is not exactly held in the highest regard, and, at times, with good reason. Expectations have been too high, and promises have been too quick and too big.

Of the 11 First Ministers who were at Meech Lake in April, 1987, seven are no longer in office, and an eighth--the Premier of Quebec--has chosen not to come to the negotiating table.

The scenario becomes even more difficult if you add in some other factors:

- A world economy that is both sluggish and unstable;

- a back breaking government debtload in this country, and heavy public-sector demand for capital, at a time when investors in the U.S. and elsewhere around the world are asking probing questions about Canada's future, and

- a constitutional reform process that is up against tight and critical deadlines.

Each of those challenges would be a handful on its own. In combination--in this spring and summer of our 125th birthday--they promise to test Canadian spirit and will as severely as we have ever been tested.

The temptation to succumb to pessimism is strong. Probably no one in this room can say, in all honesty, that he or she hasn't felt at some point in the last six or nine months that it's all over for Canada as we know it, that our national divisions are irreconcilable. I know I have felt that way at times. But those feelings haven't lasted very long and I'll explain why.

First, I know that there is still a substantial reservoir of goodwill left in the country. It isn't bottomless, but it is there and it is large and it is real. It should never be underestimated.

There is also genuine goodwill among political leaders. We have our partisan skirmishes from time to time, but we are also working hard to find as much common ground as we can.

A small example, perhaps, but virtually every Premier, myself included, has met personally with Premier Bourassa in the past six months, and we have met collectively on three occasions with the Prime Minister in the past four months. Our common economic problems have reminded us that all of us are stronger than each of us.

Most of the time Canadians are a tolerant and a generous people, and part of the reason is that we are so blessed with economic assets. In fact, from a distance, we are still the most favoured nation in the world. Unfortunately, when our economy is not performing well, we tend to forget, or undervalue, what we have to offer.

In my own province, we have a balanced economy--in many ways, a microcosm of Canada--with rich mineral resources and some of the best farmland in the Prairies. We have plentiful supplies of fresh water and the clean and renewable hydroelectric power reserves that go with it. We have a strong service sector, including financial services and all the supporting infrastructure, private and public.

Many of you here can attest first-hand to the quality of Manitoba's education system. We have traditionally been a major supplier of skill and talent to this province and this city.

And Manitobans have a quality of life that we think is unmatched anywhere.

Ontario's basic assets are every bit as sound. You have problems, some big ones. So do we in Manitoba. So do all Canadians. But I believe we have the maturity and determination to confront them as a nation and to turn a period of introspection and self-evaluation into a period of nation-building unequalled in our history.

But there will be hard choices and they will have to be made soon.

I believe Canadians are ready to make those choices. On the economic side, we can't bring about recovery entirely ourselves. Much depends on the choices some of our largest trading partners make. But we do have the option of placing ourselves in the best possible position for recovery and for long-term growth.

There are choices individual governments can and should make on their own, and there are choices which I would hope the federal and provincial governments can make cooperatively.

The first choice relates to living within our means. That's the choice we call biting the buffet and it is far from painless. But it can be done. We have done it in Manitoba and take considerable pride in the results.

Since our government took office four years ago, we have presented five budgets. Not once, in any of those five budgets, have we raised major taxes--corporate and personal income taxes, sales or gasoline taxes. In fact, we have reduced some of the key rates to improve our competitive position.

That's been made possible by a rigorous system of expenditure and deficit control which included a freeze on public-sector wages and a reduction in civil service positions of almost seven per cent. At the same time, we've been able to sustain essential services such as health care while we move to more fundamental reforms.

In our last two budgets, we were able to introduce some new measures to encourage economic development and recovery, including:

- The Mineral Exploration Incentive Program,
- a temporary tax credit for investment in manufacturing and processing,
- an Education and Training Payroll Tax Credit,
- a Research and Development Tax Credit,
- a labour-sponsored investment fund,
- Rural Grow Bonds, and
- the Economic Innovation and Technology Fund.

All these measures are being coordinated by a new cabinet economic development board, which I chair.

The consistent application of the principles of fiscal reality and the willingness to make tough decisions through four years and five budgets have kept the dislocations and adjustments during the recession manageable and minimal.

A look at this year's provincial budgets will tell the story. But next year's will be no less important. Fiscal responsibility means a long-term commitment. It is a principle, not an expedient.

So that is one choice and it is critically important.

Another choice all governments in Canada must make is whether or not to work together to encourage recovery--or whether to go our own ways. Just three weeks ago, a few blocks away from here, First Ministers met to discuss a range of options for coordinating our economic policies. Though we didn't make as much progress as we hoped for, we did reach some important agreements:

- On further reductions to inter-provincial trade barriers;
- on international trade promotion;
- on more effective training programs, and
- on fundamental reform of the health care system.

And we agreed in principle on a major new initiative--a national highways program to strengthen our economic links and to create jobs starting this year.

We didn't achieve agreement on national guidelines for holding the line on taxes, and for controlling expenditures and deficits--but we are not giving up. We will continue to pursue that goal because we believe it is essential for the long-term health of the Canadian economy and the economies of all the provinces.

I won't dwell on it, but I was disappointed, too, by the decision the Ontario Government made to translate its legitimate concerns about federal offloading into an apparent threat, during the First Ministers' Conference, to its traditional support for equalization for provinces such as Manitoba, whose taxing capacities are below the national average. I know our concern about Ontario's position was shared by all the smaller provinces.

In the past, Ontario governments have understood that Canada's equalization system is in place partly to compensate other provinces and regions for the economic costs they have paid over decades to support the national tariff and freight rate policies which helped build Ontario into the largest and wealthiest province. Ontario taxpayers pay more of their federal tax dollars into equalization than other provinces because they earn more and have a stronger economic base.

And equalization has clearly benefited Ontario by sustaining markets in other provinces for Ontario's output.

In these circumstances, I was obviously pleased to see a specific reaffirmation of Ontario's support for equalization in the recent throne speech from Queen's Park. That is a welcome message for all Canadians.

Perhaps it is also time we delivered an explicit message ourselves. The message is that we agree: Ontario's situation is serious and must be addressed.

There is no doubt that the economic boom which Ontario experienced until recently was a mixed blessing for those of us elsewhere in Canada. We benefited, of course, as the regions always do when Ontario is healthy. But we paid a price as well, through the high interest rates which the Bank of Canada established to deal with the inflationary pressures originating here.

That experience showed all of us, I think, that the old maxim: "What's good for Ontario is good for Canada," isn't always true.

But it also showed what we know to be true as well--that when Ontario catches a cold, we all sneeze. That is happening now and we recognize its significance to all of us. We believe Ontario's economic problems deserve a fair shake from the Federal Government, just as all provinces do when our economies are in trouble.

We have no problem with making that choice--to stand together with this province and with others. That's what this country is about.

Parochialism, protectionism, isolationism--those are understandable responses to economic adversity. We've seen them here, in the U.S., and elsewhere when times are hard. But surely the lessons of history are clear on this point. "Beggar your neighbour" policies may work in the short term, but they are ultimately self-defeating. Our interdependence makes it essential for us to work together.

That doesn't mean we shouldn't compete. We must compete, and hard, among ourselves and in the international markets. But we want and need healthy competition with healthy partners. That's the only way we'll all benefit.

We're not conceding permanent pre-eminence to Ontario or any other province in the Canadian economy. We're going to keep on trying to attract new investment to Manitoba, new investment by industries that enjoy a comparative advantage in our province because of our central location, our trained work force, our renewable hydro source, our transportation networks.

We're going to continue to say to business people here and elsewhere: If you're going to expand, look at what Manitoba has to offer. We think that's a key part of nation-building--strengthening all parts of the country--and moving to correct longstanding imbalances and disparities.

That brings me to the other set of major choices Canadians are facing today--the constitutional choices which will shape our future, which will determine whether we can or can't go on working together--and which, hopefully, will give us the instruments for building a stronger and more united Canada.

Most of the choices are clear and reasonably well-understood.

In the past few weeks, some encouraging progress has been made by the ministers responsible for Constitutional Affairs. Now it is getting close to the time when First Ministers should be at the table--and I mean all First Ministers, including the Premier of Quebec.

Complex and difficult as the constitutional agenda still is, we have the chance to make some very key substantial gains for all parts of the country. We have already moved closer to affirmation of the inherent right of aboriginal peoples to self-government within the Canadian constitutional framework. As Premier Rae said last week, that was an historic step forward and others are possible.

Clearly we have a national consensus for fundamental reform of the Senate to give Western Canada and the Atlantic region a stronger voice in national policy-making.

It is no secret that my strong preference is the Triple E Model--Elected, Effective and Equal. Though we haven't said "Triple E or else," we have said real effectiveness and equality are extremely important priorities.

They are important in symbolic terms and they are important in practical terms. When we talk about effective we aren't talking about a Senate that can hamstring the House of Commons. Slow it down, yes. Make it explain and justify its decisions on economic grounds, yes. But not undercut its ultimate accountability. When that is better understood, the arguments for equal numbers of Senators should become less troubling to those who have questioned the principle of equality of the provinces.

It is hard to imagine that some people look on equality as a frightening concept. The American and Australian models are far from perfect. But they do illustrate the fact that Senate equality is workable, practical and fair.

It is ironic that many who supported the Meech Lake Accord, which began with an explicit affirmation of the principle of equality of the provinces, should now be questioning the application of that principle in a reformed Senate.

I'm not asking everyone in this audience to buy the concept, just to keep an open mind. I believe that Ontario would be one of the prime beneficiaries of an equal Senate, if that Senate meant that clearly-defined economic principles replaced patronage as the basis for some of the major decisions which emanate from Ottawa.

Ontario wants to be treated fairly and should be. So do the other provinces and that is why the principle of equality is so important to us. One of the key purposes of the Canada Round is to find ways to ensure all provinces and regions feel that we are full partners in our national enterprise.

None of us expects, in the near future, to enjoy all the economic advantages of a province like Ontario. That isn't in the cards. But a renewed constitution can give us a stronger voice, and greater financial protection to ensure that the services we provide for our citizens are reasonably comparable with those available in provinces with larger economies.

Earlier I talked about the importance of equalization to the seven provinces whose taxing capacities are lower than the national average. I'm talking about the Atlantic provinces, Manitoba, Saskatchewan and Quebec.

Last year, the Ontario Government received about $33 per person for every percentage point of personal income tax it collected. But the comparable figures for the rest of the provinces were quite different--in Manitoba, around $20 per capita, less than two-thirds of Ontario's yield--and lower in the Atlantic provinces, going down to around $15 in Newfoundland.

That's why provinces differ in their ability to provide services. And that's why the national equalization system is so important to the unity of our country. It doesn't wipe out the differences between what provinces can afford to pay for, but it does narrow the gap.

As part of the Canada Round, the provinces which receive equalization are asking for greater constitutional protection for the equalization system and we are also urging some protection for federal support for Medicare, post-secondary education and other key federal-provincial transfer programs.

In this connection, we are working to ensure that the proposals for a social covenant, which would not be justifiable, would not, inadvertently, undermine the real long-term security we want for vital national programs.

Manitoba has had two major sets of public hearings on constitutional reform in the past few years. Both our task forces emphasized, right up front, that Manitobans believe a strong national government remains essential for balanced growth and unity.

That explains our stand on equalization, and it explains our stand on the division of powers. We are prepared to consider some devolution to improve services or to reduce duplication and overlap, but we are concerned that too large a transfer of powers could jeopardize services in the smaller provinces. If three or four of the largest provinces are delivering a particular service, the political will for the Federal Government to fill the gap in the smaller provinces could be minimal.

But we've asked others to keep an open mind on constitutional issues and we will do so on division of powers as well. This is not a time for ultimatums, and it is not a time for unilateral action.

We remain hopeful that the multilateral process now underway will help produce a consensus package--a package that will respond positively to the aspirations of Quebec and a package that will respond with equal generosity to the needs of the Western provinces, the Atlantic provinces, the Territories, the Fast Nations, and Ontario.

You know, a few years ago, Maclean's magazine commissioned one of its major polls on Canadian attitudes. One of the questions they asked in every province was: Do you consider yourself a Canadian first or a citizen of your own province first?

It will come as no surprise to this audience that, here in Ontario, some 89 per cent of Ontarians answered that they were Canadians first. It may surprise you, though, to learn that right behind Ontario--just a few points behind--came our province. By an overwhelming majority, Manitobans consider themselves Canadians first as well.

We may not always see things in the same way as Ontarians. Despite being in the Eastern Conference of the CFL, we're still Westerners at heart and we plan to stay that way. But we share the same basic values and goals for our country, and I believe for one another.

In the months ahead, the strength of our commitment will be tested. As I said, we will have some very difficult choices. But, if we make the right choices, I believe the country will be immeasurably stronger.

Renewed confidence, from a renewed union, could add so much to the momentum for recovery. It is a prospect I would very much like to see in our 125th year. Canadians deserve it and we owe it to ourselves and to our children to make certain it happens.

Thank you very much.

The appreciation of the meeting was expressed by Isabel Bassett, President-Elect of the Canadian Club of Toronto.

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Recovery and the Canada Round: A Manitoba Perspective

A joint meeting of The Empire Club of Canada and The Canadian Club of Toronto.
Problems of the legacy of the Meech Lake Accord; problems with the national economy; problems with a deepening of the divisions among provinces and regions. Problems with political leadership of the country. Various other factors contributing to Canada's problems. Pessimism vs. optimism for Canada's future. Challenges to be faced. The presence of goodwill across Canada. Manitoba as a microcosm of Canada. Shared problems of Ontario and Manitoba. Choices to be made. A review of recent choices made by governments, and measures taken. Agreements and disagreements between levels of government. Equalization and support for equalization. Constitutional choices. A national consensus for fundamental reform of the Senate. The "Triple E" concept: Elected, Effective and Equal. Manitoba's perspective on equalization and on the division of powers. Hope for a consensus. Canadians first. Renewed confidence, renewed union to add to the momentum for recovery.