Competition—The Cornerstone of the Free Enterprise System

MR. DERRY:

Distinguished members and guests, ladies and gentlemen: Our President, Mr. Stalder, has asked me to express his regrets at not being able to be present this week or next. In his absence, I have the pleasure of chairing these meetings and introducing our speakers.

It is our good fortune today to be addressed by a man who has a strong interest in, and responsibility for, the efforts of the Government of Ontario to foster and enhance the competitiveness of Ontario's industrial and trade sector. His address today is particularly appropriate after our having heard last week's speaker, Dr. Michael Walker of the Fraser Institute, emphasize the importance of export markets to the well-being of Canadians.

A year ago, the Ontario Ministry of Industry and Trade was created, and Mr. Walker named its Minister. When this ministry was formed, the Ministry of Industry and Tourism was reorganized to transfer Tourism to a separate ministry, while Trade was elevated to the status of a full division. This reorganized ministry is making its efforts in three main areas: expanding trade, encouraging investment opportunities, and strengthening the competitiveness of the province's industrial base. Trade missions and trade fairs abroad are being increased as part of the thrust for improved exports, while the "Buy Canadian" program is being expanded to assist with domestic markets.

The Honourable Gord Walker has first-rate credentials for this responsibility. He is known as an enthusiastic free enterpriser who has shown leadership in the past in pioneering sunset laws on government legislation and in promoting zerobased budgeting in government--both intended to ensure a greater effectiveness from government. In his new ministry, he has drafted a trade policy for Ontario to increase the sale of Canadian-manufactured products and services to world markets. He has also launched a major campaign to show smalland medium-sized firms how to successfully penetrate export markets.

Mr. Walker was educated at the University of Western Ontario and, upon admission to the bar in 1969, he opened his own law practice, Walker & Wood, in London, Ontario. However, he had felt a keen interest in political life from a young age and by this time, Mr. Walker had already served as an alderman in London for two years: this in itself was on top of an active life in student politics. He was first elected to the Ontario Legislature in 1971, and he currently represents the riding of London South, where he lives with his wife and two young daughters. Since 1978, he has held increasingly demand ing cabinet portfolios, first as Minister of Correctional Services, and then as Minister of Consumer and Commercial Relations. Throughout much of this three-and-a-half-year period, he was also provincial Secretary for Justice. A year ago this month, he took on the new portfolio of Industry and Trade.

I am pleased to welcome the Honourable Gord Walker, Q.c., to address us today.

MR. WALKER:

Mr. Chairman, ladies and gentlemen: I would like to speak to you today about competition, the cornerstone of the free enterprise system; the tremendous opportunities that exist for us to compete and win in the world marketplace; and about the dangers that threaten our very competitiveness.

Here in Canada we are the lucky heirs of a thousand-year process that started with the Saxons with their high cultural achievements, was augmented by the robust vitality of the Normans, and proceeded through a series of fortuitous historical developments to give us the rule of law, the primacy of individual and property rights, and the system of responsible government that is the basis of the free and prosperous society we value today.

The Empire Club of Canada carries on a tradition that is basic to democracy, of people freely coming together, comparing ideas, and reaching an informed consensus.

Your club's existence in this city, which has historically been the nerve-centre of Canada itself, reminds us that some of the finest achievements of the Canadian experience derive from British tradition, an entrepreneurial culture that is the foundation of Canadian accomplishment.

And why, you may ask, is a Minister of Industry and Trade talking about the value of preserving our culture? Because the economic prosperity that we have enjoyed did not come about by accident. Industry and commerce expand when they are underpinned by a vibrant, robust culture.

Even the problems of the moment haven't been able to destroy the results of decades of dedication to these principles of common-sense conservatism.

Ontario is a world-class competitor. Our economy generates $125 billion of goods and services yearly. That's roughly the equivalent of the national economies of either Sweden or the Netherlands.

Now, as we stand at the brink of world recovery, we must position ourselves for 4 per cent or 5 per cent real annual growth over the next four years. Let me try a quiz on you: name the world's most successful trading peoples. Some of you might be thinking of the Japanese. We are the world's most successful traders! On a per-capita basis, Ontario is two and a half times ahead of Japan, more than three times ahead of the United States, and ahead, as well, of France and Germany. In fact, one-third of Ontario's gross product is exported. One out of every five jobs in Ontario fills those export orders. A positive picture, you may say, and it is one that Ontario has carefully nurtured. There is, however, a great deal left to be done and it's critical that we start getting it done now.

As if the world economic climate that we compete in isn't bad enough, recently in this country federal bureaucracy has run amuck. Government waste has reached Guinness' Bookof-World-Records proportions. No one knows whether the real federal deficit will be $27 billion or $30 billion. The federal government's spending is simply out of control. What we do know is that, on a per-capita basis, it is more than 50 per cent greater than the deficit now giving our good neighbours to the south such consternation.

This federal government mismanagement is supposedly being done for our benefit. But one begins to suspect that it is in reality the legacy of a politically bankrupt government whose major policies have been proven by recent events to be totally, and expensively, wrong!

It's time to get our federal house in order, or we are in danger of forever losing our competitive edge. It's time to say, "No more, no more!" It's time to restore honesty to the economy, because to live on borrowed money and to perpetually borrow more is not a state in which either a man, a family, or a nation can survive.

Deficit spending mortgages our future. It is a tragic burden that we, our children, and our children's children will have to bear. What we're really doing is denying them democracy. They won't be able to decide where they want their tax dollars to go--they'll have to spend half of them paying interest on our bills.

It was in the early 1970s that deficits and debt became synonymous with government spending. Many countries now have deficits which are "structural"--in other words, built into , the revenue and spending patterns of the country. In good times the deficits are smaller, in bad times they are mammoth, but a structural deficit has one consistent feature: it is permanent and it is malignant.

The introduction of Canada's structural deficit has unfortunately been accompanied by the worst sustained round of inflation since the Industrial Revolution. It is not a coincidence -that the value of our dollar started to decline at the same time as Ottawa embarked on a massive "buy-now, pay-never" program. High inflation was the inevitable consequence and it has resulted in a major decline in confidence in our long-term economic future. Now, this year, we are told the federal accumulated debt will be more than $160 billion! It is the latest and largest of an unbroken series of federal disasters over the past fourteen years. The interest alone will cost the people of Canada $16 billion per year forever, if we don't do something about it.

How much is a billion dollars? Let me put it this way: if you went on a shopping spree with $1 billion, and decided not to spend more than a $1,000 a day, you wouldn't be back for more than three thousand years! But $1 billion (which we haven't got) was spent last week in Ottawa. And a billion more will be spent next week. And two weeks after that. And two weeks after that.

What should we do? I propose that the only answer is a total commitment now by the federal and all provincial governments to the complete elimination of structural deficits as fast as we can. This means we should plan for surpluses in good years and very small deficits in others until we have eliminated the problem.

How can it be done? First, by a commitment not to introduce any major new spending programs, unless the funds for them can be found within existing budgets, until the structural deficit is eliminated. Our governments, just like you and me, are going to have to say, "If we can't pay for it, we can't have it." Secondly, we must eliminate all spending programs that no longer work. Thirdly, we must conduct a vigorous attack on waste in government.

Is it politically feasible? I believe it is not only feasible but essential.

The federal record boils down to all talk, no action, and steadily increasing dread, the dread we feel in the pits of our stomachs when we think of the bills that will eventually have to be paid.

The Ontario government has been committed to achieving a balanced budget for some years, and until the current recession hit us we had almost made it. No wonder the world's financial institutions still give us their best-possible "triple-A" credit rating. That's why Ontario has the lowest per-capita provincial deficit in Canada--$300 per person against Alberta's $2,000 or British Columbia's $800. All of the credit for this is due to Treasurer Frank Miller; his predecessor, Darcy McKeough; and Premier Davis. What they, and I believe all of us in the Ontario government, have had is a strong commitment to do what must be done to keep our provincial financial house in order.

And that word commitment is indeed the key to solving this problem. Yet we must further strengthen our commitment until the problem is solved. As taxpayers and Canadians we must insist that our federal government comes to grips with this problem. Structural deficits are destroying our competitiveness.

Let's fix it, and be challenged by our enormous opportunities. We, too, are an economic island, with the whole world our anxious customer.

I firmly believe that jobs--and I mean real jobs, not the make-work kind--are created by healthy business enterprises, not governments. Therefore, government support or private enterprise, explicit government encouragement of entrepreneurship, is central to any credible economic growth concept.

Simply put, if we want to accelerate our departure from the present recession and strengthen our hold on future growth, then governments must back business--unequivocally.

Trust and mutual respect are exactly what has been missing from the government/business relationship at the federal level. In Ontario's case, we are building economic renewal on the principles of backing business and consulting business. These principles have a dramatic impact on every policy.

The marketplace will decide the winners and the losers. And that's the way it should be.

The role of government is to create a climate that inspires business success, that helps firms fulfil their objectives for growth and prosperity--that helps people fulfil their objectives for growth and prosperity!

That is the guiding principle behind my ministry's goal of practically doubling Ontario's export sales by 1987. We are a trading nation. In our earliest days, we had the coureurs-debois and the Hudson's Bay Co. Trade was essential to our survival, to our development. It still is. Our first settlements themselves were trading posts.

On a per-capita basis, Ontario is the number-one trading community of the world, and yet there are eleven thousand firms in Ontario missing the export boat. And there are sixteen hundred professional firms in Ontario also missing the export boat, or truck,or plane; but missing the opportunity.

How would the average Ontario business like a piece of a new market that's growing by over 50 per cent annually? Saudi Arabia is. The entire Middle East is growing at 34 per cent. The Pacific Rim is growing at 24 per cent.

We'd all like a part of such business. How do we get it? We need to mobilize. If the way to fight what the textbook writers call "Japan Inc." is "Ontario Inc.," then let's get on with it. What is Japan Inc.? It's a phrase which describes a co-operation in Japan of government, industry, and finance. The kind of co-operation that Premier Davis had in mind when he set up our new Ministry of Industry and Trade.

Twelve months ago we started. We brought in our trade people from all over the world, we called in senior executives of major business and industrial organizations, many private companies, and most financial institutions. Together we've set a sales goal and we are going after it.

Frankly, Ontario's share of world trade has slipped over the past decade. Had industries here been able to maintain that share, some two hundred thousand jobs might have existed that now don't, and unemployment in Ontario could be in the order of only 6 per cent.

Our trade policy has three prime objectives--JOBS, JOBS, AND JOBS. International trade is the cornerstone of our industrial wellbeing, our very economic growth. We've got to start underutilized and under-productive Canadian capacity working again, and we're going to! We're going to because we are Canada. Ontario is more than three-quarters of all of Canada's fully manufactured exports!

Our message to Ontario industry is: tell us your export ambitions and we'll help you achieve them with market intelligence, trade missions, and trade exhibits; by arranging meetings with agents, distributors, and joint venture partners; through marketing advice; by providing export loans and anything else we need to do. We're all in this together and we will work for you and with you.

You hear a lot today about "high tech." Ontario has assumed a leadership position among Canadian governments--and most world governments--by establishing six centres of applied technology to help private enterprise apply microprocessing, computer-aided design and computer-aided manufacturing, robotics, and other "tomorrow systems" to their operations so that they can become more productive and more cost-competitive. They operate in auto parts, agri-food, mining, forestry, and every manufacturing sector.

These productivity centres are being managed for us by boards with directors from the private sector--a genuine public/private partnership. Through these centres we are saying to the leaders of private enterprise: "We can assist you in the technological transformation of your operations. We can show you the route to profitable survival." We're a world-class competitor. We are investing $250 million in this, our productivity future.

In an increasingly competitive world, where technology is force-feeding change, it is vital that we find a place for ourselves on the cutting edge of creative capitalism.

We realize that those nations which have had the most impressive economic growth are those which have been the most innovative technologically--that have focused on research and development, that have forged a practical government/ business partnership, have attracted investment capital, and that have gone after markets with well-focused sales campaigns. Finally, we must do something about FIRA, the federal government's Foreign Investment Review Agency. As I said in Ottawa, on Monday, to a meeting of federal-provincial industry ministers, FIRA is still viewed around the world as evidence that we don't want new investment or new industry in this country. The impression of Canada to foreign companies is that they are not welcome here.

In Ontario we welcome foreign investment. We concern ourselves more with corporate behaviour than with parenthood. The bottom line, after all, is jobs. If they don't come here, they'll go elsewhere.

I stand here today, reminded by the institution of the Empire Club itself that one of our strongest cultural traditions, which we should protect at all costs, is that of limited government. As governments gobble up money, less and less is left for ordinary people to dispose of as they see fit, for businesses to invest, and for charitable organizations to distribute to the disadvantaged. And who says governments know better than you what should be done with your money?

We opened up this country and provided space for our people to dream their dreams. We tamed the wilderness; we cleared the farmlands; we built towns and cities. Achievements were heaped upon achievements as we were challenged to ever greater levels of accomplishment.

Remember this: success itself is a virtue, not a vice. One person's success is not responsible for another's failure. A successful person should never be penalized in the name of false equality.

Let's start talking again about equal shares of prosperity, not equal shares of poverty.

Let us remember the greatest resources in this province aren't in the ground--they're in the hearts and minds of the people of Ontario. We are world-class competitors! We are the Province of Opportunity, and the future will be far greater than the past!

The appreciation of the audience was expressed by Ian McPhail, a Director of The Empire Club of Canada.