Modern Quebec in a Global World

The Hon. Tom Hockin, PC, President and CEO, The Investment Funds Institute of Canada and Director, The Empire Club of Canada; Reverend Canon Paul Feheley, Rector, St. George's Anglican Church, Oshawa; Caitlin Curran-Blaney, Grade 12 Honour Student, Peer Counsellor, Appleby College, Oakville; Thomas d'Aquino, President and Chief Executive, Business Council on National Issues; The Hon. Barbara McDougall, President and CEO, Canadian Institute of International Affairs; The Hon. David Peterson, Chairman, Cassels Brock & Blackwell LLP; The Hon. Michael Meighen, Senator, Senate of Canada and Counsel, Meighen Demers; Michele Dionne, Special Education Teacher; Ann Curran, Director, Corporate Development International and 1st Vice-President, The Empire Club of Canada; Elizabeth Laidlaw, Grade 12 Student, St. John's College, Brantford; Dr. Sherry S. Cooper, Global Economic Strategist, Bank of Montreal Group of Companies and Chief Economist, BMO Nesbitt Burns; The Hon. Michael H. Wilson, Chairman and CEO, RT Capital Management Inc.; and John Sheridan, President, Bell Canada.

Introduction by Bill Laidlaw

We are very fortunate to have an individual like Jean Charest in public office in Canada. Being a politician today in Canada is a challenging endeavour. Leading a political party at the provincial or national level is even more challenging. Just look at what our current national leaders are facing these days.

Our guest today has faced many challenges and in each case has risen to the occasion. I had the good fortune of meeting Jean in 1989, and I remember that meeting very well. He was a seasoned politician, still very youthful in appearance, with a nice smile, a good sense of humour and a great head of hair. He was genuinely interested in my opinion of Quebec's role in Canada. I remember telling him how so many of my French-Canadian friends had such an appreciation of Canada and how important it was for Quebec to remain part of Canada. Travelling across its vast expanse and seeing how Canadians thought and acted gave me an appreciation of our desire to stay together as a nation. Jean shared with me his experiences of working on the Great Lakes as a student and his travels throughout Canada and the world. Quebec and Canada were very important to him.

From that point on I became a supporter and a friend. I have followed him through many adventures: as minister in the cabinets of our former Prime Minister Brian Mulroney, as chairman of committees looking at the Meech Lake Agreement, and as a leadership candidate for the Progressive Conservative Party. He lost and I still remember how sad I was on that day. However, he bounced back. He became a minister in Prime Minister Campbell's cabinet, one of two elected Tories in Canada, leader of the party, and Vice-President of the "No Committee" representing Quebecers in the 1995 Quebec Referendum. Who will forget his speech in Montreal that day? He was re-elected in 1997 leading an even larger number of Tory MPs to Ottawa.

Jean then heard the calling of so many Canadians and Quebecers to leave the leadership of the PC Party in Canada to become Leader of the Quebec Liberal Party in April of 1998. He was elected as a MNA in November of that year and then Leader of the Official Opposition. Jean has served superbly as leader of his party bringing members of many different parties under one tent to put forth an alternative to the government of the Parti Quebecois. We all continue to follow you, Jean, and wonder how you do it. I know how your wife and children love and support you.

Today, you will address our club on "Quebec in a Global World" and bring us back to our discussion so many years ago on how important it is for Quebec to stay as part of Canada and what an important role it can play in a global economy.

I introduce you to Jean Charest, MNA, a man whose work is still in progress.

Jean Charest

Ladies and gentlemen:

Canada has made significant gains over the last decade. The Canadian economy is much healthier, as is shown by its unemployment rate, now below 7 per cent.

Our companies are successfully negotiating the transition to new technologies. Today, Canada's position in the so-called knowledge economy is firmer.

The state of our public finances has also significantly improved. The enormous federal deficit is now a thing of the past and has been replaced by abundant surpluses. The provinces have also begun generating surpluses or balanced budgets. We have also begun paying down our debt.

Internationally, our economy is also performing much better. Free trade with the United States and Mexico has been a boon to the Canadian economy. Exports have been the main catalyst of growth during the last 10 years.

There are many causes for optimism as the future looks brighter than it did 10 years ago.

But we now face new challenges. Globalisation represents great opportunities for all Canadians. But at the same time, globalisation generates its own threats. We must better understand and prepare for the consequences of a global economy.

The creation of a Free Trade Area of the Americas extending from Baffin Island to Tierra del Fuego is an ambitious project that will benefit Canada and the entire hemisphere, provided it is implemented appropriately. Freer trade is good for all of Canada. We have one of the more open economies of the world. We rely on external markets to sell 40 per cent of the goods and services we produce each year. And with the slow growth of our internal market, exports will continue to be our primary source of future growth. We therefore need free and secure access to world markets.

One thing we must make sure of is that globalisation of markets does not serve to widen the gap between the rich and the poor. Freer trade and the technological revolution, the two components of globalisation, must be targeted at one objective: improving the well-being of all citizens. We must never lose sight of this fundamental goal.

One of the reasons many Canadians express doubts about globalisation is that they're not sure they will be better off in the long run. Canadians agree that our economy is in a much better shape than it was 10 years ago. But on an individual basis, many feel their own situation is not much better than it was a decade ago.

In large part, Canadians feel that they have not been receiving quality services from their governments in return for the taxes they pay. Of course, part of this feeling can be explained by the fact that a major portion of their taxes must go to financing debts from the past. Now that budget deficits have been eliminated, paying down public debt will represent a major challenge. The time has now come for governments to establish a clear plan to reduce debt. The sooner that happens, the sooner we will have the leeway needed to pay for better services.

But more money for services is only part of the solution. Canadians expect better delivery of services from their governments. And that is particularly the case when it comes to health-care services. We must find ways to be more efficient.

The questions we must ask ourselves are the following: Are we well equipped to face the challenges of globalisation? What are the things we must do to make sure Canada, and in my perspective Quebec, become world leaders of the new economy? And what must we do to insure that Canadians are all better off?

For one thing, a united Canada has worked very well for us in the past and will continue to do so in the future. For Quebec, being part of the Canadian federation and the Canadian common market is a very powerful tool in helping to build a modernised and successful economy. The best illustration of this is the relative influence we have on the world stage compared to the relative size of our population and the relative size of our economy. Notwithstanding our small population, we have had an important influence on world affairs.

Our federal system of government is made to measure for the challenges ahead. Fathers of federation were true visionaries. I can think of no other country better positioned than we are to take on the new world.

Within the new FTAA, the United States will outweigh by far in terms of economic strength and size of population any other country of the future free trade zone of the Americas. Because of its political and economic influence, Canada can become a strong ally of all other countries of the Americas and act as a significant counterweight to the American influence.

We share with our future Latin partners the fundamental objective to protect and promote our cultural identities in a new global economy. We have succeeded in including a clause of cultural exemption in the FTA and NAFTA. And the fact that there will be four official languages in the new FTAA will only make our case stronger as we discuss these issues with the United States.

Canada's commitment to bilingualism has given us a stronger and more influential role in world affairs. The Canadian passport that we are each entitled to as a Canadian birthright symbolises our commitment to Canadian values. Carrying a Canadian passport means a welcome in every country in the world.

Globalisation represents a strong case for a bilingual and united Canada.

This being said, there are things we must improve in the Canadian federation in order to be successful in a global economy.

Our economy is more competitive than it was 10 years ago. Our tax levels have been reduced, but not enough. We still have some way to go to be fiscally competitive with our neighbours and this is particularly true in the case of Quebec where citizens are the highest-taxed people in North America.

The single most important source of our success will be the people of Canada. If we want to become a leader in the new economy, we must invest in education. We must adapt our schools, colleges and universities to this new environment.

If we want Canadians to benefit from globalisation, we must give them the opportunity to acquire the necessary knowledge and skills to be successful in the new economy. Education will go a long way to making sure a global economy will not translate into a greater gap between the rich and the poor. Education is still the strongest tool we have to combat poverty.

A strong economy must also rely on a strong healthcare system. Canadians share the value of a universal and publicly funded health-care system. But they expect their governments to improve the delivery of services. They want to have access to quality services when they need them. It is up to governments to find ways to better deliver those services.

It is well worth reminding ourselves that a strong and efficient health-care system does make our economy more competitive. Businesses will be more and more inclined to locate where their employees and management can rely on good health-care services at a reasonable cost. Health costs to business are ballooning in the United States. A strong health-care system will give Canada a competitive advantage.

Health issues are not just about hospitals. They are about the food we eat, the water we drink and the air we breathe. Trade issues aren't just about goods and services. Trade issues must also be about the quality of the food we eat, the water we drink and the air that we breathe.

Our first duty is to ourselves and to each other. Trade is about increasing our standard of living. The role of government is to protect and increase our standard of life. We must firmly reassert the power of government to do what must be done to protect and promote our well-being and our standard of life. As we deal with these issues, in the context of our federal system of government, we must ask ourselves which level of government is best to act on our health-care system, educational system, the environment and health-related issues?

A good place to start is to remind ourselves that the closer the government to the people the more efficient it is in the delivery of services. Provincial administrations are in the best position to develop and tailor programmes to suit local realities. It is up to provincial governments to show leadership in these areas.

It is in these areas of provincial jurisdiction that the pressure is strongest on public spending. And this trend will only grow stronger with time. In education, health and social services-three areas under provincial responsibility-spending by the provincial governments has surged from $107.1 billion in 1991-1992 to $125.5 billion in 1998-1999. Growth in spending has occurred at a rate of 17.5 per cent. Spending on education, health and social services accounts for about 60 per cent of provincial government budgets, which gives you an indication of just how strong pressure is likely to become in the future.

The federal government has not been confronted with any comparable pressure in any of its areas of spending. This partly explains why we have seen ballooning surpluses in Ottawa.

Pressure to increase spending in areas of provincial jurisdiction will become stronger and stronger over the next several years.

In health care, an aging Canadian population, coupled with the spiralling cost of drugs and leading-edge medical equipment, will have a significant impact on provincial spending. In only 10 years from now, as the baby-boomers begin reaching retirement age, the effect of an aging population will be fully felt.

An aging population will also prompt the federal government to earmark greater sums for several of its budget items-notably for old-age security programmes. However, the sums allocated for these programmes amount to only 14 per cent of all federal spending. Obviously, the impact will not be nearly as severe on federal finances.

All in all, pressure on spending is occurring mainly at the provincial level whereas growth in revenues has, primarily, been swelling the coffers of the federal government. Something must be done to renew our current fiscal arrangements so that each level of government can fulfil its responsibilities to the people of Canada.

A study commissioned by the premiers of the western provinces has confirmed this forecast. A Federation Out of Balance is the name of the study which predicted that the federal budget surplus will continue to grow faster and faster. The federal government's budget surpluses will reach $153.7 billion in 2019-2020, according to the current tax structure. In comparison, the combined surpluses of all provinces would total only $13.9 billion during the same fiscal year.

The issue is one of restoring balance so that the Canadian federation can meet the challenges of the new economy. Restoring fiscal balance hinges on the transfer of tax points from the federal government to the provinces. This measure is a top priority-justifiably so, considering the imbalance that has been steadily growing between the fiscal capacity of the provinces and the expenses they must incur in assuming their responsibilities.

The Quebec Liberal Party has made the transfer of tax points a centrepiece of its political programme. Other provinces of Canada have also come out in favour of new fiscal arrangements. The transfer of tax points has the advantage of ensuring stable funding for social programmes. The federal government's unilateral cuts in transfer payments to the provinces made a strong case for this new proposal.

We must also strengthen equalisation. Sharing the wealth between our regions is one of the most important values of the Canadian federation. The current ceiling on equalisation must be raised.

The Honourable Roy Romanow, who heads the Commission on the Future of Health Care in Canada, recently stated that health-care funding and, with that, the federal transfer payments, would be studied by the Commission. That is a good first step. And indeed I explicitly requested this measure in a letter addressed to both the Prime Minister and Mr. Romanow.

The Commission must examine federal transfer payments from the dual perspective of the prevailing fiscal imbalance and growing pressure on health-care spending as the result of an aging population. This effort will represent the first test of the willingness of the federal government to correct the fiscal imbalance now affecting the federation.

In Canada, the forces of change will come from the provinces. Only if the provinces come together and initiate changes will a reform of the Canadian federation become a reality. Clearly, it is not a question of challenging the deep-running values that unite us. Instead, it is a question of implementing the required changes in response to the challenges of globalisation and making the federation work better.

Unfortunately, Quebecers remain on the sidelines. I deplore the haste with which the Landry government announced its decision not to participate in the proceedings of the Romanow Commission. Quebec will be the only government absent from the discussions.

The people of Quebec expect their leaders to help make the federation work better. They too are tired of sterile debates. They expect governments to co-operate and help make their lives better.

I can assure you of one thing. Once the Quebec Liberal Party has formed the next government and I have become Premier of Quebec, I intend to lead the forces of change. I will relentlessly promote the interests of Quebecers and in doing so the interest of all Canadians.

Le people Quebecois, dont je fais partie, avec ses particularites, sa fierte et ses valeurs propres croit que sa participation A la federation canadienne est un gage de reussite devant la mondialisation des marches et l'emergence de l'economie du savoir. La voie que propose le gouvernement Landry, c'est le repli sur soi. C'est la voie de l'isolement qui est a contre-courant de la tendance mondiale aux regroupements et aux alliances. Les Quebecois ne veulent pas s'isoler des courants mondiaux. Its veulent au contraire devenir des leaders de la nouvelle economie.

L'obsession independantiste du gouvernement Landry nous fera reculer. Le Quebec, s'il se separe, devra renegocier sa participation A L'ALENA. Les termes de l'accord sont clairs a ce sujet. Qui croyez-vous devra faire des concessions A la table des negociations? Qui aura le gros bout du baton? Le Quebec ou les Etats-Unis? Devrons-nous sacrifier notre industrie du bois-d'oeuvre? Ou donner libre acces aux Etats-Unis A nos reserves en eau potable? Ce ne sont certainement pas les Etats-Unis qui devront faire des concessions.

Le Parti liberal du Quebec entend au contraire faire en sorte que le Quebec devienne un leader de l'economie du savoir. Il entend concentrer ses efforts a moderniser notre systeme d'education et A mettre sur pied un systeme de sante qui repond aux besoins de la population. II entend aussi developper une economie competitive qui pourra rivaliser avec nos principaux concurrents. Mais surtout, il entend agir pour que tous les Quebecois beneficient d'une societe juste et equitable qui s'inscrit dans le courant de modernite.

Together, we will succeed in building a modern Canada, that will be the model of the post-industrial age. Merci. Thank you.

The appreciation of the meeting was expressed by Ann Curran, Director, Corporate Development International and 1st VicePresident, The Empire Club of Canada.