The State of the Economy

MR. DERRY:

Mr. Premier, My Lord, members and friends of The Empire Club of Canada: It is an interesting proposition, Mr. Premier, to introduce a little-known fellow such as yourself. Research has shown this to be the seventh occasion on which this club has been honoured by an address from you and this fact made me wonder whether perhaps you might be breaking a record of some sort and, indeed, I found that you are in rarified company. However, there are six who have, in our eighty-year history, addressed us on more occasions, with the record going to George Drew, with sixteen addresses over thirty-five years. Yet, with your addresses covering a mere nineteen years, you still have lots of time! While we do not measure our success by the frequency of repeat performances, we are certainly pleased that with your very busy schedule, you have returned to this forum today, during our province's bicentennial year.

As you know, for many years now, our weekly addresses have been broadcast on radio station CJRT and televised by Rogers Cable TV. We are always gratified by the number of people who listen to or watch our addresses either live or when they are rebroadcast. The strong interest in hearing addresses made to this club is certainly there, though, Mr. Premier, it saddens me a little that for today's address, some viewers, I suspect, may prefer other television programming. For instance, I am told that Messrs. Peterson and Rae* have other interests. I understand that Mr. Peterson has a distinct preference for "Search for Tomorrow" while Mr. Rae is a devotee of "Fantasy Island." Their second choice may periodically be "Let's Make a Deal" but that doesn't seem to get strong reviews. Of course, there are one or two people on the government benches who seem to prefer "The Young and the Restless," but the real question, Mr. Premier, is, other than the address which we look forward to now, what you would prefer to watch. You may correct me of course, but on good authority, I am told that since Mr. Sazio's team is enjoying a well-earned rest, your current favourite is one which would have the full approval of Mr. Drew. I am told that it is a series called "Dynasty."

However, exclusive of those few eccentrics who might prefer alternative programming, you can see from today's attendance that while as always it is an honour to have our premier address us, it is also our genuine pleasure to welcome Bill Davis back to this forum.

Mr. Premier, I could remind our audience of your many accomplishments as premier of this province, of the progress that has been made under your leadership, and of your laudable role in negotiating Canada's recent constitutional accord. However, they know all that, and it is because of that knowledge and their high regard for you that they are here. They really want me to get on with my job so they can hear from you. I shall do just that. Ladies and gentlemen, please join me in welcoming the Premier of the Province of Ontario, The Honourable William Davis.

MR. DAVIS:

Mr. President, ladies and gentlemen: I welcome this opportunity to speak to this session of The Empire Club and to share some thoughts with you concerning

*Mr. David Peterson, Leader of the Ontario Liberal Party and of the Official Opposition, and Mr. Robert Rae, Leader of the Ontario New Democratic Party. The state of our economy and the related challenges we face as Canadians. Delivering such a speech, I must admit, is a much more pleasant task today than it would have been a year and a half ago.

The evidence of Ontario's recovery is unmistakable. World economic recovery has been under way since the beginning of last year and Ontario's diversified economy has been well placed to share in the progress. I believe that this strong recovery from extremely difficult conditions has demonstrated the underlying strength and resilience of Ontario's industrial base. Not surprisingly, I also believe that it reflects the excellent record of the Ontario government in pursuing prudent economic and fiscal policies.

Without belabouring the point, which I trust is already obvious to you, we have come through the worst recession in the last fifty years in Ontario, without a cut in our major programs and without any significant tax increases. This, in my estimation, is no small achievement. And we should be encouraged by the prospect that 1984 should and will be an even better year for virtually all parts of our economy. According to the Conference Board of Canada, Ontario outpaced the national recovery last year and will continue to be the leader this year with real economic growth of about 4.7 per cent.

Analysis shows that this buoyancy is attributable mainly to an improvement in our manufacturing industries. The recovery and subsequent performance of the auto industry alone has exceeded our most optimistic expectations. Canadian car production is up 21 per cent over 1982 and total Canadian car sales are up 18 per cent. Regardless of which indicators you choose - jobs, production, sales, trade, investment - the auto industry has led the economic recovery in this province.

The service sector has also displayed considerable stability during the recession and has accounted for the creation of approximately 120,000 new jobs since December of 1982. This strong performance, combined with the improving performance of our agriculture, transportation and communications, trade, and finance sectors, puts Ontario in the forefront of what should be exciting new opportunities for growth and development as we move into the latter half of the 1980s.

And since the Ontario way of life is dependent on sustained economic growth, recovery must be our principal economic goal for 1984. But it is up to each and every one of us to heed the lessons of the past difficult years and work effectively and co-operatively to ensure that the recovery continues. Government, labour, and industry together have the capability to accelerate and reinforce the strength of our economy and the progress that is made will be heavily dependent upon that kind of concerted effort. While the recession produced very little in the way of beneficial side effects, it may have brought home to many of us the fact that we can no longer continue to travel in our own individual orbits, oblivious to the needs of others and to the notion of the common good. The recession may have helped many people to arrive at the realization that if we are to be successful as a nation, we must operate as a partnership, where the individual working Canadian is recognized as being a major contributor to economic growth, just as we recognize the contribution made by those in senior management.

As far as government is concerned, the most constructive role we can play in this partnership is to concentrate our attention on creating the kind of environment in which the private sector can do what it does best - creating new jobs and new prosperity. For the leaders of business and industry, the challenge may be one of realizing that the men and women who devote their skills and efforts to our various enterprises represent far more than just another piece of plant equipment or cogs in a machine. Each and every human being can be motivated, will respond to incentives, and therefore, should be allowed to share in the success of his or her employer.

As far as the labour movement is concerned, if its members are to be full and contributing members of our economic partnership, they must stop viewing employers simply as adversaries, to be squeezed as hard as possible. If attitudes on both sides of the labour-management equation do not change, then the kind of tension and unrest that cost us so dearly in the past will continue to prevent us from becoming more productive and competitive in the future. There is no doubt in my mind that as individuals, and in a collective sense, we have much to gain from such a spirit of partnership. For only if we are united and determined at home can we hope to succeed abroad, where most of our new economic opportunities lie.

In this regard, it is obvious that we need to sharpen our competitive edge. We need to upgrade existing industries, using new capital to exploit new technologies; establish a competitive advantage based upon skilled people, unique design, and flexible production; and adapt to changing patterns of trade by preparing to supply the products for which there is a world demand. As is well known to every business person in this audience, the vitality of Ontario's economy, and our assurance of a prosperous future, will be dependent on our ability to develop and expand export opportunities for Ontario manufacturers and for our resource industries. At this moment in time, the development of these opportunities is the numberone priority of our Minister of Industry and Trade and I am encouraged both by his accomplishments to date and by the prospects for the future. As many of you may have noted in this week's press, by reaching $41.6 billion in merchandise exports in 1983, Ontario is well on its way to our $60 billion target for 1987.

But the field of trade is not marked by a clear and smooth path that will, in some preordained fashion, take us onward and upward. Nor is it by any means a path that moves in only one direction. Practically every jurisdiction in the world is looking for trading opportunities for the same reasons that give rise to our own initiatives in this area. When you talk to other jurisdictions about the prospects for the sale of Ontario goods and services, they, in turn, want to know what their prospects are in our province. Further, as is understandable, every nation has concerns about maintaining reasonable home markets and opportunities for local producers.

It was those kinds of concerns, and the ramifications that they hold for Ontario, that prompted me to go to Washington just a little over a week ago. For in the United States, at this time, as I am sure many of you are aware, there is a very strong movement to protect certain basic industries in that country. While the list could probably be a much longer one, for purposes of this occasion it may be sufficient to note that steel, copper, cement, and automobiles, all products which we produce and hope to sell in the American market, are very high on the list of American concerns. It was fortuitous, therefore, that our Ambassador to the United States, Allan Gotlieb, asked if I would come to Washington to speak to members of both the administration and the Congress on trade matters, in order that they might better understand Canadian concerns about their contemplated actions. In what turned out to be a very busy two-day period, I had the opportunity to speak to two members of Mr. Reagan's Cabinet, one of his senior economic advisers, as well as members of the Senate, the House of Representatives, and other government officials. Without exception, I was assured that it was certainly not Canadian trade and Canadian products that had led to the type of protectionist measures that are currently being advocated. Nevertheless, it was also indicated that, if such measures are adopted, Canada will be swept into the net, and the resulting adverse effects will fall upon our country just as they will fall on other trading nations dealing in these commodities. For my part, and I trust that I was speaking for many Canadians in this regard, I attempted to stress the adverse effects these measures could have not only upon Canadian industry but also more importantly, upon the great and historic Canada-United States relationship. I can assure you that our ambassador and other Canadian officials will continue to push this point of view as forcefully as possible.

No one, at this stage, can be certain as to what the fate of any of the proposed legislation will be. As you know, the American legislative process is a complicated one involving two houses of Congress that act quite independently of one another, and an administraton that, at times, can be independent of both (and vice versa). The administration, in general, is opposed to these protectionist measures, both as a general philosophy and as a method of handling the particular problems that affect the economy of the United States at this time. So, at the moment, this is a story without a firm conclusion. Hopefully, with the assistance and support of public officials in the United States who understand the strong linkages that exist with this country and who are, in every sense, friends of Canada, the problems that loom on the horizon will not become a reality for us.

But I cite these circumstances to stress that in this highly competitive world no one is going to make our task particularly easy. We will only succeed if we look first to our own efforts. We must, therefore, be vigilant not only in respect of developments in other parts of the world that might affect us, but also in respect of the kinds of actions and decisions that we are making that can affect others.

Trade is clearly an area in which balance, fair play, and openness will be required and I trust that we have what it takes to set an example in the way we carry out our affairs. We must be fair and open with those who are fair and open with us. To those who are not, we must show our firmness of resolve.

The difficulties that we must overcome, however, are not only those that lie beyond our borders. Here, at home, there are still problems that continue to plague us and which must be addressed before our citizens believe that our economy is back to a healthy state. Most obvious of these is the continuing high rate of unemployment that exists in all parts of Canada. Ontario's relative situation may be better than that in most parts of the country but it is certainly not good enough.

The factors related to unemployment in Canada, and in Ontario, are many and complex and their analysis would require considerably more time than is available to me on this occasion. Allow me, however, to take just enough of that time to comment on one aspect of the problem that disturbs me greatly, and that is the matter of youth unemployment. It is a matter that requires our collective attention and our creative talents if we are to bring about some measure of real improvement in the current situation. While we are all familiar with the array of available statistics on the subject of unemployment, those statistics do not necessarily focus our attention on the human side of this problem.

It may be that some of today's young people have unrealistic expectations, partially self-created but also created in part by an environment in the creation of which all of us have shared to some extent. But whatever the cause, and whoever may share the burden of responsibility, we must think through the implications of what we are saying when, as the result of current circumstances, we effectively tell a young person that there are limited opportunities for him or her to start to build a career.

Indeed, we must ask ourselves what we are going to do about one of the most insidious hoops through which society forces young people to jump - no jobs for the inexperienced and no jobs in which to gain that experience. My fear is that the impact of all of these circumstances may have already given rise to a new and more profound cynicism, a reduction in the sense of self-worth on the parts of many young Canadians, and an erosion in the degree to which they believe there truly is equality of opportunity.

Now, having come before you today and drawn your attention to the problem, I must admit that I have no neat, simple solution. Anyone who pretends he or she has such an answer is simply attempting to deceive the public. But if our results are less than satisfactory, it is not due to lack of effort. During the current fiscal year, the Government of Ontario has spent some $125 million to help young people to find employment, to help them to obtain some useful experience, and to provide them with some direction during the most critical years of their lives.

While we have offered direct employment to many of these young citizens, most of our programs involve the private sector, either directly or indirectly. Basically, it has been our objective, as we undertake some of these initiatives, that a brief period of government involvement, and/or some exposure to the private sector, will lead to permanent and productive jobs for many of these people - particularly if general economic recovery is taking place at the same time. There can be no doubt that the general improvement in the economy will make the single most significant contribution to our youth employment picture. And government's most important contribution to that end will be to create the climate within which the private sector can grow and create the jobs that our young people seek. But beyond these general circumstances, there are some basic steps that can be taken to address the situation. The first is to recognize that youth unemployment is a particular problem that needs particular attention. That recognition is not solely the responsibility of government, but the shared responsibility of government, business, and organized labour. For, in truth, all of us, through established patterns of operation and established attitudes, may well have contributed to the situation without deliberately attempting to do so. Only through co-operative effort, therefore, are we going to begin to create an improved situation. Government, business, and labour must work together.

For our part, we are going to take two basic steps that, hopefully, will allow us to make inroads on the current situation and put us in a stronger position for the future. These will involve the consolidation of government efforts and responsibilities, now spread throughout several ministries and agencies, and an even greater emphasis on the fundamental areas of education and training. As industrial technology advances, so too must the levels of training of our work force. Already, significant efforts are being made in our colleges of applied arts and technology, and in many cases, on the shop floors to ensure that new skills are being developed to match the technological advances taking place in business and industry. But more can and will be done. If the jobs are not available today, we must ensure that the young people are ready when they become available tomorrow - and that we intend to do.

I indicated earlier that this is a complex matter that defies simplistic solutions. We know that, but that is no excuse to curtail our efforts. You may expect, therefore, that in the upcoming weeks, through the Speech from the Throne and the budget, the government's two major instruments of progress, further attention will be given to this vital area of life in our province.

At the risk of sounding extremely chauvinistic, I believe there are few places on the face of this earth that provide their citizens with a better life or greater opportunity than Canada, and our own province within it. Certainly, we have problems but they are not insurmountable and they do not come close to offsetting the positive character of our society. Our challenge is to tackle those problems and make Ontario and Canada an even better place in which to live.

Without question, the particular challenges that I have mentioned today are formidable ones. But if we can meet them in a united and determined manner, we will open up our country to a host of new and exciting opportunities. Now is the time for all of us to contribute to securing the future of this magnificent country. I remain, as always, optimistic about our prospects.

The appreciation of the audience was expressed by Sydney Hermant, the Senior Past President of The Empire Club of Canada.