Transport in Canada and National Unity

Transportation, too, must be able to adapt to the rapid, powerful forces of change in the global marketplace if it is to contribute to Canada's economic health. For many businesses in this country, distance to market is a No. 1 marketing challenge. Canadian competitiveness abroad begins with a competitive transportation system at home.

A transportation system that is competitive and responsive to market forces cannot be planned for in an ivory tower; it has to be shaped and reshaped as conditions change.

We have taken a business-like approach to planning the future of the transportation industry. We have established realistic objectives that can be met with available resources and within reasonable timeframes. We are finding innovative and creative ways to solve infrastructure problems and capacity constraints. The advantages of economies of scale are allowing us to avoid duplication of services on a nation wide basis. In other words, we are continuing to do more with less.

Harnessing Canadian transportation to market forces has been behind our transportation policies since 1984 and, I am pleased to say, we have made radical changes in key areas of transportation to achieve that goal.

During the last few years, the combination of recessionary forces and intensified competition has led to a rationalization and consolidation in the industry on a global scale.

Airlines around the world have streamlined their operations, introduced efficient technical innovations both on the ground and in the air, and have developed effective routing networks--all in an effort to remain competitive. Airports are aggressively marketing themselves locally, regionally and internationally.

In today's dynamic environment, maintaining the status quo is tantamount to losing ground. As a government, we recognized that the protective legislation that had served our transport industries well in the past was now impeding their growth. It served neither the industry nor the Canadian travelling public.

Our Freedom to Move initiatives of the mid-1980s were designed with Canadians in mind--and Canadians are benefiting. These changes have contributed to the development of effective hub-and-spoke networks with links to other international carriers. And our carriers are today providing better service at more competitive prices.

A new Canada-U.S. air transport agreement is essential if our airlines are to continue to provide better service. The potential advantages of a new agreement make it an essential element in our strategy to help Canadian carriers and their clients.

Under the current arrangement, our airlines have access to only 30 per cent of the American market while U.S. carriers enjoy access to 90 per cent of ours.

The 1974 agreement is stifling the new trade, travel and tourism realities of the North American trans-border market and Canadians are at an obvious disadvantage.

International trade has been, and always will be, a key to Canada's economic vitality. The Free Trade Agreement was signed in recognition of this fact, and with the intent of providing easier access for Canadian products to the U.S. market. Transportation agreements and infrastructure that are complementary to the FTA must be developed if Canadian business is to be fully competitive.

The new bilateral air agreement is intended to do precisely that. It will provide a wider choice of fares, carriers and services. Canadians will be able to make more direct flights between major centres such as Toronto and Washington, Montreal and Atlanta, and Vancouver and Denver. Increased business will, in turn, spur development of better facilities.

As you know, we have held four rounds of talks in the United States and Canada and the progress has been good. As Minister of Transport, I can assure you I will not sign a new agreement that does not ensure the continued viability of the Canadian airline industry. Safeguards, phase-in-periods and an examination of "made-in-Canada" cost issues are ways of accomplishing this goal.

We can't deny the future. But we can manage it for the sake of our airlines and our business interests.

The new air agreement is being negotiated by our government in the interests of all Canadians. I am confident a new agreement could be concluded by the end of 1992.

Air Canada--Canadian Airlines International

With respect to the situation of our two major airlines, we are monitoring this issue very closely. Neither Air Canada nor Canadian Airlines International have asked us to modify any parts of our existing legislation, but I repeat what I have said on many occasions: any proposals put to us by any one or both airlines will receive our immediate and careful attention.

Our government, of course, would like to see the combined operation of our two national airlines because we strongly believe that competition between Air Canada and Canadian Airlines International will provide travellers with wider choices and better fares.

These are some of the adjustments we may be taking in the air. But what about the changes on the ground.

A visit to any one of Canada's major airports would give observers the impression of an isolated island humming with independent activity-people scurrying about, luggage moving on conveyors, planes coming and going, and so on.

But that impression would be wrong. These transportation gateways are hardly isolated, and they're far from being independent of their communities. Recent economic impact studies have shown just how integral our major airports are to their surrounding environments.

In Toronto, almost 34,000 direct airport jobs are created by firms and government agencies located at, or directly tied to, Pearson International Airport. Some 14,000 people are employed right at the airport.

In total, Pearson and the other industries it supports generate more than $1.9 billion a year in personal income and $4 billion in direct revenue for local businesses which translates to nearly $11 million of business revenues each and every day of each year.

The airport also helps to generate revenues for municipal, provincial and federal governments. These are taxes paid by both individuals and businesses.

Annual revenues resulting from airport activity and paid to the various government jurisdictions total $630 million. As you all know for sure, an environmental review is under way to assess the impact of the proposed construction of three additional runways at Pearson International Airport. Public hearings concluded earlier this month and the panel is preparing its report and recommendations to the government. They're due in Ottawa this summer.

Nearly one third of all travellers in Canada pass through Pearson International, this country's largest airport and the second-busiest gateway in North America. And it is expected Pearson will surpass its 28-million-passenger capacity in 1997 whether new runways are added or not.

And because Pearson will need to accommodate such volume of transient passengers before the end of this century (with or without the new runways) and because nobody wants to relive the horrible congestion that prevailed for too long before February 1991, we are actively examining the upgrading of Terminals 1 and 2.

Many factors have to be considered, one being the state of the economy, and we expect to be in a position to finalize our examination of this question very shortly.

Canada's airports obviously are big business and vital elements of the local, regional and national economies. How have we, as a government, adjusted to this reality?

As was the case with our airlines, we've recognized the environment in which our airports function is changing and that the arrangements of the past don't meet present-day needs.

In response, we've adopted a management framework for Canadian airports that emphasizes commercial development, potential contribution to economic development and responsiveness to local interests and concerns.

To implement this strategy, we've moved on several fronts. Smaller federal airports in the Northwest Territories and the Yukon have been transferred to the territorial governments. Proposals are being considered to transfer small airports throughout Canada by sale or lease to local governments or private interests.

With respect to our larger federal airports, I am pleased to tell you that I will soon be signing formal agreements to transfer four international airports--the Dorval and Mirabel integrated airport system as well as Vancouver, Calgary and Edmonton- to local airport authorities (LAAs).

Once all conditions of the transfer agreement are met by the local airport authorities and the Federal Government, the airports will be turned over formally to the LAAs about six months later. If the Toronto-area municipalities so wish, the operation of Pearson airport could also be transferred eventually to a Toronto LAA

These agreements will allow us to embark on a challenging new approach to airport management in Canada.

Transport Canada places considerable importance on partnerships with the private sector as we develop our programs, policies and services to meet the needs of the airport system. I am pleased to say the Federal Government and the private sector are taking a major step forward in providing for the sound economic management and competitiveness of our airports.

The LAAs will operate these airports autonomously on their own behalf. The Federal Government will continue to provide and pay for safety-related functions such as aviation and inspection services.

Let me emphasize that the transfers of the four international airports do not represent their sale by the government. Instead, the LAAs will operate the facilities under the terms of a 60-year lease.

As a result of these transfers, LAAs will be managed by local people who will best know the local requirements, will be better suited to adjust the management of the local airports much faster to changing conditions, better adapt to the changing world of a new bilateral air treaty with the U.S. and better utilize the airport as an economic development tool. Now let's turn to:

A safe, effective and efficient surface transportation system is essential to the day-today operation of any airport, from Pearson to the smallest gravel runway on the prairies. One of the major transportation industries that uses the road network is the Canadian trucking industry.

When you talk about trucking you are again talking big business. Canada's 5,900 trucking companies employ 100,000 people and the industry generates some $9.6 billion in revenue each year.

Until four years ago, government regulation tended to be interventionist and anti-competitive. We have moved away from that approach and, at the same time, have paid more attention to safety. We now have a National Safety Code under which truckers everywhere in Canada operate under the same safety standards. Most items in this National Safety Code are already in effect nationwide.

It isn't easy to adapt to new standards--particularly so in a recession--so we have taken certain measures to help truckers make the transition.

• We have adjusted the capital cost allowance rates to allow faster depreciation on tractors.

• We have also set up a two-year partial rebate for truckers on the federal excise tax on diesel fuel.

So, even in tight fiscal times, we are working to improve the regulatory environment for truckers--it's a good investment.

Any discussion about surface transportation would not be complete without citing the remarkable achievements of VIA Rail recently. A month ago, VIA Rail inaugurated an early-morning, Kingston-to-Toronto passenger service as part of a series of train-frequency improvements in the Montreal-Ottawa-Toronto triangle.

VIA's additional services are in response to demand from this growing market. The increased levels of service have been made possible by productivity improvements, better equipment and rolling stock. Responsible, sound management and a corporate restructuring have allowed VIA Rail to fulfil its mandate, cut its dependence on government funds and continue to provide first-class rail passenger services in Ontario and across Canada.

For example, VIA has added a Montreal Toronto express train that will make the 539-kilometre trip 20 minutes faster. By the end of the year, VIA hopes to be able to cut this trip by a further 10 minutes, to just under four hours.

Yes, it was a tough decision to take in 1989. Yes, we suffered badly in the House of Commons and in the polls when we cut back our annual subsidy to VIA Rail. But we accepted the temporary "verbal abuse" because we knew that Canadian taxpayers could no longer support the massive financial contribution that VIA required.

But I can tell you it was a great satisfaction to see that, within hardly two years, VIA could come back with the improvements recently announced and do it within its reduced budgetary constraints The better our transportation systems are, of course, the better we can compete. But there is another vital factor in play at this time. It is psychological. It has to do with complacency. It also has to do with estimating our assets realistically.

The recovery from recession in our country, and by our trading partners, has been painfully slow. Yet Canada continues to be one of the most fortunate nations in the world.

In terms of population, we rank 31st in the world. Yet we are members of G7, the regrouping of the top seven industrialized countries and we can boast the second-highest standard of living in the world.

We should never forget the base on which our prosperity stands. It rests, in part, on resource wealth and human skills. It also rests, in part, on our crossroads location, with trading windows south, west and east.

But the bedrock of our prosperity is Canadian nationhood--the economic integrity of a large, single, nation. Other countries and coalitions understand that advantage and many are making extraordinary efforts to match it.

Across the Atlantic, this is the year of European unity. Three-hundred and twenty million people, different in language and culture, with a centuries-long history of conflicts, are coming together at last. They are doing this for practical economic reasons. Europe united will be stronger economically than Europe divided.

Other coalitions are taking shape--the Association of Southeast Nations, for instance. These countries understand that larger economic units can compete better than smaller ones. They are hoping to cash in on synergism--the paradox that says two plus two can equal five.

Where did they learn that? Partly from us. Canada is a textbook example of synergism. We are more than the sum of our parts. Canada is a country of differences--regional, cultural, linguistic. Canada since 1867 has shown, despite periods of turbulence, that differences can be accommodated in a nation state.

That is the challenge of 1992. And it translates, at this point, into the task of renewing and improving our constitution, as I said earlier. A constitution is both an expression and an instrument of unity. It is a map that delineates the common ground of principle on which a nation stands. It is also a formula for co-ordinated economic effort.

L'une des preoccupations du gouvernement federal, c'est le conflit des politiques fiscales et budgetaires es divers paliers de gouvernement. II arrive souvent que celles des gouvernements federal et provinciaux ne se competent pas Tune l'autre. Elles peuvent meme se neutraliser.

II y a aussi une foule d'obstacles au commerce interieur. Dans certains cas, les echanges sont plus faciles entre le Canada et d'autre pays qu'A l'interieur de notre pays. L'Association des manufacturiers canadiens est parvenu a chiffrer ce probleme. Elle a denombre au moins 500 obstacles gouvernementaux au commerce interieur.

Truckers in some provinces cannot go into other provinces because of variances in weight standards. Job vacancies in some provinces cannot be filled by people from across the provincial boundary. Architects cannot bid on work in certain Canadian cities if they don't maintain an office in that city. This is not the way to build a sense of common interest.

But it is also expensive. The Canadian Manufacturers Association estimates we could save $6 billion a year by getting these barriers out of the way.

The Europeans have made similar calculations in this area. They believe that taking down the barriers there will increase personal income five to 10 per cent. On that basis, the same process would increase the standard of living of the average Canadian by anywhere from 11.5 to 16.5 per cent. For a family of four that would be equivalent to an increase in income of $11,000 to $16,000 a year.

The Federal Government proposes to amend Section 121 of the Constitution Act of 1867. This would allow goods, services and capital to move freely, without barriers or restrictions based on provincial or territorial boundaries. We are also proposing to develop guidelines for cooperation.

These would allow Ottawa and the provinces to coordinate fiscal policy and harmonize it with the national monetary policy. These guidelines would have to be approved by at least seven of the provinces representing 50 per cent of the population. Up to three provinces could opt out.

Until we put this aspect of our house in order, Canada will be realizing only part of its economic potential. We cannot afford to continue in this mode. And we cannot afford to be complacent. Canadians need to realize that the relative affluence of Canada is not a special privilege granted from on high. It has its roots. Recent history makes that point vividly.

The countries which have chosen to harness market forces have prospered. And these are the countries which have come to market united. And we have seen some nations which ignored these realities slide into decline.

In 1932, a new American president, Franklin Delano Roosevelt, told his people the only thing they had to fear was fear itself. Let me conclude by adapting that famous quotation to Canada today. The only thing Canadians have to fear is taking Canada for granted.

We need to stop moaning about our few miseries and think more about our many successes. Yes, through our first 125 years of existence we have experienced regional difficulties and differences of opinions. And, very likely, during the next, many hundred years, we will again live through strenuous times.

But, like members of a strong and loving family, we will surmount our problems through generosity, tolerance, understanding and a determination to stick together.

I propose to The Empire Club--and all Canadians--that we conclude a "pact" which will permit us to reach our collective objective.

I propose that all Canadians--regardless of origin, language and heritage--resolve to live together as a proud, united and prosperous nation, where democracy and freedom will continue to assure us, our children and their children that we will live in peace, harmony and goodwill in this God-blessed country--our Canada.

Thank you.

The appreciation of the meeting was expressed by Maj.-Gen. Reginald Lewis, Chairman and CEO, Toronto Economic Development Corporation, Chairman, The Empire Club Foundation and a Past President, The Empire Club of Canada.

Monsieur le President, Monsieur le Ministre, chers invites, cher membres et chers amis de l'Empire Club of Canada.

Monsieur le Ministre--au non de cette assemblee, c'est avec le plus grand plaisir que je vous remercie, d'avoir accepte de nous rendre visite, et de prendre la parole aujourd'hui.

The President's introduction and many of your remarks, Minister, emphasize the significant importance of transportation in this, the second largest country in the world. We are most grateful to you for the comprehensive manner in which you have given us your views as they relate to current transportation problems and proposals.

I would also take this opportunity to congratulate you on the remarkable achievement your ministry has demonstrated as attested to in the co-operation and liaison between the two levels of government, the federal and provincial, which co-operation is manifested in the creation and continuation of the Royal Commission on the future of the Toronto waterfront. Your ministry and the Royal Commission have come forward with creative, positive thoughtful yet titillating recommendations on the reclamation, rejuvenation and utilization of the waterfront. This region owes its thanks to you, your ministry and the Royal Commission for the beneficial work you have carried out on its behalf.

So too today, Minister, we are delighted to have as guest of honour a Federal Government leader from Quebec. In these difficult times for Canada it is a symbol of national unity that is extremely precious to all who are assembled in this room today.

Canada is a truly remarkable country--it is a country of distinction. And is an encouragement to all who seek to emulate her. In no small measure the distinction that Canada enjoys is derived from the Distinct Society of one of its vital component parts, the province of Quebec.

I am sure I speak for all here today, as well as many beyond these four walls, when I say we look forward to many meetings at this Club in the years ahead, when the guest of honour is once again a Federal Government leader from Quebec. A Quebec which is an acknowledged Distinct Society but nonetheless a fully integrated part of this magnificent country.

Monsieur le Ministee--merci d'etre venu a Toronto, et merci de nous avoir parle. Veuillez accepter tous nos souhaits de succes face aux defis nationaux.