OCTOBER 2, 1980
Roadblocks to National Unity
AN ADDRESS BY The Honourable Frank Miller, TREASURER OF ONTARIO AND MINISTER OF ECONOMICS
CHAIRMAN The President, Reginald Stackhouse
Ladies and gentlemen of The Empire Club of Canada: In the Prologue to his Canterbury Tales, Geoffrey Chaucer described a miller whose many strengths and qualities included what Chaucer called "a thumb of gold."
The premier of Ontario may not have had that mediaeval epic in mind when he turned to another Miller in 1978 to undertake the challenge of completing what his government had begun--a 180 degree turnaround in provincial fiscal policy, replacing expenditure escalation with spending restraint, halting deficit financing in favour of budget control, and all without impairing the comprehensive program of services for which Ontario was known throughout the world.
But such was the responsibility given and accepted in the Hon. Frank Miller becoming the Treasurer of Ontario and Minister of Economics. When Thomas Carlyle described economics as "a gloomy science," he could not have known how aptly he was anticipating most of the analyses of the last few years. But there have been a few rays of sunshine piercing the Ontario skies; not only because of the treasurer's warm personality, but more because of his department's steady advance towards a balanced budget. To his portfolio, whose importance is second to none in the government, he has brought experience in legislature and administration, having been Member of the Legislative Assembly for Muskoka since 1971, and Minister of Health and Minister of Natural Resources. Equally important, he has brought the vital experience of a man who has dealt with government as it affects the local ratepayer, Mr. Miller having been a member of the Bracebridge town council from 1967 to 1970.
In each of these public offices, from town councillor to provincial treasurer, he has looked at demands and opportunities through the eyes of a man who has had to balance his own budget through many years of owning and operating his own businesses. An engineer by training, he practised his profession in industry and in teaching, and then entered business as a General Motors dealer in Bracebridge. Since 1960 he has been owner and operator of two summer lodges at Bracebridge and for the past ten years has been president of Santa's Village.
When he was both Premier of Ontario and also Treasurer of Ontario, the late Leslie Frost used to say he looked at all issues as they appeared to a person sitting in a barber's chair and looking down the main street of Lindsay. The present Treasurer of Ontario looks at issues as they appear to people who have to meet a payroll and who have to live off what they earn. The number of public leaders who share that perspective is not overly large and it is a great pleasure to welcome, to this first meeting of The Empire Club of Canada's 1980-81 season, the Hon. Frank Miller, to speak to us on "Roadblocks to National Unity: Energy Pricing and Constitutional Reform.
THE HONOURABLE FRANK MILLER: Today could be an important day for the future of this country. This afternoon, federal Energy Minister Marc Lalonde meets with the Alberta Energy Minister, Merv Leitch, in one more attempt to work out an energy-pricing formula.
This evening, Prime Minister Trudeau will hold a nationally televised press conference to announce his proposals for bringing home the constitution.
It is symbolic that these two events are happening on the same day: energy pricing and constitutional reform are really two sides of the same issue. The failure to resolve the first accounts, in part, for the failure of the eleven First Ministers to agree on a new constitution three weeks ago in Ottawa.
Today, I want to talk about this failure and what it means to you and me as Canadians. My speech may be personal, and risks being emotional, because to me the very survival of our country is at stake.
The irony of it all is that our country appears to be on the verge of disintegration just when its greatest economic success is being achieved. We are singularly fortunate in having the energy resources and the potential to rise above the scarcities, OPEC pricing policies, and Middle East politics that plague virtually every other country in the world.
We have survived 113 years as a collection of provinces united by our determination to support each other. We have done it by giving the federal government the money, and the power, to set national priorities and to help our poorer provinces.
Remember too, that for many years, the poorer provinces numbered nine ... only Ontario was able to give more than it got to support the development of the rest of the nation.
I am no constitutional lawyer; I am an engineer turned politician. I suffer, as I suspect many of you do, from a less than perfect understanding of our constitution. However, when the 1976 election in Quebec produced a separatist government, I found myself a participant on Ontario's Confederation Committee, listening to detailed discussions on the merits of
various alternatives to the written part of our constitution, the BNA Act.
It didn't take me too long to realize that my role on that committee would not be to offer better wording for, or new interpretations of, say, section 91 or 92 of the BNA Act. Rather, what I could best do was try to understand the effects of these changes on Canadians and, at times, translate these feelings back to the members of the committee.
After all, these constitutional talks are not an end in themselves. They are taking place in order to build a better Canada for us all. Nor are these constitutional talks partisan debates. I am going to say some things that sound like I support the federal Liberal position.
I do not.
I support the position of a strong Canada, with a strong federal government with the ability both to resolve our internal difficulties and to strengthen Canada and its position in a world of increasing international tensions and uncertainties.
I think that too many people watching the neverending meetings between Premiers, or Premiers and the Prime Minister, or Finance Ministers, get the impression that the whole thing is an academic discussion--a fight between governments over who gets what while everyone ignores the citizens of the country.
But you must know that it is more than that, much more. This debate will shape our future as the Fathers of Confederation shaped our past.
Our country was not a creation of history or logic. Sir John A. Macdonald said that Canada was a "triumph of politics over geography." In many senses, that is still true today. When we formed this country, we ignored the tremendous impediments to its creation.
We built railways that ran east-west across the roughest terrain in the world. North-south would have been more logical. We protected fledgling industries with tariff barriers, and this increased the price of goods to Canadians. It would have been cheaper to form an economic union with the United States. And we gave the central government the right to move money from the richer provinces to the poorer ones so that all parts of Canada could be provided with reasonable levels of social and government services.
So, Canada was not a logical union. It was a creature of people with a strong respect for British parliamentary traditions and values, people with an understanding of their personal interdependence, and people with a strong will to survive as a separate political entity on the North American continent.
What these motives produced is a country based on the concept of economic equality and sharing that is unique in the history of modern nation-building.
No other nation I can think of was created with this kind of vision, equality amongst its parts, as one of its paramount objectives. Canada even continued that tradition when British Columbia joined the union with the promise of a transcontinental railway, and when Newfoundland accepted the "benefits of Confederation" in 1949.
Ontario got a lot out of Confederation. We have never denied that. Because of our geographic location, industries developed here and they did well under Canada's protectionist umbrella.
Sure, westerners paid more for Ontario goods--but so did we. That was part of the illogic of our Confederation, part of the price we all paid to be Canadian.
At the same time, though, Ontario put a lot into Confederation. The federal government taxed the wealth produced by Ontario industries and earned by their employees. That income was used for the benefit of the less-developed provinces.
And, don't forget, in those days that included the rest of the country. Ontario also paid higher-thanworld oil prices for over twenty-five years to assist the development of Canadian oil sources so that we would have our own resources if things got tough.
Now, things are tough.
Canada today has a new set of problems, problems never visualized by our nation-builders. We have mastered our geography. We have developed social services and infrastructure across the country that are the envy of the western world. And many of the provinces, that we all nurtured for so long, have developed economic potential that can contribute enormous strength to Canada as a whole. I guess the major problem now is that we have lost sight of the principle of economic sharing that was the basis for the formation of the country. Now that the resources of the west are producing incredible revenues, several provinces want to change the rules.
"We have finally got it made," they say, "and we are going to keep it that way."
I firmly believe that the separatist referendum in Quebec was a blessing in disguise because it galvanized Canadians into taking a good, hard look at our country. The visible, and highly emotional, verbal attack made many Canadians realize that they could not take Canada for granted.
At the same time, because of the Quebec focus, many Canadians remained blissfully unaware of another and strikingly different challenge to our national survival--the growing tension between the federal government and the governments of the oil/gas producing provinces over the control and sharing of resource-based revenues.
Frankly, this is a struggle for power.
I am tired of hearing that Ontario must be poorer because other parts of Canada are richer. The truth is that we will all be much better off because we have resources in the west and new resources in the east.
Thank God we have them. What a mess we would be in without them.
People who complain about the cost of these energy resources are forgetting one very important fact. If we did not have these energy sources in Canada, we would be sending the money out of the country to Saudi Arabia, Iran, and Venezuela.
What our resources have given this country, what no other western nation has, is the luxury--plain and simple it is a luxury in today's world--of deciding how much we are going to pay and how we are going to use the profits for the benefit of the whole nation. So, the money that you and I pay for gas and oil, at any price, can stay within the country. If we remember our Canadian heritage, if we still believe in the principle of economic equality, that money, that new revenue, can make Canada a much stronger and healthier nation, and can help all Canadians build a better life.
I firmly believe that the only way for this country to grow, to become more than a collection of balkanized, bickering mini-states, is to maintain that principle and to give the central government the ability and economic power to enforce it.
For this to happen, the federal government must be given access to, and a substantial share of, the growing resource revenues so that it can carry on its traditional role as the redistributor of national wealth.
Just as the federal government taxed Ontario's industrial wealth and transferred a portion of it to other provinces, so now it must be able to tax resourcerevenue wealth and redistribute it in a manner consistent with national priorities.
That is why the constitutional talks are so important. At the moment it is the petro-dollar, not the constitutional lawyer, that is shaping the future of our country.
The present distribution of revenue from oil and gas resources gives about 45 per cent to the producing provinces and about 10 per cent to the national government. This economic imbalance is literally destroying the ability of the federal government to pursue its historic responsibilities.
If the producing provinces have their way, and maintain control of the predominant share of these resource revenues, in a very few years they will control the national economy.
Power goes with money. So, as the economic capital of the nation becomes more concentrated in the hands of a few provinces, the effect will be to transfer the power of the federal government to those provinces. This is not consistent with my concept of what Canada is all about.
Two things must happen if we are to make any headway in our constitutional talks. First, we must be prepared to resolve issues that are not spelled out very clearly in the BNA Act as it now stands.
Second, we must see some attitudinal changes so that the resolution of these issues is consistent with Canada's long-term national interest.
Let's face it. If it wasn't for the vague areas in the act, we wouldn't be facing some of our present dilemmas. And, if we all had a similar concern with the national interest, many of these problems would not be so serious.
What must happen?
First, we must establish the right of the federal government to receive a "reasonable" share of all national revenues--and that includes resource revenues. That, of course, will involve us in a discussion of what is "reasonable." But we should be able to handle that if we agree on the principle of economic equality.
Second, we must reaffirm, or re-establish, an "economic union" that allows all Canadians the right to trade freely and move freely throughout every part of the country.
We are finding now that more and more of that freedom is being eroded by provincial legislation which is designed to address specific provincial problems but, as a by-product, restricts the free movement of labour and goods across provincial borders.
Those two things will begin to get us back on track, and moving again.
We seem to be in a peculiar hiatus in Canada right now. As a nation, we are almost at a standstill while other nations scramble to make the adjustments that higher energy prices have forced upon us all.
While other countries struggle to increase their energy self-sufficiency, we find Alberta stalling on the construction of new synthetic oil plants. It may be a negotiating ploy in the struggle for control over resource revenues, but if it is a ploy, it is a very destructive one.
These new oil plants, the mega-projects, are absolutely essential if Canada is to achieve energy selfsufficiency in this decade. They will also have an immediate effect on our business health, and our aftertax personal income, no matter where we live in Canada, or what we do for a living.
One such mega-project can cost up to eight billion dollars to construct. That is half of the Ontario government's annual budget--for just one project.
It can create new jobs for Ontario's steel industry, in Saskatchewan's pipe mills, and in construction trades all across the country. It can increase the demand for consumer goods, stimulate research and development activities, and even spark the creation of whole new industries. That means more jobs now.
Later, as it comes into production, it can save Canadians billions in foreign oil purchases. And it can provide the federal government with much-needed revenues to pursue its traditional equalization and economic-development roles.
While construction of these projects is stalled, we wait. We wait while the producing provinces argue for control of the revenues from them.
Let me tell you that one province, Alberta, would like to use some of these new revenues as if it were the national government. It wants to invest in out-ofprovince projects such as the expansion of the Prince Rupert port facilities, improvements in our railway system, or the redevelopment of the Churchill port.
These are the very kinds of projects that our federal government is supposed to be responsible for. It must be the national government, rather than individual provinces, that controls the destiny of this country. Ontario's government is responsible for the growth and development of this province. As a provincial legislature, we have the obligation to do this and to contribute, as much as we are able, to national priorities and national strength.
Whatever their relative economic positions, all provinces are the same. All provincial governments have the obligation to contribute to Canada as a whole through the workings of national programs and policies. Provinces cannot meet this responsibility by withholding a significant portion of their wealth or by refusing to allow its redistribution to other parts of the country, where it is desperately needed.
In plain English, it is also the obligation of the federal government to ensure that this economic sharing and redistribution take place. Parliament would not long have the support of the Canadian public if it did not stand up for the national interest or if it ignored pressing regional needs.
Resolution of this struggle for economic power will move Canada a long way towards constitutional agreement on sharing of jurisdictions and other important reforms. And it will open the door to an economic future that few of us can really appreciate.
But, this will only happen if we can get together to reaffirm some of the basic beliefs that have turned this political union of ours into a united Canada. This will only happen if our narrow, parochial viewpoints give way to concern with the broader national interest.
We can keep talking about the past until we are mired in it. That is not the way to get Canada moving ahead into the future.
Let me say again that the traditional political labels, Liberal, Conservative, socialist or whatever, have no place, no place at all in our discussions on the survival of the nation.
When I speak on this issue, I do not speak first as a Conservative free-enterpriser. I speak as a citizen of Canada who is also an elected representative of a provincial government. And when I speak, I am talking to my national government, not to a Liberal Prime Minister or a particular group of cabinet ministers.
Party interests and economic philosophy come second to the interests of Canada and its national survival. Without the nation, there is nothing else and nowhere to practise my beliefs and values.
Rest assured, however, once we have this national question resolved, I will not be inhibited in my pursuit of Conservative answers to Ontario's problems.
Let me repeat my view of what it will take to get this country back on the road to nationhood again, instead of acting as a collection of independent fiefdoms:
We must reaffirm that the central government is the only structure with the power and authority to speak for the national interest.
We must ensure that any new constitution reflects the principle of economic equality and sharing that was the foundation of Confederation 113 years ago; that includes removing legislated barriers to a revitalized economic union.
We must, as provinces, give the federal government the economic ability to control the national economy and to ensure that effective redistribution of wealth takes place. That includes the right of the federal government to a reasonable share of resourcebased revenues.
We must believe that Canada means a lot more than the individual provinces put together; that where regional and national interests conflict, the problem resolution must lie with our national institutions.
I fear for my country right now. I fear that the success we face as a nation has made our provinces too narrow in their viewpoints; too little aware of how immediate needs can destroy the country that we are all trying to build.
But, my fear is tempered with optimism. I believe that Canadians from every part of this country love this nation enough to demand that their politicians act for the greater benefit of us all, and for the unity of Canada.
I hope that this optimism is justified.
The thanks of the club were expressed to Mr. Miller by John A. MacNaughton, Immediate Past President of The Empire Club of Canada.