Energy and a Sense of Balance

BGEN. ANDRUNYK:

Members and friends of The Empire Club of Canada: During the past two years Canada's business and political life has been dominated by pro longed and vigorous debates on three issues of great importance to Canadians--the constitution, the economy, and the National Energy Program.

These issues, some more than others, seem to have divided Canadians and their governments to a point where, at times, the structure of the nation appears to be threatened.

Today we will focus on energy where, it is said, the debates are producing far more heat than light.

The National Energy Program announced in the Finance Minister's Budget of October 1980 brought back into the national spotlight the National Energy Board. This board has two main responsibilities given to it under the National Energy Board Act of 1959, namely, to regulate specific areas of the oil, gas and electrical utility industries in the public interest, and to advise the government on the development and use of energy resources. The board also, on its own initiative, has the power to hold inquiries into particular aspects of the energy situation and prepare reports for the information of the government, of parliament, and of the general public. Interesting projects in which the board has been involved in recent times have been: the Alaska Highway Natural Gas Pipeline; the Trans-Mountain Pipeline to carry Alaska oil to the U. S. midwest; the Norman Wells Pipeline; and the Trans-Quebec and Maritimes Pipeline. Last month it released its comprehensive report on energy supply/demand after extensive public hearings across Canada.

So although the board has no claim on being the main mover on energy policy formation--which remains the prime responsibility of the Minister of Energy, Mines and Resources--the board has a certain degree of influence in the shaping of energy policy.

Today we are honoured to have as our speaker the Chairman of the National Energy Board, Mr. C. Geoffrey Edge. Born in Wilmslow, England he obtained a Bachelor of Science Honours degree in economics from the University of London. After an appointment as a tax officer with the British Civil Service, he served in the Royal Artillery from 1939 to 1946. He rejoined the British civil service after the war and then came to Canada in 1951 to work for Canadian Industries Limited. He later joined Canadian Chemical and Cellulose Company Limited, serving in various senior capacities with it and its related companies and subsidiaries, rising to the post of Vice-President, Corporate Development in 1969.

He was appointed a member of the National Energy Board on January 1, 1971 rising through the positions of Associate Vice Chairman and Vice Chairman until his appointment as Chairman in November 1980.

Ladies and gentlemen, it is now my pleasure to invite the Chairman of the National Energy Board, Mr. C. Geoffrey Edge, to share with us his views on how Canadians can best take full advantage of the abundant energy resources available in this country.

MR. EDGE:

Ladies and gentlemen: It is an honour and a privilege to have the opportunity to express one's views before this club. The Empire Club is, by its nature, interested in the broad and fundamental aspects of the unfolding story of this country and its international relationships, while I, by the nature of my position, must avoid any narrow partisan position upon currently contentious issues of policy, but rather seek to focus my words upon the underlying essentials that emerge from our geography and history and delineate the options that will shape our future. Both you and I seek the long perspective and balanced view.

One of the most perceptive analyses of Canadian potentials and problems ever published was André Siegfried's 1937 book Canada. Part of Siegfried's virtue was that he was a visitor, unencumbered by preconceptions and biases which a native Canadian cannot avoid absorbing from earliest childhood. I cannot hope to emulate Siegfried, but his example emboldens me to suggest that a dispassionate view of Canada and Canadian problems may be easier for an immigrant such as myself, even one who arrived more than thirty years ago, than for those who were born in this country.

To either the visitor or the immigrant to the New World, what is perhaps most astonishing is the abundance of natural resources, the forests, the minerals, the energy resources. In energy then, we have vast hydro-electric resources, uranium, coal, natural gas, tar sand oil and an untapped potential of hydrocarbons in the Arctic. Canada shares this characteristic with other parts of the North and South American continents.

Where Canada differs from the rest of this hemisphere most markedly is in the political institutions that have developed in this country. Canada is far from being the only federal state in the Americas, but

it is unique in that it did not separate from its founding empire by revolution, but instead evolved peacefully and with continuing friendly ties to its European founders as the pioneer and prototype constituent member of the British Commonwealth of Nations. In addition, in the world at large as an independent and founding member of the League of Nations, and later of the United Nations, and by its part in the development of the General Agreement on Trade and Tariffs and of the Law of the Sea, Canada has demonstrated that a firm determination to e an independent nation does not preclude an equall firm determination to recognize and encourage the interdependence of nations. This sense of development in peaceful and constructive continuity in external matters, disregarding for the moment the many qualifications which will leap to your minds, is, I submit, the external expression of the essence of Canada.

That essence is perhaps easier to discuss in external matters than in our internal history, not least because each successive internal crisis so engages the passions of the participants and colours the approaches to further problems as time goes on. Many of these problems stem from another phenomenon uniquely Canadian. That is the arrangement by which the Fathers of Confederation, and succeeding generations, have placed ownership of natural resources with the provinces, while the main levers controlling international and interprovincial trade are in the hands of the federal government. Our particular mix of checks and balances is particularly our own. While it has meant that economic problems can rarely be answered by optimum solutions, which may at least occasionally be approximated in unitary states, the varied interests of the very different regions of this vast land have usually, in the long run, been accommodated in the working out of the compromises by which our country survives problems even if it does not wholly resolve them.

What is astonishing is not only that the country survives, but that it ever came into existence. It is on the face of it an economic nonsense, a geopolitical absurdity. How can we justify in logic an independent country one hundred or so miles wide, in terms of ninety-odd per cent of its population, stretched along the three thousand mile northern flank of one superpower and, in its northern extremities contiguous with the other, the Soviet Union; a country long regarded by one of its founding nations as "quelques arpents de neige," and by the other as a convenient bag of bargaining considerations in negotiations with France and later with the United States. How could such a country survive containing "two nations warring within the bosom of a single state"; whose geographic and economical paths were north and south, not east and west; to whose people, in each isolated region of the country there is as strong an affinity and personal network in the corresponding US. region as in other parts of Canada? To many Haligonians Boston is familiar and dear, but Toronto is remote, and anathema. Vancouverites shop in Washington, holiday in Las Vegas or Honolulu, trade with Japan, and sometimes seem to hear nothing and care less about what happens across the Rockies. A Francophone will more readily find conversation in New Hampshire or in Louisiana than in Alberta. How indeed have we survived? And now, looking at the lightning and hearing the thunder that fill the encircling gloom, why should we hope and strive to continue?

To sketch an answer to the question with regard to '. the past is fairly easy. In a sense, it is a series of negatives, of reactions to things we did not want to be. Ij' offer no new perceptions, but quickly recapitulate what we all know. When the American revolution broke out, the northern fringe of British possessions in North America did not want to revolt or to engage in the new-fangled American republicanism, so they abstained, and drove out the Revolutionary Army when it attempted to add the Canadas by force to the American experiment. The populace was far from unanimous, but on balance the northern fringe was against revolutionary change. And its population was increased and enriched by the influx of those in the Thirteen Colonies who felt likewise, and came to join us.

Again, in the War of 1812, there were those who thought it not a bad thing to become Americans, but the view did not prevail. There was a fairly strong movement in the 1840s for joining the United States because that seemed an attractive way out of the depression then besetting Canada. As Arthur Lower put it in his great book, Colony to Nation, "The Annexation squall blew out as rapidly as it had blown up, and for the same reason: hard times had brought it on and returning prosperity dispersed it." As has so often happened, a strong manifestation of the pull toward north-south integration, or continentalism, was followed by a period of fear of the powerful neighbour, and a drawing together of the diverse elements of Canada. By the end of the Civil War, the United States government was highly unfriendly to British North America--not without reason--and had a large, victorious and unemployed army. The Fenians were trying to use the United States as a base from which to avenge Ireland at the expense of the Canadas. If the British North American colonies were not to be gobbled up piecemeal they had somehow to surmount their dissensions about race, religion, trade and local interests; they had in fact to make the leap from a virtual breakdown of their various governments to a larger unity.

That they achieved it is little short of marvellous. Most nation states have emerged from conquest, royal marriages, and agonizing centuries of internal and external warfare. To prove that men and women whose loyalty is to some small area can come together, and by reason and accommodation erect something larger, yet something in which the founding parts are not lost or submerged, was an almost unprecedented act. The Swiss had done it, within their fortress enclave. The Thirteen Colonies had done it, having by revolution divorced themselves from their past, but they had then undergone the Civil War to reaffirm their continuation as a nation. Now a group of understanding men from the Atlantic colonies and the Canadas proved that it could be done without revolution, without geographic unity, recognizing that the alternative was anarchy, depression and absorption. When one looks at this past we share, and realizes at what costs and pains we have come together and stayed together, when one thinks of how we have time and again emerged from the gloomiest of prospects, one cannot readily despair of our ability to find a mutually acceptable way through our present difficulties.

It is a costly way of life. At almost every stage of our history, some region or other has rightly calculated that in then existing circumstances it would be economically better off in closer connection with the colossus to the south than in continuing the Canadian experiment. More recently, some people in some regions have felt that those regions could have a better life as separate countries. Thus far, Canadians have on balance felt that staying together, and staying independent, is worth the price. There are no simple solutions to our problems, but so far we have managed to find the policies and the will to seek out and endure the least objectionable among imperfect alternatives. I for one believe that we shall so continue, that in the broad currents of history we will be carried along together, remaining one nation while multiplying and strengthening our ties with our near neighbours and with the other political and economic aggregates of our increasingly interdependent world. The logic of our time leads surely to cohesion, not disintegration. The same reasoning supports our continuation as a nation, a nation created almost in defiance of logic. I cannot believe we will lack the skill and determination to continue together to develop our unique and paradoxical country.

Recent events encourage this view. When first I began to think about what I wanted to say to you, the foremost on my list of concerns was the federalprovincial deadlock on energy matters. Then at the beginning of September came the announcement of the federal Alberta agreement about oil and gas pricing and revenue allocation, followed by one with British Columbia. These agreements, we may hope, may be followed by accommodations between the federal government and the other hydrocarbon-producing provinces, which, whatever their other merits, will put an end to the uncertainties and delays which beset the petroleum industry, and other affected industries and services, during the eighteen-month deadlock. Now the hydrocarbon industries, and those who finance and supply them, will know what the new rules are, and will be able to plan accordingly.

It is not my purpose or function to comment whether these rules are good or bad; for me they are now certain and visible. The point is that, after great travail, they have been agreed on and we have that basis from which to proceed. As this audience well knows, development investment decisions reflect the degree of confidence existent in the financial community, and that degree of confidence cannot be high if the rules are unknown. What is not entirely clear is whether industry will be fully motivated by the new rules.

- No doubt the rules will change to reflect changing circumstances, and no doubt each of you has ideas as to how they could be improved. That is as it should be, and our system of government provides means of adjusting the rules once the basic framework is established. That, it has now been demonstrated again, can be done in this country, and will be done.

I am not for a moment suggesting that all our problems are over, or that all of them are within Canadian control. Least of all do I suggest that everything is lovely in the energy garden. Much of what happens in Canada about energy reflects events outside Canada and beyond Canada's control. The great world-wide shifts in economic power, starting with the exponential increases in world oil prices in the mid-1970s, have brought us into an era of confusing economics and confused economists. The great shifts in wealth and power in the world have in a sense been reflected in microcosm in Canada. We have tried to isolate, or at best to insulate ourselves from the extremes of world price increases, and within Canada have sought to moderate the pace and extent of the shifts of wealth and power to the oil-producing areas of the country. We cannot wholly or permanently isolate Canada from world oil price changes. Neither can we prevent or forever delay their counterpart developments in the Canadian energy industries. The recent federal-Alberta agreement implicitly reflects these facts.

OPEC is frequently blamed for the rapid rise in international oil prices which have been a major consideration affecting the pricing of Canadian oil. But the OpEc control over world oil production and pricing is perhaps the reflection rather than the cause of growing energy shortages. However, recent events have demonstrated that supply and demand for oil are more price sensitive than some economists believed. High prices have caused conservation and substitution, while recession has also reduced demand. At the same time high prices have encouraged more production of oil outside OpEc. It doesn't take very much of a percentage swing to turn an oil shortage into an oil glut. What has arisen in recent months has been what might be called a mini-glut, sufficient to cause OpEc, with much bickering, to refrain from price increases, some OpEc members to reduce prices, and Saudi Arabia to reduce production as well as to use its great influence to hold down prices.

It would be premature if not clearly wrong to take this to signify the end of oil shortages. A resumption of higher levels of economic activity or any improvement of the energy-purchasing power of the increasing populations of the Southern Hemisphere could quickly turn mini-glut into shortage. More importantly, the OPEC countries could again agree to reduce production. These are elementary economic factors. Since what is essentially important is the volume and price of oil purchased in the Middle East, the adequacy and security of oil supply may be determined by the political and strategic problems of that region. The eminent expert on international oil matters, Walter Levy, has put this succinctly in the periodical Foreign Affairs for Summer 1981, and I quote:

Contingencies could arise from the Soviet threat, regional fighting, internal upheavals, terrorism, the festering Arab-Israeli issue, or a sudden shift in the production and pricing policy of one or more OpEc countries. It is nearly certain that we will have to cope with one or even several of these contingencies in the years ahead.

The realism of this prediction is illustrated by the tragic events in Egypt earlier this month. Mr. Levy's "we" is primarily the United States, but in effect embraces the western world including Canada. Returning to the Canadian situation, we do not know what mix and balance of supply, demand and price will exist from year to year, but we do know that hydrocarbon resources are finite, that the cost of finding additional supplies is rising, and that alternatives to oil in all of its uses are not yet available at comparable prices. Therefore, I submit, we must conclude that the probable long run trend of hydrocarbon and other energy supply prices is upward, and sharply upward.

Canada should be capable, in the future, of physical self-sufficiency in energy terms. As I have said, we cannot isolate ourselves from the effects of world energy price movements. But how fortunate we are to have the degree of self-sufficiency of which we are capable, given our hydrocarbon, coal and hydroelectric resources, and our highly efficient nuclear power production techniques. This does not imply that we should ignore research and development of other potential energy sources, but we do have at least a period of relative net self-sufficiency in which to research and plan, while enjoying some degree of shelter from the worst impacts of world energy shortages and crises.

Do not misunderstand me: my reference to potential net energy self-sufficiency is not an assertion that we will be self-sufficient in conventional sweet crude oil in this decade. We will for some time need to continue to import substantial quantities of crude oil to meet the requirements of the eastern parts of Canada, especially in respect of transportation and domestic heating fuels. It remains to be seen whether we can develop the Atlantic offshore hydrocarbon reserves, those in the Arctic, and oil from tar sands, fast enough and in sufficient quantity to meet this need over the longer term. There is, however, little prospect that the conventional oilfields, chiefly in Alberta and Saskatchewan, will be able to increase production to meet all our requirements pending the development of these new sources of oil. So we will continue at least for some time to be dependent on imported oil, at world prices, to meet a vital part of our requirements. We should also bear in mind that we have an obligation as a member of the International Energy Agency to assist in meeting international supply emergencies arising out of crises such as the Arab embargo of 1973-74, the Iranian revolution, and the Iraq-Iran war. We cannot separate ourselves completely from the---

problems or the prices of world oil supply. Where we are fortunate is to be dependent on actual imports of oil only to a limited degree, unlike Japan and some European states. One of our problems is to determine what measures are needed to encourage conservation, better utilization of oil and increased supply to offset that degree of dependence on imported oil, and to what extent the related benefits and costs can be brought into balance. Internally, we have as you know many other energy problems, for each of which we must somehow accommodate divergent interests, assess the costs of alternative responses, and do our best to reach balanced solutions. Although these problems have many aspects, they may be broadly grouped as questions of pricing and questions of supply. They are all, of course, interrelated, and if I were to attempt to discuss all the relationships we would be here for a very long time. Let me then select a few samples.

On pricing, I have already touched upon the two most important, the inexorability of price increases in some degree of relationship with world prices, and the re-establishment of a working basis of agreement between Alberta and the federal government. A schedule of proposed future prices is outlined in that agreement, but the details, the adjustments. to changing circumstances, the implications for the cost of other goods and services, the ultimate effects on our ways of living, will only become apparent over time.

Perhaps you will bear with me for observations on two points. The mechanisms of oil pricing are extremely complex. Because they are hard to understand, it is tempting to look for simple explanations. It is also tempting to look for scapegoats, either the oil producing areas of the world, or the oil marketing companies, particularly the multinationals. We have seen much of both in Canada.

The manifestations, especially in Alberta, of the wealth and power recently accruing from large petroleum reserves have caused a distressing amount of criticism, ranging from envious to hostile, in other parts of the country. It would seem more reasonable to rejoice that the new wealth is accruing to any part of Canada, rather than, as in less fortunate countries flowing wholly to foreign sources of oil. Inter-regional rivalries and jealousies are not new to Canada, are perhaps inevitable, but surely there is a need for moderation, balance and even satisfaction in the prosperity of once poor regions which cannot fail to be reflected in demands for the goods and services of the other parts of the country. Especially is this so when one keeps in mind that Alberta has never insisted, as it might have, that it receive the full equivalent of world prices for its oil and gas.

The multinational oil companies are well able to speak for themselves, and I cannot and do not wish to appear as their advocate. I do, however, advocate fair play, and, therefore, have been distressed at a noticeable tendency in the media to accept as proven various allegations of past impropriety, if not law breaking, which have been published without the oil companies having been given an opportunity to meet the allegations. That opportunity is now to be given before the Restrictive Trade Practices Commission, and I suggest that in simple fairness, judgement should be suspended until all the evidence is in and the competent authorities have reached decisions on that complete evidence. If wrongdoing be established, by all means let the appropriate sanctions be applied. Meanwhile, let it also be remembered that the multinationals have, in the course of pursuing their shareholders' interests, invested very heavily indeed in the development of Canadian petroleum resources to the benefit of Canada as well as to themselves. A sense of balance would suggest that we cannot appear to condemn them without trial and then expect them to be whole-hearted in helping us to solve our energy problems.

The temptation to simplify the complexity of petroleum pricing is pervasive, and I am not exempt. To reduce it almost to absurdity, consider the mythical case of the man who has gone out and dug a well and found a barrel of oil. He sells it for the best price he can, whether in an open market or one controlled by the government. He pays the relevant royalties and taxes. Then he considers what to do with the proceeds. If he has not made what he perceives is a reasonable return on his investment, he may decide to spend the money, that is, go out of business, or invest it in another kind of enterprise. Even if he has received a reasonable return, but is not confident about the stability of the environment of rules in which he is working, he may decide to stay in the same business, but to drill his next well somewhere where the rules are more to his liking. If he perceives that he can hope to achieve a higher return on his next barrel produced in some other area, he may decide to put his money there, even if the environment is more risky. If both the prospective return and the rules are more attractive elsewhere, he will be more strongly moved to go there.

In recent years, quite a few oil explorers and developers have decided that the returns and the rules in Canada have been less attractive than those elsewhere. It is no bad thing that Canadian exploration efforts should be diversified: some of our Canadian companies have done very well in the North Sea and in the U.S. and elsewhere. But if the outward movement of exploration and development money and skill becomes so large that activity in Canada falters and shows signs of halting, we have a problem. Once again, the recent establishment of some of the new basic rules, and of the outline of a price schedule for some years ahead, gives reason to hope that that problem is being dealt with, even though the explorer may not receive as high a price for his next barrel as he might expect elsewhere. We can hope that, on balance, the Canadian scene will be attractive for petroleum exploration and development.

This balance of attractiveness for capital is never clear, never static, because changes are always going on in the alternative environments and also in Canada. We do not yet know the actual effects of recent events, and legislation implementing the National Energy Program has yet to be put in place and assessed by those who make the investment decisions. I have not attempted to relate to this simple tale the complexities of foreign exchange rates, interest rates, levels of economic activity, inflation rates, technological developments, project lead time and all the other relevant factors. Even so, the least one can say is that we are again moving, and moving in the right direction.

I wish now to touch briefly on a few matters, other than price, which affect our domestic production and supply of energy. In all of these my purpose is to point yet again to the need for a sense of balance, an accommodation of differing viewpoints which will enable us to cope with our problems.

A broad example is the debate between those who advocate conservation and those who support development of new energy supply. Conservation not only minimizes the use of scarce non-renewable resources, but also avoids the adverse environmental and socioeconomic impacts which are sometimes associated with the development of them. It is clear that conservation is a primary goal of federal and provincial energy policies, and has strong and vigorously expressed public support. However, in our climate, and with our distances, there are limits to what can be achieved by conservation. Development of new supplies of energy is also needed if we are to continue to have a healthy and viable economy. In finding the proper balance point along this spectrum, careful and improved analysis of costs and benefits is essential.

A much more controversial and complex aspect of energy development is the effect on the environment. Some environmental problems are within our own control; others take us into international relationships. For instance, it is clear that in Canada new thermal electric power plants which do not conform to environmental standards and which generate acid rain are not likely to receive government approvals for their construction. It appears that the present United States administration may follow a less rigorous path and our lakes may succumb to acid rain generated south of the border. Vigorous Canadian diplomatic action has thus far not been successful in solving the problem. Pollution of the atmosphere and of the world's waters, by products of combustion and by spillage of toxic energy-related substances, take us into multilateral international considerations where the essential for any progress is both to reduce the pollution and to find an acceptable balance of interests.

Within Canada, perhaps our most difficult environmental problem is to reconcile energy development with the fragility of the Arctic eco-systems. The views of the many public interest groups expressed at the Berger inquiry, and the evidence adduced before the National Energy Board that the pipeline to carry Alaska natural gas should be routed along the Alaska Highway rather than along the North Slope of the Yukon and up the Mackenzie Valley, demonstrated that those concerns are recognized and carefully weighed.

So too are the environmental concerns of other parts of the country, to the extent that there are now vast arrays of federal, provincial and territorial laws and regulations to be coped with before any new energy supply can be brought on stream. There are often overlapping provincial and federal areas of regulation. One sometimes wonders how major energy developments survive such a formidable array of obstacles. The National Energy Board is working with the provinces to reduce the delays and duplications inherent in the overlap. Thus far only in one case, that of the Northern Pipeline Agency, which is supervising the construction of the Alaska Highway pipeline, have federal, provincial and territorial interests been combined into a "one-window" approach. A sense of balance is needed between those scientists who would take unlimited time to assemble all relevant data, and those developers who would press on without enough assessment of risks and provision of remedies: that balance has to be struck at some point, where necessary energy developments can proceed once there is sufficient evidence to give reasonable assurance that environmental impacts can be contained or mitigated to acceptable levels. Changes in legislation and regulation may be needed to facilitate decisions in principle being made before completion of the comprehensive and voluminous detailed environmental studies. These would still have to be completed and to be taken fully into account before construction is allowed to begin. This could prevent waste of time and a great deal of money in preparing applications which may be rejected for non-environmental reasons, while allowing planning to proceed on a conditional basis for projects which qualify for approval subject to further environmental examination. More and more, companies are refusing to spend many millions of dollars preparing applications for public hearings without getting some indication that it is worthwhile to spend more money on delineating the more detailed aspects of the proposals. A sense of balance is needed if necessary and desirable energy supply projects are to take place.

A similar and even more emotion-laden problem is the interrelation between energy development projects and the claims of native peoples to land settlements and aboriginal rights. Again, discussions of such interrelations were extensive in the Berger Inquiry and Report. There can be no doubt that it is important to all Canadians that these claims be justly dealt with, but by their very nature the claims seem difficult to resolve quickly. Should all energy developments to which native claims are relevant be held up pending settlement of those claims, or can we devise some manner of allowing the energy development to pro- Petro Canada falls somewhere in the middle of the spectrum. People sometimes forget the sound business reputation of the Crown corporation Polymer, now Polysar, or of such provincially owned utilities as Ontario Hydro and Hydro-Quebec which have well earned world-wide reputations for excellence.

You may well say that I have been identifying energy problems without pointing to solutions to them. What I have been trying to do is to point out that solutions to them, in the complex political, economic and social structure of Canada, are not easy to come by, and are unlikely to be achieved if one's objective is to optimize the position of any one special interest group. Self-restraint by federal and provincial governments, by consumers and producers, by conservationists, environmentalists and energy developers, will be needed if compromises which can command general acceptance are to be reached.

It is sometimes hard to be optimistic on this score. Many are at present pessimistic, and they have many reasons to feel so. Underlying our economic and constitutional problems is a sense of unease about the major shift in the social mores which pervades the western nations. The work ethic is no longer the driving force it once was nor do religious codes of conduct govern as many people's lives. Rather we live in a self-centred society, geared to what is sometimes called the "me" generation. Corporations take exorbitant profits where they can. Wage increases are no longer tied to increases in productivity, but are demanded, whether in direct pay, cost of living adjustments, so-called fringe benefits, or reduction of work, as a matter of right regardless of whether the economy can support the rising expectations. The world owes us an everimproving standard of living in return for an everdecreasing amount of effort. There is an uncomfortable element of truth in all that, but it is not the whole story. Every generation as it ages feels somewhat like that about the following generations. You may recall the little bit of doggerel which runs:

My grandad, viewing earth's worn cogs, Said things were going to the dogs; His grandad, in his home of logs,

Said things were going to the dogs; His grandad in the Flemish bogs, Said things were going to the dogs; His grandad, in his old skin togs, Said things were going to the dogs; There's one thing that I have to state--The dogs have had a good long wait!

I am not a Pollyanna, nor do I wish to be a Cassandra. The latter would be the easier choice, if one had to choose, at this time of constitutional conflict, unprecedentedly high interest rates, serious unemployment, the looming possibility of a foreign exchange crisis, Quebec separatism and western alienation, as well as the manifold difficulties of our energy situation. I see no simple way through any one of these problem areas, let alone all of them. But if one considers our history of overcoming threats and surviving crises, depressions and bitter inter-regional disputes, one is amazed at how each time we have found the fortitude, the willingness to compromise, the sense of balance that has enabled us to endure, to overcome, and still to achieve a high standard of living and a peaceful way of life.

In this light of the past, I suggest to you, Canadians do not have reason to despair of the future of this country, but much reason for faith that our capacity to survive and together to improve our lot is still with us, still vital, still full of promise. One could be even more optimistic if we could find the key to make cooperative federalism work and work well and at the same time have all segments of Canadian society restrain themselves from seeking too great a reward at the expense of others. These are very major hurdles to overcome. But if we can succeed in overcoming them and, considering our relatively abundant energy, mineral and forest resources, we could indeed begin to move towards a promising future.

The thanks of the club were expressed to Mr. Edge by Robert H. Hilborn, a Past President of The Empire Club of Canada.