What You Can Expect from the New Government

Warren Kinsella, Principal, Navigator Limited; Margaret M. Samuel, Chief Investment Officer and Portfolio Manager, Quadrexx Asset Management, and Director, The Empire Club of Canada; Rev. Dr. John Niles, Rector, St. Andrews United Church, Markham, and First Vice-President and President-Elect, The Empire Club of Canada; Sabri Ali, Grade 12 Student, North Toronto Collegiate Institute; Robin Sears, Principal, Navigator Limited, and Director, The Empire Club of Canada; The Hon. George W. Vari, George and Helen Vari Foundation; Glen Murray, Principal, Navigator Limited; Terence Corcoran, Editor-In-Chief, Financial Post; and Dr. Helen Vari, George and Helen Vari Foundation.

Introduction by William Whittaker

Our just concluded 39th general election, which elected a minority Conservative government, leaves us much to ponder over. While the Canadian electorate didn't speak with a clear voice, the desire for change was clear and significant. We have had only 15 changes in the governing political party in our almost 140-year history. That a Conservative government was elected is also significant, as the Conservative Party has only held power for 32 years since its 1896 defeat by Wilfred Laurier.

International editorial comment regarding our January 23rd election was insipid and really didn't provide much insight to Canadians. The Wall Street Journal's news piece was entitled "Canadian Warm Front" stating: "It's January, so naturally much of Canada has fled to Florida, but enough voters were at home Monday to cast their ballots." Judging by the attendance at our breakfast today, some of us are still here!

The New York Times editorial was titled "Canada Tilts, Cautiously, Rightward" stating "Canadian voters have done the un-Canadian thing by electing a hard-edged Conservative, Stephen Harper, as their new prime minister."

The Economist was more muted writing about the failed promise of Paul Martin, Harper's weak minority government with no natural allies in Parliament and Canada's regionalism. All three publications spoke about the importance of Canada's relationship with the United States and the need to remove irritants between our two countries. However, Carolyn Parrish was not mentioned by name!

After dissecting the election results in detail, the National Post and Globe and Mail have been focusing on the transition and possible personalities in the new government. No doubt many of you, like me, have been avidly reading these two newspapers since the election. As an aside and not because Mr. Corcoran is here today, I think many of us in this room favour the Post's coverage and columnists given their conservative views.

Our speaker's focus today will be different from the media's perspective of telling you what the election results mean and speculating on why Canadians voted the way they did. Mr. Watt will be giving us an in-depth analysis of the results of coast-to-coast qualitative research conducted by his firm, Navigator Limited, since the election concerning Canadians' expectations of the Harper government.

Jaime Watt is Chair of Navigator Limited, a Toronto-based consulting firm that specializes in the measurement, evaluation and movement of public opinion, corporate and communications strategy and public-policy development. Navigator's four principals--Warren Kinsella, Robin Sears, Glen Murray and Mr. Watt--are senior advisors to Canada's three major political parties and have participated in elections at all three levels of government--federal, provincial and municipal.

A specialist in complex communications issues, Mr. Watt has served clients in the corporate, retail, not-for-profit and government sectors and has worked in every province in Canada, the United States, the United Kingdom, France, Central America and Korea. His most recent international work was on democratic and leadership development in Kosovo.

Mr. Watt is currently a director of the Albany Club, the Dominion Institute, the Clean Water Foundation as well as a member of the President's Advisory Council for the Canadian Red Cross. He is the current Chair of Casey House, Canada's pioneer AIDS hospice, and was a founding Trustee and Co-chair of the Canadian Human Rights Trust and the Canadian Human Rights Campaign. In 2003, he was awarded the Queen's Jubilee Medal for service to the community.

A highly regarded speaker and panelist, Mr. Watt regularly appears on CBC, Global, CTV, and TVO and in the National Post and the Globe and Mail as a commentator on public affairs issues.

If time permits, Mr. Watt will be taking questions after his speech. There are cards for your written questions at your table, which will be collected by our staff.

Ladies and gentlemen, please welcome to our podium today Jamie Watt, President and Chief Executive Officer of Navigator Limited.

Jaime Watt

One of the things we all tend to forget is just how tough Canadian voters can be when they get mad. We have become used to a "stable period" in federal politics that has lasted since the collapse of the Mulroney coalition. It's become easy to forget just how often we actually do "throw the bums out." The split on the right that destroyed Mulroney's coalition didn't really end until this past Monday. The 2004 election came too soon after the shotgun marriage for voters to feel confident about Stephen Harper, his team of survivors from a badly broken family and, more importantly, his agenda for Canada.

One of the most significant lessons of this campaign, the campaign just ended, is that the old coalition is new again. It's an old coalition that has been extensively remodeled during its decade in the political repair shop. We've dubbed this new old coalition the "New Harper Conservatives."

Monday night, Canadians participated in the biggest poll our country conducts and their verdict was clear--a result that will challenge the new government to deliver on some key commitments but to do so in the context of working with the Opposition.

This week Navigator set out to understand why Canadians made the choices they did, why they decided to join this new coalition, their expectations of their new government and what it all means for you and your businesses. We held eight focus groups, two each in Vancouver, Halifax and Quebec City on Wednesday. Last night, we were in Toronto.

This morning, we have the results of that study. I think we found some fascinating insights into what Monday's results mean, and where they are likely to lead.

I also want to remind you that this is qualitative research. Our observations are based on in-depth conversations with 72 Canadians who voted for the Stephen Harper Conservatives. This type of research allows us to get well below the surface with a group of regular Canadians. While it gives us good insight into what people are thinking, it does not allow us to draw statistically backed extrapolations of the views of the larger population.

Before I get to what we learned, I want to say a great big thank you to my colleagues at Navigator, most of whom are here this morning and most of whom didn't make it to bed last night. With a bit of luck, you'll be able to see past our bleary eyes and find it worthwhile to have given us the early part of your morning.

When we talk about the New Harper Conservatives, what or whom do we mean?

At the core of this nascent coalition is the old western Reform/Alliance. These voters have been joined by a group of new Quebec supporters, a crucially important group, whose distinct motives and unique expectations we will look at in detail.

Joining them is a group of angry, somewhat right-of-centre Liberals focused in British Columbia, Ontario and the Atlantic provinces along with most of the traditional Red Tory vote in what is now an extensively remodeled home. This quartet--Western Reform, Red Tory, Blue Grits and Bleu Quebecois--brings together most of the elements of the Mulroney coalition. But the New Harper Conservatives hold significant differences in their values and expectations. And they hold significant differences within themselves.

Understanding these values and expectations, who holds them and how they are different, allows us to assess how the Harper government will likely move forward and how it will manage its cross pressures. That's why we convened focus groups. We wanted to understand the differences among seemingly similar people. One way to understand the differences can perhaps be illustrated by looking at two groups of shoppers as stand-ins for Canadian voters. One could look at the people who shop at Loblaws and make generalized conclusions about what the shoppers look like, what their income is, where they live and so on. But that would only tell part of the story. A more detailed look would reveal that there are a group of Loblaws customers that make a special trip to their stores because of the cheese selection and a second possibly larger group that shops only for weekly specials. The people who run Loblaws need to know not only how many customers they have, but also why they shop at their stores. This requires drilling deeper into their decision-making process, which is what we have tried to do with this study. We wanted to listen to the newest additions to the Harper coalition; those that probably had the weakest attachment.

After all, for Mr. Harper to become the next Brian Mulroney and not the next Joe Clark, he will have to keep these voters satisfied enough that their loyalty deepens and they vote for him again. Our choice of cities was based on their closeness to "New Harper Conservative" heartland. In Vancouver we drew voters from outside the downtown core, to better examine the areas of Conservative strength on the Lower Mainland, and not the Liberal/NDP core. Similarly, here in Toronto we brought together 905 voters, where the Tories had strength, and steered away from the downtown ridings. In Quebec, we decided that the 418 area code around Quebec City, an area where the Tories showed amazing last minute strength that yielded four MPs, made more sense than the island of Montreal.

Finally, in the Halifax/Dartmouth area we drew voters from across the region. Our groups uncovered significant differences in motivation and expectation. Many were pushed, some were pulled, and others joined the New Harper Conservatives while closing their eyes and crossing their fingers. For several reasons, the 2006 policy agenda on which the Harper team campaigned was crucial to its success. First, it diluted anxiety about a "hidden" social conservative agenda.

Second, it demonstrated that the Conservatives had surpassed a "governmental competence" threshold. What had been so easy to mock in 2004 was now out of the Liberals' reach.

Third, it gave a credibility to the Harper campaign that was noticeably absent from the Liberal campaign in those frantic closing days.

In Vancouver, we found a greater number of "believers" than in any other of the cities we studied.

That being said, had we gone to Calgary, I imagine we would have found an even larger loyal core. But we wanted to find voters who had moved, whose choice was new, and perhaps uncertain.

GTA Tory voters were less convinced than westerners. Talk of a majority government and the pounding of negative advertising took its toll in the closing days of the campaign.

However, when it came to expectations of prosperity, Ontarians were the most bullish of all.

The Quebec voters were the newest members of the New Harper Conservatives, some having made their decision less than two weeks ago. Their very recent conversion was not a hesitation about the substance of Harper so much as a concern about wasting their votes on what was seen in Quebec as a losing proposition.

Finally, Halifax participants wanted a very constrained minority. They voted to achieve it and are delighted with the outcome. A conditional mandate. A tight leash for Mr. Harper.

This "conditionality" suited many of the New Harper Conservatives. They see their support as phased or staged and likened it to the kind of "learner's permit" new drivers are given.

For some, uncertainty about Stephen Harper remains.

But if he takes the right lessons from this victory, if he delivers on his key commitments, if he demonstrates strong management skills in the tough Parliament that he has been handed, he will be well rewarded by Canadian voters next time round.

Harper Challenges

Perhaps the mixed message that voters are sending the New Harper Conservatives to Ottawa with can be best seen through the lens of Canada/U.S relations.

In all of our groups, it was clear that the Ottawa /Washington relationship has both a practical and a symbolic meaning to Canadian voters. It maps the complexity of our views of America and ourselves.

Participants expect a Canadian prime minister to manage the U.S. relationship competently and effectively. They expect results with as little confrontation and rhetoric as possible.

The Canadians in our groups want Stephen Harper to demonstrate his ability to ease frictions such as softwood lumber and agricultural trade. They expect that the discourse between the capitals will be professional and independent, sovereign but respectful.

But there is metaphoric level in which the Harper government needs to walk with great care in its dealings with Washington. Voters see that relationship as a surrogate for their fears about the "dark side of a Harper government."

If the two leaders become "bon chums"--in the slang of young Quebeckers -it would signal an unwelcome prominence of a social conservative agenda, of the things that worry these new supporters about a Harper majority government.

What's more, the New Harper Conservatives draw a clear distinction between trade policy and foreign policy, between resolving our commercial differences and marching headlong into prosecuting an American agenda.

Antipathy to the American president runs high. In fact, among this group, it runs surprisingly high and is one of the defining differences of the values and expectations of members of this new coalition.

The Prime Minister-elect demonstrated his sensitivity to this point in his news conference Thursday when he brushed off comments by the American ambassador about Canadian northern sovereignty concerns, saying he will take his direction "from the Canadian people."

Nowhere are Mr. Harper's challenges more complex than on Kyoto. As a public-policy brand "Kyoto" has become shorthand for taking responsible action on the environment; for doing our part.

That being said, participants have only a dim idea what adherence to the Kyoto protocols would actually mean to their lives or pocketbooks.

For downtown Calgary, ground zero of the Harper coalition, we assume opposing the Kyoto targets is next to Godliness.

For the newest members of the coalition we talked to in Quebec, abandoning Kyoto would be tantamount to abandoning them and their values.

Canadians' confidence in our ability to manage our relationship with the United States without kowtowing to Washington, our confidence in our ability to stay prosperous and be environmentally sensible, and our cherished vision of a "true North strong, free and green" are all bound up in the word "Kyoto."

Which policy issues are a high priority?

For Mr. Harper, the good news is that members of his coalition are not demanding action on this issue now. None ranked it as one of the five most important issues for his government.

This does not mean that the Harper government is free to abandon Canada's commitment, and it certainly does not mean that he can join any Bush-led anti-Kyoto coalition. It does open policy options and business implications to which I will return.

Corruption

Of all the issues we discussed with participants, there was one overarching concern which united them all. The elephant in the middle of the room is the violent rage of voters about corruption. It is impossible to convey strongly enough the anger directed at the Liberal Party over the issue of political corruption. That "corruption" is the word that is now used, and not simply "scandals," is instructive. Political scientists and prosecutors can argue all they want about the amount of real "corruption" but it is irrelevant. These Canadians simply do not accept this behaviour. End of story. They're angry about it. Fed up. And they want it stopped. Time and time again, we heard about how the Liberals had stolen their money. In Toronto, when one participant said, "We don't know where that money went," he was corrected by another participant who quickly added, "Someone knows where it went. We just don't."

While dealing with the American relationship and Kyoto present tough challenges for the new government, accountability, integrity and transparency present both the toughest challenge and the best opportunity for the Harper government.

First, the New Harper Conservatives have zero tolerance for corruption.

Second, they have exceedingly high expectations of how well the Harper government will perform on this file. Even with a minority government, Mr. Harper is expected to deliver and deliver quickly on his accountability policy package.

Third, they expect him, as an extension, to keep his promises on other commitments.

The straightjacket of a minority government gives him some "room to move" on promise keeping in some areas--but none at all on integrity.

As one Halifax participant put it, "All the scandals on television just make me sick. I'm fed up with it. Enough. There had better not be any more."

Just as Enron, Worldcom and Tyco generated the demand for tough new rules and gave us Sarbanes-Oxley and whole new standards of corporate governance, so Adscam and Gomery have raised the bar on "political governance."

Woe betide the next Canadian politician who is seen to break these tough new rules. Our participants will not forgive or forget being "fooled again."

The Non-Politician

Stephen Harper seems to have been successful in tapping into this "political anger" by recasting himself as a "non-politician." The "he is a parent just like me" comments came from groups across the country. To many English Canadians he has begun to overcome the "heartless rightwing policy wonk" box he used to occupy. To his fans among the New Harper Conservatives, he is viewed as a "guy who loves hockey and his kids" and shares my values and dreams. It is a positioning that resonates because these people think that it is real and is one, which will be valuable in deepening and broadening his coalition's reach.

At the same time, it is a somewhat perilous positioning. For, if the "non-politician" in opposition breaks that trust as a prime minister, he becomes seriously damaged. He must walk a narrow path between assuming the appropriate mantle of office and becoming too American, too presidential. When he is seen to act "like a politician"--tough to avoid in a minority Parliament--he begins to lose his appeal. If he is seen to be enjoying the trappings of office--the Challenger, the limos and globe-hopping international travel--he risks Mulroney's fate.

Canadians have often demonstrated their lack of tolerance for presidential politicians. For the members of the New Harper Conservatives we talked to, this sensitivity is higher than ever, as it plays so directly into their "anti-corruption" expectation.

Civil Politics

A while ago, my friend Senator Hugh Segal wrote a book calling for more civility in political life to sneers of many pundits. But Canadians from coast to coast in these sessions used words like Hugh did; words like "respect," "professional," "effectiveness," "getting things done" when describing the tone they expect.

Nowhere is that revulsion at "the finger in the eye" political style more evident than in Quebec. The generation of insults between federalists and sovereigntists has worn out the generation that grew up with these epic battles, and is regarded with contempt by a younger generation for whom it simply appears bizarre.

Managing Quebec

Our B.C. groups want an end to "pandering to Quebec." They see the province as a "spoiled child." Ontario and Atlantic Canadians resent any "special deals" for the province.

The Harper government should never allow Quebec to have a greater international role. Quebec voters in our groups, on the other hand, have only modest expectations of a Harper government.

First they want "respect." This may seem innocuous or of little consequence, but it is the very absence of that respect that lies at the heart of the rage about Gomery.

They do not expect a Meech II, rather they expect a relatively quiet period of negotiation on issues like immigration, training, and health care between Ottawa and Quebec.

They are tired of the rhetorical excess of the Bloc. After all, many of the New Harper Conservatives in Quebec were Blocistes until only days ago!

They have chosen to gamble on Harper as the only non-Liberal federalist choice they see. The NDP is rejected on grounds of not being competitive, the Liberals beneath contempt.

These Quebeckers' expectations of Harper seem muted. They respect his strenuous efforts to learn French and to understand the basics of Quebec political culture. His Dec.19 Quebec City speech made an impact on them as much for its delivery and its tone as its substance.

They worry about the fiscal imbalance and expect action but they are also brutally realistic about whom they blame for the province's challenges.

One participant recalled Mr. Harper's campaign response to the infamous Liberal "soldiers in the city" ad: "The only soldiers in Quebec cities in our recent history were there as a result of a Liberal decision." To our surprise and that of our Quebec partners, Leger Marketing, Stephen Harper has moved beyond the "my kind of non-politician" status he has in English Canada and has become an object of deep affection. In Quebec he seems to be on the verge of crossing from the "cool, reserved" hardworking guy to a leader who is both loved and admired.

A young voter said they could see Harper developing charisma, becoming a "great prime minister like M. Mulroney."

Comments like these seem to represent the beginning of "an affaire" between some deeply disenchanted Quebec voters and the new prime minister. We expect to see the Harper government devoting much political energy to fostering this essential new component of their coalition.

How federal-provincial relations are addressed in substance, how the fiscal imbalance is actually bridged is probably less important than that they are seen to be the object of serious political effort by Mr. Harper, with a degree of respect for Quebec's political itches.

This, of course, must be skillfully done to avoid a backlash from other parts of Harper's coalition.

Delivering On The Economy

There is excitement at some of the elements of the Harper economic agenda and a real belief that with it will come new-found prosperity. Participants felt strongly that, at the end of a Harper government, things would be better economically, that their standard of living would be raised, that they would have more of the things they wanted, more money in their pockets and more time to spend with their families.

Which policy issues are a high priority? GST reduction and childcare payments are widely popular. There is neither interest in, nor opposition to capital gains tax changes.

As a point of interest, we also asked our participants if they would like to see the government permit mergers among financial-services institutions. And the answer, simply put, is a resounding no. Not one ranked this as a priority issue. Many said it was something the new government should not go near.

Crime

The demand for tougher, more effective measures to keep criminals off the streets is strong and is a big winner for the Harper government. This ranks in the top-three issues that these voters expect fast action on.

Health Care

One surprise was the interest in health care. Although it did not seem to feature highly in the campaign, there remains a deep level of concern about the quality of health-care provision across all groups and regions. It is matched by an anxiety about the future of the system and its ability to provide the care we want, when and where we want it. There seems to be, at the same time, less concern about how health care is provided than that wait times are reduced and quality improved.

Harper Conservatives we talked to seemed poised to support greater flexibility in the mix of public-private health-care solutions. This may give the Harper government some room to move in negotiating their "wait-time guarantee" deals with the provinces.

This is one of the areas where, despite a minority Parliament, members of the New Harper Conservatives expect action.

The Regions

Canada's famous regionalism seems not to have been an issue in the decision of the Harper coalition to support the new team. In Atlantic Canada there was a weary recognition that Quebec and Ontario will always trump a federal government's agenda, but no greater unhappiness about how a Harper team will treat their region than they felt towards the Liberals.

Similarly, our B.C. voters understood the need to govern for all of Canada, but they believe they have some ownership of this new government, something they clearly did not believe about its predecessor.

Only our Quebeckers will judge their deeper commitment to this new political alignment with some concern and some hesitation about the regional sensitivity of the government. They no longer see Mr. Harper as solely an Alberta champion. In fact, several participants thought the Bloc's endgame ad featuring a mocking reference to Calgary with a cowboy hat in their ads was silly.

Our Ontario participants understand their province's place in Confederation, and are therefore comfortable about their influence with this federal government. They believe that Mr. Harper believes the only way he can win a majority government is by winning more seats in Ontario and that is as good an insurance policy as one can buy.

Priorities

In summary, the cross-section of New Harper Conservatives we spoke to want the government to go to work on three issues while at the same time avoid three landmines. The three issues are:

1. Integrity in government package;
2. Cuts to the GST and childcare package that provides for parental choice;
3. Wait-time and health-care guarantees.

If Mr. Harper wants to earn the support of this coalition next time out, he must, at all costs, avoid:

1. Any scandal, no matter how trivial;
2. Acting "presidential," like the other politicians;
3. Becoming a Bush poodle.

The Impact On Canadian Business

How will all these cross pressures impact on Canadian business?

Several themes are clear from the research:

1. The combination of consumer confidence, optimism at the prospect of GST reductions and a childcare package mean anyone in the business of selling hard-ticket items to Canadians should be pleased by the next few quarters.

2. If you are in the financial-services sector, do not count on capital gains tax being an early priority, unless you fight to make it so. It does not seem to be moving ordinary voters in this New Harper coalition. At the same time, there is not serious opposition to it.

3. Among these New Harper Conservatives there is an increasing willingness to consider mixed health-care solutions. It has not reached the tipping point yet, but the goal posts are moving. The private health-care sector may be granted more freedom to play a role in the provision of solutions in those areas likely to improve wait times or performance assessment.

4. Canada/US relations should improve, which may mean Mr. Harper can find a resolution to some festering trade issues important to the affected sectors. However, new initiatives may not be possible especially those delivering increased economic integration such as greater cross-border security. They may become hostage to Mr. Harper's reasonable fears of being seen to be "too close to the Bush White House" unless they can be framed in ways that avoid that taint.

5. For those in the environmental or energy sectors, the Harper government is likely to continue your uncertainty about a resolution of Kyoto and, in the short term at least, offer a process solution.

The next six months will be crucial for the new government, demonstrating that it "knows how to do politics" without looking political; delivering deals without looking like sleazy dealmakers; and keeping promises while being tripped daily by a hostile and experienced Parliament.

Our participants have set high expectations for Mr. Harper, but they also want him to succeed.

He will be rewarded for trying hard, and his enemies will need to be careful in their efforts to frustrate him, if they are to be successful in stopping this newest coalition in Canadian politics.

Thanks very much.

The appreciation of the meeting was expressed by Robin Sears, Principal, Navigator Limited, and Director, The Empire Club of Canada.