Plain Talk

MR. JACKMAN:

Members of The Empire Club who have attended our most recent meetings will appreciate that this is the third--and may well be the most important--meeting in a series of three, where leading Canadians in public life have spoken about our country and the attitudes of their respective parties to our current economic problems.

Following immediately after Robert Stanfield, and David Lewis, with the possible exception of the Prime Minister himself, there is no more articulate and forceful exponent of Government policy than our guest of honour today, the Honourable John Turner.

When our speaker was first elected a Member of Parliament in 1962, perhaps no other freshman Member elected at that time aroused such interest on the part of the press and public, or was considered to have such prospects for a great career in the House of Commons.

Elected to Parliament not long after his 30th birthday, our guest had already attained an enviable reputation for excellence, not only in his professional endeavours but in his attitude towards public responsibility.

Coming from a well-known family, which was no stranger to public service, our guest had received several university degrees, all with honours. He was an internationally acclaimed athlete--a Rhodes Scholar from British Columbia--and an active participant in professional and community endeavours, where he rapidly assumed positions of leadership.

During his days in Montreal he became associated with the law firm of Stikeman & Elliott, the well-known specialists in income tax law. Members of the Empire Club will remember that Mr. Heward Stikeman, the former senior partner of our guest, has been a recent speaker at our Empire Club luncheons. His views on the Government's tax reform proposals are, therefore, well-known to Empire Club members. Now I know that the rules of cabinet secrecy may prevent us from ever knowing what part our guest played in what must have been the acrimonious discussions on the tax reform bill in Cabinet, so that whether Heward Stikeman had any lasting influence on our guest may never be known to history. I hope, however, that Mr. Stikeman will not think unkindly on the career of his former protege--and speaking on behalf of those members of The Empire Club who may be clients of Mr. Stikeman, I hope that our guest today, in his capacity as Attorney General and Canada's chief law enforcement officer, will continue to be not displeased with the work of his former mentor.

Elected to Parliament in 1962, our guest's progress was predictably rapid. He was appointed Parliamentary Secretary to the Minister of Northern Affairs in the first Pearson Administration in 1963. He was named Minister without portfolio in 1965, and in 1967 he was appointed Registrar General and the first Minister of Consumer and Corporate Affairs, a department which he was chiefly responsible for creating. In 1968 he was appointed Minister of Justice and Attorney General of Canada--traditionally the most senior of cabinet posts.

John Turner is perhaps best known to Canadians, particularly to those of the television audience, for his vigorous campaign for the national leadership of the Liberal Party of Canada in 1968, when his campaign won considerable support not only from those in his own Party but from the public at large. Now I appreciate that it may be a political fact of life in Canada that the surest way to send an up-and-coming cabinet minister to obscurity is to suggest that he has a great and glorious future before him, particularly when his Prime Minister is relatively young and healthy. Although I do not wish to embarrass our speaker, I think that we should all be very conscious that our guest has undoubtedly a great career ahead of him and that someday we may ask him to speak to The Empire Club as Prime Minister of Canada.

It is, therefore, a great pleasure for me to present to you, the Honourable John Turner, P.C., Q.C., M.P., LL.D., Minister of Justice and Attorney General of Canada.

THE HON. JOHN N. TURNER:

One of the persistent criticisms I hear from businessmen when I travel about the country is that government has created a climate of economic uncertainty. I am told that there are too many legislative proposals in orbit: the Tax Reform Bill, the Competition Bill, the Labour Standards Code Amendments, and so on. There is just too much to digest at one time. I am told that business needs certainty and predictability in order to project and plan investment. Without that investment, there will be insufficient economic growth to support the jobs needed to absorb a rapidly expanding labour force.

I understand this argument. I understand the quest for stability. We all instinctively seek an atmosphere of predictability and certainty. Businessmen particularly seek it because they take risks which they hope to minimize by as much predictability as possible.

This criticism, I venture to say, is accentuated by two factors: the difficulty in communication between government and citizen and the incessant pace of change in today's world.

The more advanced our means of communication become, the more difficulty we have in communicating with each other. Why is it that with all the new hardware electronics, the computer, the earth satellite, the laser beam we have not yet perfected the software to go with it renewing those basic skills by which one human being talks to another: the art of persuasion and the gift of listening?

The task is magnified when governments try to communicate with people. What are the phenomena that have made it so difficult?

First, the fact of change. It is trite to say that we are living in an age of change--an age of transition. Changes in attitudes, life styles, work patterns. And it is not merely the fact of change; it is the pace of change. Alvin Toffler has made the words "future shock" part of the lexicon of our language. He defines it as the premature arrival of the future.

The epoch of change is here to stay. There will be no return to the "good old days" of stability and certainty. Change is so rapid--one change follows another so relentlessly and intensively--that the "conventional wisdom" has become that change is the only constant factor in our lives. We in public life must recognize it. You must come to terms with it as well.

There is little hope for stability in our generation. Traditional roots are being torn up. Old approaches are outmoded. The lessons of the past are no longer so relevant. History is no longer the great teacher. It is not the past that matters. It is the future that counts. It is not yesterday that concerns me because that has gone. Nor today because that is happening now. It is tomorrow because that we can do something about. Tomorrow should be our concern.

Compounded with the pace of change is the immediacy of communication, forced upon us by an electronic age. We are bombarded by words, sounds, and ideas. The world has indeed become a global village. Electronics converts change into a universal phenomenon.

The institutions under which we have lived find difficulty in responding to change and immediacy. All institutions by definition are committed to yesterday's tasks. The church reels under the onslaught of secularism. The family is buffetted by new permissive attitudes. Politics struggles with participation. Business spars with the new consumerism. The law finds itself caught in the conflict of authority and freedom, escalated by crises of confrontation.

And everywhere change prompts expectations that cannot be fulfilled soon enough to satisfy impatient appetites. The time lag between evocation of an idea and its fulfillment in legislation breeds frustration, impatience and alienation. A generation bred on instant food, raised on instant credit, demands instant government.

The pace of change, the immediacy of communication, bigness, remoteness, and anonymity in government, have compelled new efforts to rectify the imbalance between citizen and state--new remedies, new avenues of appeal, new efforts to participate in the decision-making process.

One of the paradoxes of the age is that, despite the intimacy of television, the links between government and people remain strained. Government finds that the hardware of communication--the techniques, the technology--is not by itself effective. We still need the software, the basic skills uniting one human being to another; the art of persuasion and the gift of listening. But today we still rely on hardware to substitute for software. We think that technology will compensate for neglect of the human skills.

I hold strongly to the view that, in this age of change, immediacy and remoteness, the use of TV, radio hot lines, opinion polls, is no substitute for basic human talk. Communication is dialogue. The art of persuasion must be matched by the gift of listening. I think we have to return to tactile politics--the politics of feeling, conversing--actual encounters between the elector and the elected.

That is one reason why I am here. To try to dissipate some of the breach in communication between your government and you--the business and professional community. For instance, I have heard it said in recent weeks that the Canadian government is anti-American. That is not true. That it is being said is a reflection of a serious communication gap. I reject any attempt to quote certain remarks of the Prime Minister of this country completely out of context in order to build such a case. Policy is not made nor interpreted by isolated or selective citation. Policy must be found from the deliberate words and acts of government.

Your government is not anti-American. If you were to ask me, anti-Americanism is bad politics in Canada. I believe there is too much community of interest, too many family ties, too much shared experience, to tolerate any permanent breach in our relationship with the U.S.

The Canadian Government is not anti-American. Broadening our links with China and the Soviet Union is not anti-American. It makes sense to us in the cause of peace. It makes sense to us in the interest of trade. Mr. Trudeau was a pacemaker and Mr. Nixon is on the trail. He will go to Peking. He will go to Moscow. Protection of our Arctic waters from pollution is not anti-American. We have a right to protect our environment and a duty to the world to co-operate in saving the seas from either oil or nuclear pollution.

Insisting upon a national rather than a continental energy policy is not anti-American. It is protection of our birthright. Resisting a continental resources policy is legitimate self-interest in any country that wants to find jobs for its people. A national water policy is not anti-American; it is a careful husbanding of our future. Resisting a landlord-tenant confrontation on this continent is inherent in our national self-respect.

If there has been any straining of our friendship with the United States, that surely has resulted from American initiatives. Two events have clouded our rapport with the Americans; one economic, one environmental--the imposition of the 10 per cent surcharge on imports by President Nixon and the nuclear test on Amchitka. These United States' actions, taken together with pending economic proposals before Congress, have provoked a wide range of emotion in Canada--from impatience to worry to bitterness.

It is time for "cool". Bruce Hutchison once told us that anti-Americanism is a dangerous luxury for Canada. One does not have to know much about economics and geopolitics to understand why. Faced in Canada with a restless public opinion, our Government, I believe, has reacted with restraint. No attempt to recite remarks of the Prime Minister, quoted out of context, as evidence of a sinister anti-American plot, can stand up against the facts.

In response to the surcharge, we have sought reasons from the Americans, we have tried to analyse the depth of their predicament, we have tried to demonstrate that we were not contributing to their problem, and we have deliberately avoided retaliatory measures.

On the matter of Amchitka, the House of Commons passed a resolution calling for cancellation of the test. The resolution was unanimous, save for one vote. Confronted by considerable pressure to intervene personally with the President of the United States, Mr. Trudeau maintained his calm and relied on the parliamentary resolution as the most significant expression of free opinion available in this country.

Those are the facts and they lend no support to an anti-American posture. This is not to deny that the current situation will prompt some economic and political decisions of the first magnitude. In making them, Canadians will undoubtedly be forced to debate the essential continuing aspects of our association with the Americans. I think most Canadians want to adopt a posture and a reality more independent of the United States. I believe, however, that a wise national policy should resist any action based on jingoistic or chauvinistic rhetoric, however emotionally satisfying that might be. Rather, a wise national policy would insist upon a balance, reconciling political sovereignty with economic stability. Any policy that recklessly risks our own standard of living would not, I believe, be generally endorsed by Canadians. We have until now tended to seek the best of both worlds and we have for the most part succeeded. We have enjoyed both sovereign independence and a high standard of living.

There are limits, I think, to our present maneuverability in revising our economic position in North America. It is prudent to remind ourselves, first of all, that no country is truly economically independent, not even the United States, as recent events prove. In the second place, while our trade balance and overall balance of payments are currently satisfactory, our rate of unemployment is at a totally unacceptable level and we have a labour force that is growing at a faster rate than that of any other industrialized country. The growth necessary to absorb people and create new jobs will demand heavy investment and an annual increase in G.N.P. of 9% over the next two to three years and 6% thereafter.

Thirdly, our economy, though healthy, is vulnerable in the sense that one-quarter of our gross national product depends on foreign trade and two-thirds of that trade is with a single customer, the United States. It is difficult to disengage from a trading partner with whom one conducts $23 billion of mutual business annually ($20 billion in exchange of goods alone). We have some difficult bargaining sessions ahead. We have an old-fashioned selling job to do on our best customer and there is no place for abrasive rhetoric.

What are our immediate problems and our long-term prospects? Our immediate problems are economic. I am talking economics because I believe that for the next decade it will be the "bread and butter" issues that count.

In the short term, we must devise our response to the current American surcharge and other ancillary economic measures currently before Congress--export subsidies and domestic investment tax incentives. We must diversify our trade. We must think in terms of economic growth. In the long term, we must gradually move towards a more independent control of our own business and resources, while ensuring that our actions do not unnecessarily jeopardize our economy nor impede the growth of our own manufacturing industries.

First, the surcharge. The 10 per cent imposition (which is, in fact, a disguised devaluation of the American dollar) affects between $2 billion and $3 billion of our sales. That alone is bad enough. What is worse is the uncertain duration of the surcharge. If it were limited in time, we could calculate its effects and respond accordingly. Mr. Pepin said that present Canada-U.S. trade difficulties are transitory--a "pause for station identification", a "do not adjust your set" situation. But we don't know. The uncertainty makes response difficult. Underlying that uncertainty is a confusion about the basic long-term objectives of the United States. The Americans themselves have not clarified their motives. Is the surcharge limited in purpose to international monetary revaluation, as the President indicated in his initial statement? Or does it depend more, as Secretary Connally has intimated, on bilateral trading conditions and balance of payments patterns throughout the world? Is it a deeper reflection of a new protectionism, a new isolationism? On either assumption, we have made our case that Canadian action has not contributed to the American predicament. Our dollar has floated for over a year and our total balance of payments position, current and capital, visible and invisible, is in a relatively neutral position visa vis the United States. Nor do we maintain any discriminatory curbs against American trade. We apply no unfair restrictions against U.S. goods. We have one of the openest markets in the world.

We have responded, in the interim, with the Employment Support Act as an underpinning to industries affected by the surcharge. We are supporting agricultural products under agriculture stabilization mechanisms. We are now exploring the full range of fiscal, monetary, exchange and tariff tools to meet any prolonged imposition of the American policy. We have resisted immediate retaliation as self-defeating.

The Americans at last are beginning to talk and to negotiate. And we have some bargaining assets on our side which we can lay on the table. We intend to do so.

In world trade we need a new aggressive style of multilateral commodity trading. The ground rules have changed--perhaps for a long time, perhaps forever. The new protectionism of the United States and Britain's entry into the Common Market cloud our trading prospects. We run the risk of being shut out of the two most fertile markets in the world. New trading blocs and abnormal currency values endanger our prosperity. Surely we must explore our rights under the GATT treaty and attempt to revive a general movement towards freer trade. Our competition policy should recognize that in order to compete abroad we need larger economic units. We must rationalize some of our industries, thereby increasing productivity and encouraging lower unit costs.

We need new economic tools. We need new procedures for solving industrial disputes. We need to reconcile technological advances with security of employment. We must somehow raise the standard of special pleading on behalf of management or labour to a consensus in favour of the common good.

More important, we have to renew the dialogue between government, labour and business. Postwar Japan and Germany have shown what a tripartite effort can do. True, we have wealth in Canada but much of it is potential only it is under the water, in the ground, in the forests and in the fields, and in the skills of our people. It needs development, processing, selling. It is latent wealth, dependent on volatile markets and upon an economy extremely sensitive and vulnerable to world trade. We cannot easily afford confrontations between the public and the private sector, between government and business or between business and labour. Until our markets are assured and our unemployment dissipated, that type of confrontation spells self-inflicted economic punishment.

On the longer term, I favour a deliberate national economic policy, broadening and strengthening the Canadian economy. We need to seek means to lessen our economic vulnerability and to increase our scope for independent action and enhance our sense of national purpose. I do not believe that Canadians would contemplate with favour a free trade area or customs union with the United States. The political consequences would be irreversible and would dilute or even destroy any claim we had to our own sovereignty.

The current American action and posture have made the status quo difficult to maintain. Canada has traditionally paid for American investment by selling off raw materials and recently by a tremendous increase in manufactured products, highlighted by the auto pact. If American policy is now meant to transfer manufacturing potential across the border, then either we shall be unable to pay for their investment in this country or we shall have to be content with paying for that investment by the export of raw materials. Neither would suit us. Canadians will no longer support an economic strategy that would leave us a mere storehouse for the United States.

Any move towards more control over our own economy should be made, I believe, in positive, not negative nor retroactive terms, that our action would have to take account step by step of the effect upon our economy and its need for sufficient growth to absorb a growing labour force. I do not believe that we should indiscriminantly discourage foreign investment (apart from takeovers of existing firms), nor do I believe that we should or could "buy back" any investment already made. I am more interested in ensuring that any future foreign investment in the "knowledge" industries of tomorrow, in the technological industries that spell power in the future, be directed towards debt rather than equity. Our tax laws should encourage this direction. Correspondingly, Canadian investors, banks, insurance companies, pension funds, must take up the equity available in this country and we should have fiscal and monetary incentives to encourage this investment. Nor do I exclude joint ventures of public and private capital when these are feasible and necessary to promote new Canadian enterprise.

Any economic program which is going to give us more independence and international muscle must involve closer federal-provincial liaison. Economic policy should be more comprehensive and involve co-ordination of all aspects of growth. There should be a closer relationship between government and industry and better analysis as to which industrial sectors need encouragement. We have to seek rules under domestic and international law for multinational corporations. We must stimulate more research and innovation. We must encourage our own industrial engineering and managerial skills. We must protect our own Canadian businesses from any foreign take-ovens that would add little to our national economic prospects.

Robert Frost used to say that "Good fences make good neighbours". We are not quite sure whether the United States wants to raise the fences or tear them down. We are not sure whether they want to shut us out or take us over, or both. No issue is causing Canadians greater concern. Some of our problem lies in human nature. Friendship does not make news. Quarrels between neighbours do. Since 1812 our relations have generally been friendly. That does not make news. It is only when something happens between us--as it is bound to do between two neighbours, especially between two neighbours who deal and trade with each other as much as we do--that the news is reported in tones of crisis.

The former Prime Minister, Mr. Pearson, said this to his American hosts at the Pilgrims' dinner in New York in November, 1963: "You underplay Canadian-American problems unless they become conflicts. We tend to overplay them and make a disaster out of a difference . . . A sense of responsibility, a sense of proportion, and mutual understanding is needed on both sides; above all, a sane and mature approach to our problems; by politicians, press and public".

In our constant search for a national identity and independence, we have reacted defensively to the United States. The urgency of the moment provides us with the challenge now to strike out on a positive course that is proCanadian and anti-nobody.

Mr. Turner was thanked on behalf of The Empire Club of Canada by Mr. H. Allan Leal, Q.C., LL.D.

EDITOR'S NOTE: This address by the Honourable John Turner, one of the most articulate of the Federal Government Ministers, represents a clear statement of the Government position in answer to the attacks made by Mr. Stanfield and Mr. Lewis, at the two previous Empire Club luncheons. His address should, therefore, be read in the context of the two previous speeches in the Yearbook. (See Editor's Note page 57.)