New Directions and New Choices for Canada

Head Table Guests

John Tory, President and CEO, Rogers Multi-Media Inc., Co-Chairman, PC Toronto Dinner 1997 and Second Vice-President, The Empire Club of Canada; John Medland, Head Steward, Upper Canada College; Sarah Band, Owner, Bianco Plus and a Past President, The Empire Club of Canada; Dr. James Gillies, Professor, Schulich School of Business, York University and Former Member of Parliament; The Hon. Barbara McDougall, Chairperson, AT and T Canada Long Distance Services and Former Cabinet Minister; William Thorsell, Editor-in-Chief, The Globe and Mail; Michelle Dionne, Special Education Teacher and wife of our guest speaker; The Hon. Henry N.R. Jackman, Chairman of National Trustco Inc. and The Empire Life Insurance Company and a Past President, The Empire Club of Canada; David Edmison, Director, Martin, Lucas & Seagram and Immediate Past President, The Empire Club of Canada; Wendy Lambert, OAC student, City Adult Learning Centre; Rev. Grant Kerr, Minister, St. Paul's United Church, Brampton; Don McDougall, President, Novatronics Inc. and Accuform Golf Corp. and Past Chairman, PC Canada Fund; Dr. Sherry Cooper, Chief Economist and Sr. Vice-President, Nesbitt Burns Inc.; and A. Charles Baillie, President and CEO, The Toronto Dominion Bank.

Introduction by Julie Hannaford

The tradition around introductions of speakers at The Empire Club of Canada dictates that a brief biographical tour be undertaken with respect to each guest. The function of such biographical tours is to locate the speaker in his or her rightful place in politics, art, science, or generally the calling in which they have become distinguished. Today, in many ways a biographical sketch of our guest seems redundant for members of The Empire Club of Canada have heard Mr. Charest's background at least three times. We therefore know that he was called to the Quebec Bar in 1981. We know that after his election in 1984, he held several portfolios until he was appointed Leader of the Progressive Conservative Party of Canada in December, 1993. We know that when Mr. Charest was appointed Minister of State for Youth, he became the youngest person to ever serve in cabinet, and we know that only four years after that first appointment, Mr. Charest played a critical role as Chairman of the Special House of Commons Committee to study a companion resolution to the Meech Lake Constitutional Accord.

In the case of Mr. Charest however, I would hazard to say that what we know about Mr. Charest is secondary to what all of us most vividly remember about the last 12 years that Mr. Charest has enjoyed in the political field. What we remember is Mr. Charest's energy in his dedication to the study and understanding of the issues surrounding the Meech Lake Accord. What we also remember is his energy, his optimism, and his straight shooting, as he rode into each of his roles as Deputy Leader in 1989, as Minister of the Environment in 1991, and as Deputy Prime Minister and Minister of Industry and Science.

Perhaps what is recalled most distinctly is the time toward the end of October, 1995, in a hockey arena in Verdun in the midst of the referendum, when a young man stepped up to the podium and spoke extemporaneously, passionately, and eloquently, and in so doing, transformed the debate into a matter of vision.

What the media tells us about the Canadian population on the threshold of another election is probably true. We are a nation beleaguered by politics, made cynical by promises unfulfilled, and distrustful of any political platform. But the media is also telling us that we as a country are positioned to take our place as a leader in the global economy and we are seen by others as possessing virtues to aspire to, rather than lessons to learn from. If we fail to look forward and grasp a vision, then we risk losing all of those opportunities.

One of the media commentaries on the various campaigns brewing up to the election has suggested that the price of admission to the debates about the future of Canada is the ability to talk about the past. While this may be true, we should remember that if we spend all of our time looking backward, we shall miss or at the very least, stumble over those opportunities and challenges that might well shape the future.

Jean Charest has always looked forward and moved forward. That is the burden and benchmark of leadership. We are therefore honoured and privileged at The Empire Club of Canada to have Mr. Charest share his views and visions as we move forward today. Ladies and gentlemen, please join me in welcoming to The Empire Club of Canada, The Honourable Jean Charest, Leader of the Progressive Conservative Party of Canada.

Jean Charest

The upcoming election will be about who has a new vision for the future of Canada and a plan to take us there. It will be about the choices and the new approaches we need to take as a nation to secure a successful and prosperous future in the new global economy. It will be about restoring a national government with the creativity to set clear directions and the will to lead this country in the race to the next century. It will be about the difference between staying the course and setting the course.

The election platform I unveiled here in Toronto three weeks ago presents these new directions and new choices. It presents a vision for a revitalised national government that establishes new goals for a confident and prosperous Canada, with national and international benchmarks to measure our progress.

Our platform lays the groundwork for long-term consumer confidence, job creation and employment security. It presents a comprehensive plan to create new jobs by reducing the tax burden on individuals and businesses, breaking down inter-provincial trade barriers, guaranteeing the future of health care for Canadians and their families, ensuring that our students can compete in the new global economy, and reforming our federal system to make it work better for Canadians.

This plan provides the right choices for Canada:

• Instead of the despair of unemployment, it will create at least one million new jobs in our first mandate and at least one million more in the second mandate.
• Instead of overtaxing Canadians to build up an unnecessary surplus in the employment insurance fund, it will cut the Liberals' El job tax by $5 billion.
• Instead of another $3.8 billion in cuts to health care and post-secondary education, it will restore federal dollars to these critical programmes and guarantee their future funding.
• Instead of watching the academic achievement of our young people fall further behind the world, it promises action to close this growing knowledge gap.
• Instead of an $11 billion tax hike, it will make different choices to secure the future of the CPP. Getting government right today means changing what we expect of government. It means understanding the challenges of the emerging global economy and their impact on our competitiveness and trade. It means making different choices about federal spending that creates jobs and protects health care. It means providing new national leadership that leads Canada confidently into the future.

While the international economy may have changed, domestic economies still operate the way they always have. When people are not working, they do not have the income to consume. When those people with jobs find the government's hand constantly in their pockets, they do not spend. And when companies are overtaxed, they do not invest in growth and jobs.

We see results of an overtaxed and stagnant economy around us every day:

• an entire generation in one of the most prosperous countries in the world afraid that it will not enjoy the same standard of living as its parents;
• working Canadians worried about their jobs and economic security; and
• older citizens facing their retirement with apprehension rather than confidence.

Working Canadians have less income today than when the government was elected. In the three years the Liberals have been in office, personal disposable income has actually declined by one per cent, while it increased by 11 per cent in the United States. Is it any wonder that we are experiencing a jobless recovery? This is not the Canada our parents worked so hard to build, and it is not the future our children deserve.

Our first priority must be to create new jobs for Canadians. To do this we must put money back into the hands of the biggest job-creating machine in this country--the Canadian consumer. We will:

• cut personal income taxes by 10 per cent over the next four years, and we will further lower personal tax rates to provide an additional $12 billion in net personal tax reductions by 2005;
• increase the basic income tax credit from $6,459 to $10,000, taking two million working poor Canadians off the tax rolls, and saving money for every taxpayer;
• move to a simpler and fairer system of two tax rates, and end the three-per-cent income surtax on all taxpayers;
• and because high payroll taxes kill jobs and growth by taxing every new job that is created, we will reduce employment insurance premiums by close to $5 billion.

The Liberals have told Canadians that none of this is possible, that we cannot defeat the deficit and have tax cuts at the same time. I know from experience that when a government says "tax cuts later," it means "tax cuts never." And that means jobs can wait. I also know from my time in government that when you get dug in on the wrong side of an issue, it is very hard to admit you were wrong and change course.

So I have a little challenge for Mr. Martin. Look at the numbers again. Obey your instincts. Take some of that employment insurance surplus you have been hording and give it back to Canadians. Give a helping hand to the consumer. Take a gamble on jobs. Choose growth.

A critical part of our plan is to make tough choices about federal programme spending. Our plan sets new priorities for federal spending and details $12 billion in cost savings. These cuts will be accomplished by cutting those programmes that are no longer necessary, amalgamating existing departments, transferring several programmes to the provinces and managing more effectively. This plan will result in real priority setting to ensure Canadians receive the best possible services at the lowest possible cost.

Inter-provincial trade barriers cost this country billions of dollars in lost productivity every year. Tearing down these trade barriers is not just a matter of common sense, it is an issue of economic self-interest. The Canadian chamber of commerce estimates that an increase in inter-provincial trade of only 10 per cent would be worth 200,000 new jobs. It is still easier to trade between Ontario and Ohio than it is between Saskatchewan and New Brunswick. Successive governments have lacked the vision and commitment to meet this problem head-on.

Action on inter-provincial trade barriers is also a simple question of leadership. The agreement on internal trade negotiated by the current government is full of loopholes. It requires unanimity among the provinces to tear

down barriers, which means that any one province can block progress for all the others. There is no enforcement mechanism, so third parties cannot fight back. We propose one final effort, with a one-year deadline, to negotiate free internal trade co-operatively with the provinces. If that does not work, I am prepared to act alone.

If the provinces and the federal government cannot solve this problem within one year, I will use the federal trade and commerce powers to establish an inter-provincial trade commission to remove the barriers once and for all, and establish a climate for jobs and growth. The commission will ensure that Canadians are guaranteed the ability to work wherever they choose. It will establish common standards for corporate and business registration and help abolish the barriers to employment mobility created by professional and occupational certification.

Just last month, the federal government was forced to make a significant change in the immigration regulations. It is going to allow computer and software companies to bring in workers from offshore without having to prove that they have been recruited within Canada. More than any other example I have seen, this illustrates how the federal government is asleep at the switch. Here we have a new industry where Canadians have proved they can compete and prosper against the best and brightest in the world, and we have to look beyond our borders for skilled workers. This is nothing more than a world-class failure of vision, and a world-class failure of planning.

And as usual, the Liberals' answer is to opt for the short-term, cosmetic fix--just let a few thousand well-trained people into the country and that will solve the problem. That's not good enough. I know, as everyone else does in this country, that education is a provincial responsibility. But that cannot be an excuse for inaction by the federal government. If we as a country do not respond with creativity to the challenges of the knowledge economy, opportunities and prosperity will go elsewhere.

How can it be that we spend the most per capita on education in the world, while our students place near the bottom in comparisons with other OECD countries in mathematics and science? One reason is that we have tended to measure success in terms of how much money we spend, instead of the results we achieve.

If the ability of our young people to compete in the international marketplace of ideas and jobs is not a Canada-wide interest, then I do not know what is. If our students cannot make the grade at home, then how will we as a country be able to compete abroad?

I believe that ensuring the quality of our education system requires new national leadership, and I am prepared to work closely with the provinces and territories to make education a national priority.

We will provide that leadership by:

• establishing a national testing institute to test our students to find out where they stand;
• building on the work begun by the council of ministers of education to establish inter-provincial standards for common curricula across the country;
• providing a 10-year, free right-of-way on federal lands and to waive federal taxes on the construction of the fibre-optic highways to connect our schools with the world;
• ensuring that every grade-school classroom has a computer and that all Canadian university and college students have their own computer;
• creating a $100 million merit-based scholarship programme for 25,000 needy students; and
• establishing, with the help of the private sector, a national, universal student assistance programme that is available to every post-secondary student in the country.

Canadians are worried about the future of health care in this country and they have good cause to be concerned. By cutting transfers to the provinces, the current government has put Canadian health care on the critical list.

In their 1993 red book, the Liberals said: "It is essential to provide financial certainty and predictability for our health-care planning." That is one promise they have kept. Canadians know with certainty that the Liberals have cut transfers to the provinces for health care by 40 per cent and it is clearly predictable that there are another $3.8 billion in cuts on the way. Canadians know that taking an axe to health care is no way to guarantee its future.

Our plan takes a completely different approach. It recognises that at a time of acute personal insecurity, we cannot have Canadians worrying about the future of health care. We cannot jeopardise a programme that gives Canada a huge economic advantage against our international trade competitors.

Our plan will restore the cash portion of federal funding for health care and post secondary education at the level of $12.5 billion. It will ensure future funding growth for these critical programmes by converting federal cash into tax points that grow in value with the economy and that will guarantee provinces and territories the increased funds they need to sustain and meet the needs of our expanding and aging population. It will also prevent the federal government from ever again solving its spending problems on the backs of the provinces.

Canadian federalism, our political, economic and social union, is in serious need of repair. We need a more creative, more comprehensive federalism to make that union stronger, more effective and more dynamic. We need a new way to help this country work together.

We all recognise that fundamental constitutional reform in the short term is not on, but that does not mean that we must stand still. I am not a centralist, but neither am I prepared to close down the federal government to please the provinces.

My preference is to put aside the bickering and deadlock of the past and find what works. We can pursue non-constitutional changes that will create a more effective and efficient balance between the two levels, and that make practical sense. In some cases, such as training, this will mean giving the provinces much larger roles in the definition and delivery of services. In others, such as inter-provincial trade, it may involve exerting a stronger federal presence. And in areas such as education, it will likely require developing a more co-operative approach to a common challenge.

In my vision of federalism, the federal government protects the national interest, and services are provided by the level of government closest to the people and best able to do so. And they have the taxing powers to meet those responsibilities.

Our platform defines a new framework, called the Canadian covenant, which will allow Ottawa to exercise necessary leadership while ensuring the co-operation we need between governments to secure our quality of life, and help the national economy grow and create jobs. Our approach to renewing federalism starts with a new Canadian covenant. It has three objectives:

• to maintain the common high standards that Canadians expect for the most important services; • to move services closest to the people they serve; and

• to recognise the flexibility the provinces and territories need to respond to the differences that exist across the country.

At the core of the covenant will be the five existing principles of medicare, which will not be compromised, to ensure that universal access to health care remains a fundamental of Canadian citizenship. The covenant will include the new structures to guarantee free trade within Canada. As we agree with the provinces on a wholesale transfer of responsibility for training, that will be included too. We will also be looking to end the long-standing overlap between the federal government and the provinces in such areas as mining, forestry, tourism promotion and elsewhere.

Let me be very clear. A strong and vigorous federation is not a luxury to pursue when we get around to it or when the stars are in the right location in the distant future. It is the prerequisite for stability, job creation, growth and prosperity. If this country is not rooted in a strong and successful economic union that promotes job creation and growth, then our future is in jeopardy.

I understand that Mr. Martin has some problems with our platform; he says the numbers do not add up. Am I surprised? Not really; I did not exactly expect a ringing endorsement.

But let me assure you that our assumptions and projections are as cautious and prudent as they can be--4.2-per-cent nominal growth in gross domestic product, 2.5-per-cent real growth and inflation of 1.7 per cent. These are all lower than the private-sector consensus of economists in all cases.

The tax, fiscal and expenditure plan contained in the platform, combined with the action I have outlined on inter-provincial trade, will guarantee the future of health care, balance the federal budget in the year 2000 and create two million jobs over the next 10 years.

And unlike Mr. Martin and Mr. Manning, our assumptions about economic growth are all out there in public for everyone to see. By the way, what are their economic assumptions and where are they?

Canada has always been a country of endless horizons and possibilities. Our ability to succeed is limited only by our ability to turn the challenges of the present into the advantages of the future. Canadians have always been successful at seizing the future against tough odds; we have done it many times before. It is no different in 1997. Today, Canadians know that their horizons are much larger than they were in the past. Globalisation has brought the world to our door, but it has also brought fierce competition, far-reaching economic restructuring and a revolution in the way we live and work. As a result, Canadians are uncertain about their future. They wonder where their government is leading them and they doubt it has a plan. They want to know whether this country will be a contender in the race to the next century or just a bystander.

A wise person once said that "to govern is to choose." For the past three and a half years, Canada has had a government of wrong choices. When the Liberals say the choice is deficit reduction or job creation, that is a wrong choice, and also, incidentally a false choice. When they say that the only action government can take to create jobs is public-works spending and make-work programmes, that is a wrong choice. When they cut health-care and education transfers by 40 per cent while cutting Ottawa's spending by only two per cent, that is a wrong choice. And when their only response to the lack of skilled Canadians is to open the borders, that is a very wrong choice.

In the coming election, Canadians will also have some serious choices to make. We can sit back and let the future happen to us, or we can make the decisions to make it ours.

The Liberals offer the status quo--no changes to challenge the way things are, no upsetting departures from the predictable and no vision and no plan.

We believe we have a better idea. We can opt for lower taxes to support job creation and growth. We can choose to guarantee the future of health care. We can strengthen our economic union by getting rid of inter-provincial trade barriers. We can ensure our children have an education that equips them for a competitive world. And we can rebuild our federation to provide the foundation for stability and economic prosperity.

Our plan restores a national government with the vision to set new objectives for this country and the creativity to see new horizons. It is a plan that sets the course, instead of staying the course. It believes that Canadians will make the right choice.

The appreciation of the meeting was expressed by The Hon. Henry N.R. Jackman, Chairman of National Trustco Inc. and The Empire Life Insurance Company and a Past President, The Empire Club of Canada.