Notes for an address at the
"Facing the Future" symposium
for public- and private-sector leaders
Ottawa, Ontario
November 11, 1996
I am very honoured to be speaking to an audience of private- and public-sector
decision-makers. The discussion topics proposed for this two-day symposium will
incite you to think about the dynamic of our public and private organizations in
the light of the major trends and strategic issues that will be our road map
into the 21st century.
The future of organizations and institutions lies in in-depth restructuring
and in challenging fundamental concepts. Some futurologists, such as Dr Stan
Davis, whom you will have the privilege of hearing during your symposium, will
even challenge the concepts of time, space and matter. Strategic planning and
restructuring specialists such as Marcel Côté, who will also be making a
presentation, will tell you that the global trends and changes confronting us
require us to be innovative, flexible and open, but also thoughtful and
disciplined. They will also tell you that public and private organizations will
have a bright future provided that they are able to capitalize on new issues,
rather than considering them only as a threat, and that we can create a
constructive synergy between public and private organizations.
The same is true for the future of our federation and our country. Far from
being fixed in time and space, the Canadian federation is continually evolving,
and I will tell you that it also has a bright future ahead of it. While it is
true that we have difficulties, which are mainly linked to the risk of
secession, I am convinced that we will overcome those difficulties, because we
can do so by all working together, both the private and the public sectors, to
convince all Canadians that the guarantee of the best possible future lies in
building on our federation. And we will convince them of that by making changes
that can yield tangible results in terms of prosperity and hope.
I will first give you my perspective on what constitutes the strength and
greatness of Canadian federalism. I will then diagnose the current state of our
federation, followed by a summary of the initiatives the federal government has
taken to make the federation even better.
1. THE NATURE OF CANADIAN FEDERALISM
Too often, our debates on federal-provincial relations focus on a completely
unproductive aspect, namely power relationships. It would be much better to
focus solely on the daily realities of citizens.
I feel that the best perspective for dealing with issues of national unity is
a focus on public service. If all Quebecers and other Canadians stopped to think
how much this federation makes it possible to improve public service quality, we
wouldn't be talking about secession in this country.
This is a way of seeing things that I've had for a long time. That's why, as
a political science student, I took a particular interest in public
administration, because, to understand political theory and more global issues,
one first has to understand the state. It is not an abstract, faceless notion;
it is a set of institutions, of people, flesh and blood, thinking and working
and making decisions; you have to understand them and know them. At the same
time, to truly understand the Canadian federation and its dynamic, you have to
be interested first and foremost in public service, because that's what makes
federalism so great. Providing effective public services not only means
recognizing certain basic principles for government action, but, most of the
time, also requires striking a proper balance between competing values. For
example, government must seek to balance equality and diversity, on the one
hand, and solidarity and subsidiarity, on the other.
Equality and diversity
Let's begin with the balance between equality and diversity, at the level
both of individuals and of the provinces, by considering an example. The federal
government makes equalization payments to some provinces and not to others. What
does that mean? It means ensuring that all citizens have access to comparable
public services no matter what region of Canada they live in.
Let's take another example. When the federal government works with the
Government of British Columbia to support coastal communities and fishermen who
have lost their jobs because of depleted salmon stocks, it does not necessarily
use the same model it uses to compensate Saskatchewan farmers for crop failures,
because the contexts are different. Governments must recognize that all citizens
are equal, but they must also respond to a diversity of needs and circumstances.
That doesn't mean, however, that inequality is created among the provinces; it
must be clearly understood that equality of treatment does not mean uniformity
of treatment. Public service falls to mediocrity when equality is confused with
uniformity.
This same principle applies to recognizing Quebec's linguistic and cultural
difference as a fundamental characteristic of Canada. That recognition responds
to a unique need and circumstance, without undermining the legal equality of
provinces, much less the equality of citizens. Recognizing that historical and
contemporary difference shows that all Canadians want Quebec's culture, language
and way of being Canadian to be recognized, celebrated and protected.
Solidarity and subsidiarity
The other important balance is the balance between solidarity and
subsidiarity. Solidarity, which is based on a sense of the common good and
compassion for our fellow citizens, allows us to pool our resources and our
strengths, to act together for the betterment of all. The federal government
acts for the common good of all Canadians and all regions, especially the less
advantaged. Subsidiarity, which means respecting the autonomy of citizens,
institutions and local governments, allows us to build on local strengths to
address the special needs of each community, each region and each province of
the country. More than ever, we need to reconcile the global and the local
aspect of things, which my colleague Tom Courchene at Queen's University calls
"glocalization". Reconciling the objectives of solidarity and
subsidiarity through federalism has served humanity well in the past and will be
more necessary than ever in the years to come.
The Canadian balance is based on both a strong subsidiarity -- our federation
is the most decentralized in the world, along with Switzerland -- and a strong
solidarity: Canada is a very generous federation. No other federal country has
an equalization mechanism as developed as ours, much less a constitutionally
guaranteed right of comparable services for all citizens, no matter where they
live. Therefore, to improve our federation, in a public service perspective, we
must build on that balance between solidarity and subsidiarity.
Governments must always seek the right balance between these principles of
equality and diversity, solidarity and subsidiarity, and make the necessary
adjustments, if we want to be effective in providing the best possible public
services to citizens.
The value of public service
It is too easy to lose sight of this perspective of the value of public
service, and to consider federal-provincial relations as a zero-sum game. The
concentration or devolution of government power is often seen not from the point
of view of service users, namely citizens, but in terms of a "loss" or
a "win" for a particular order of government. Many articles reduce
their analysis of the division of federal and provincial responsibilities to a
"who gets what" formula, without ever devoting even one paragraph, one
sentence, one line to the aspect of service to the public. And yet, it is
citizens' health, safety and welfare that are at stake. To consider how our
federation works as a power struggle is to ignore the value of public services
and Canadians' expectations of their common institutions.
In Quebec, for example, too many thinkers and politicians side with the
Government of Quebec and rashly equate any increase in its powers with the
interests of Quebecers. They let compliance with the so-called traditional
demands of Quebec monopolize their thinking on the issue of the division of
roles between Ottawa and Quebec City so much that they completely lose sight of
the value of public service. Those famous "traditional demands" have
become an obligatory reference, an imperative, a conditioned reflex that takes
the place of reasoning. Anyone who dares take away from them by suggesting a
less restricted role for Ottawa is too often accused of having a paternalistic,
arrogant and contemptuous attitude toward Quebecers.
I have always deplored that way of thinking. The truth, in my opinion, is
that the federal government is also the government of Quebecers, who bring to it
their culture, their talents and their uniqueness. And the federal government is
able to serve Quebecers and other Canadians appropriately by exercising its
legitimate responsibilities.
In other provinces as well, a provincialist leaning can be seen, as well as,
in the opposite direction, a misplaced Canadian nationalism which, in this case,
is just a knee-jerk reaction in favour of federal power. It equates Canada's
interests with increased responsibilities for the federal government, which it
calls on it to be active in every field, on the pretext that, without an
omnipresent federal government, the Canadian identity would be threatened and
the country would risk disintegration.
I believe, on the contrary, that the fact that we are a federation, and that
people in Nova Scotia, British Columbia, Quebec and other regions of the country
can be Canadian in their own way, is one of Canada's great strengths. By letting
each province develop solutions that are adapted to its needs, but can often be
adapted at the national level, we make Canada greater and serve Canadians
better. We all know how Saskatchewan inspired all of Canada by establishing
Medicare.
This is far from creating ten self-centred republics; a strong Canada must
not be confused with an omnipresent federal government. Instead, it's a question
of striking the dual balance between equality and diversity, between solidarity
and subsidiarity, always keeping public service quality in mind. And if any
country needs that balance and that federal dynamic, it is Canada, because of
its vast territory and its so diverse society.
2. THE SHAPE OF THE FEDERATION
According to the principles I have just outlined, can we say that our
federation works well in terms of service to the public? If we stop to measure
how far we've come since Confederation, 129 years ago, we see that Canada has
become one of the greatest human achievements of our century. You are aware, as
I am, of the UN and World Bank indicators that speak volumes of our collective
wealth and give our country top marks among 174 countries in various aspects of
socio-economic activity. We are number one in terms of quality of life, number
five among the industrialized countries in terms of per-capita income, number
eight in terms of life expectancy; our inflation rate has been the second lowest
among G-7 countries in the past three years; the World Economic Forum ranks us
eighth among the 48 most competitive countries.
To what do we owe those results, which give us an honorable ranking in the
honour roll of the international community? We owe it not only to our resources,
our climate of peace and stability, our proximity to major world markets, and
our traditions of democracy and respect for the rule of law. We owe it to the
synergy of our institutions, our social solidarity, our economic union, our
harmonious cohabitation of cultures within a common citizenship. That is what
the Canadian federation and Canada is all about.
Of course, we don't claim to be champions in all fields. Our unemployment
rate is still too high, we have too much poverty. We have nothing to be proud
about, living in one of the wealthiest countries, to see ourselves ranked one of
the worst OECD countries with respect to child poverty. We still have work to do
to take on the challenges facing societies and economies in all countries, and
also to recover those excluded from economic growth by helping them to
participate actively in our collective progress toward prosperity. Looking at
things in perspective, however, it is difficult to deny that Canada ranks
favourably against other wealthy countries and that it is still responding to
the aspirations and ambitions of millions of people in Quebec, the other regions
of Canada, and even abroad.
The strength of our federation lies in our ability to take on challenges.
Remember what was said about Canada in 1992, especially during the referendum on
the Charlottetown Accord: it was said that our country was on the verge of
bankruptcy, that the country's finances were crippled by debt and red tape, that
we were hostage to the whims of foreign markets, and so on. And yet, Canadian
institutions proved they were able to overcome those difficulties and put public
finances in order.
Let's look at what we've been able to do in the past three years; not just
the federal government, but the provinces and citizens as well, who have shown
clearheadedness, discipline and courage.
The deficit, which stood at $42 billion, or 6% of the gross domestic product
(GDP), will drop to $24.3 billion, or 3% of GDP, in 1996-1997; we will thus meet
our objective. And we are confident that, for 1997-1998, the deficit will be $17
billion, or 2% of GDP. Finance Minister Paul Martin has announced that the
deficit objective for 1998-1999 will likely be $9 billion, or 1% of GDP. That
will mean that we will have reduced our deficit by almost 80% in five years.
Next year, Canada will have the lowest deficit in the OECD. And we have achieved
this mainly by cutting spending, not by raising taxes. The year before our
government was elected, Canada had the worst record in terms of borrowing
requirements of all G-7 countries except Italy. In 1997, using the same
criterion, Canada will have the best record in the G-7. In its recently
published World Economic Outlook, the IMF predicts that Canada will have the
fastest economic growth rate of all G-7 countries in 1997.
The federal government and the majority of the provinces, regardless of their
political stripe, have moved to put public finances in order. Seven of the ten
provinces have balanced their budget or are showing a surplus, whereas they were
all running a deficit a few years ago.
As a result of the measures we have taken to clean up public finances,
interest rates have dropped some 20 times in the past 18 months, which has been
a real boon to the provinces in reaching their deficit reduction objectives.
In the past few months, the Government of Quebec has been following the lead
of the other provinces in undertaking a courageous plan to put its fiscal house
in order. We can look forward optimistically to the future, thanks to the
resources of Quebec's economy, Quebecers' unique culture, cooperation among
governments and solidarity among all Canadians. The Government of Quebec will
succeed, despite the costs of political uncertainty linked to its senseless
plans for secession. And all of us, the private and public sectors alike, have a
role to play in seeing that Montreal, which currently has a high unemployment
and poverty rate, again becomes the driving force of the Quebec economy and one
of the main engines of the Canadian economy.
Our responsibilities as political leaders oblige us to set aside anything
that is deeply divisive, to drive out uncertainty and restore confidence and
hope. Governments must put aside partisan considerations and work in the best
interests of citizens. Despite our disagreements, we have proven that we can
work with the Government of Quebec in a spirit of cooperation, and we will
continue in that vein. We do not have the right to fail, and I am completely
confident that we shall succeed.
The top priority of business and government must be more and better
opportunities for jobs and prosperity for Canadians, in Montreal and elsewhere.
We can do that by establishing our economy on stable, lasting foundations, not
only to maintain investor confidence, but to position our businesses
advantageously in the world economy.
Since 1993, Canadian businesses have created some 675,000 jobs, making Canada
number one in terms of job creation. Canada has created more jobs than Germany,
France and Great Britain combined.
And yet, we can and must do better. We know, for example, that 37% of our
gross domestic product is linked to international trade, whereas only 10% of the
one million small businesses in Canada have overseas dealings. We also know that
every billion dollars in exports makes it possible to maintain or create 11,000
jobs. So we must ask what we can do to help business, especially small business,
to become exporters.
The Team Canada trade missions are one of the tools that allow business to
break into new markets, but they're not the only one. We have set up a variety
of mechanisms here at home and in our trade missions abroad to support small,
medium-sized and large businesses and help them to access international markets.
Our exports are currently booming; they have increased by 75% in the past five
years, and, for the first time in 12 years, Canada is showing a current account
surplus.
It is noteworthy that we have achieved all of that without changing a line of
the Constitution. Despite those encouraging results, however, there are still
some old myths circulating to the effect that the federal and provincial
governments duplicate their activities in a host of areas, because a number of
studies have shown that Ottawa and the provinces are active in a number of
common areas.
For example, there is a legend that Health Canada employs 8,000 people whose
only task is to monitor the provinces and duplicate their activities. In point
of fact, Health Canada has only 6,400 employees for the 1996-1997 fiscal year.
How many of them are responsible for enforcing the Canada Health Act? Only 23.
The rest of Health Canada's employees deal with responsibilities that logically
fall under federal jurisdiction, such as Aboriginal health services, drug
regulation, and prevention of epidemics. I think it would be difficult to
require drug companies to have the results of their clinical trials approved by
10 governments; it just wouldn't make any sense.
Much is also said about duplication of employment assistance measures. The
Official Opposition and the Government of Quebec often talk about blunders
caused by the approximately one hundred federal and provincial measures
currently implemented in Quebec. Well, according to a recent edition of the
French magazine L'Express, there are currently some 2,300 different employment
assistance measures in France. That plethora of programs is due to the fact that
municipalities, departments, regions and the central government all implement
their own measures, without paying much heed to what the others are doing
already.
Regardless, we are currently negotiating the transfer of active employment
measures to those provinces that want them, to ensure that only one level of
government is responsible for delivering all active employment measures funded
through the Employment Insurance Account.
3. HOW TO IMPROVE AND STRENGTHEN OUR FEDERATION
That brings me to the third part of my speech. I've spoken of the nature and
achievements of our federation; now let's see how we can improve it by building
on its strengths, so that it serves Canadians even better.
In the Speech from the Throne in February, the federal government clearly set
out the means it proposes to use to follow through on its commitment to make the
federation efficient for the benefit of all Canadians.
To illustrate how the federal government sees that change, I will talk about
only a few key issues: the labour force, health, forests, and fisheries.
Labour force development
I'll start with labour-market training, since I just referred to employment
assistance measures. This is an important sector, because countries such as
Canada will maintain their competitive edge only if they can count on a highly
skilled labour force.
Historically, the federal government entered this field for very legitimate
reasons. With constitutional responsibility for Unemployment Insurance, it
introduced programs to help get workers out of the cycle of unemployment. Yet
some of these programs were similar to sectoral training programs offered by the
provinces under their responsibility for education.
We are not only eliminating conflicts linked to overlap, but are also
building on our strengths by giving the provinces clear responsibilities in this
field, but without breaking Canadian solidarity. We want to have good job
training programs throughout the country, and we want them to be complementary.
Control by the provinces must not hinder labour mobility, because that would
considerably damage our socio-economic union and our collective ability to take
action.
What my colleague Pierre Pettigrew, the Minister of Human Resources
Development, is negotiating with the provinces, is a general framework giving
the provinces responsibility for active employment measures and labour-market
training; the federal government will act only where responsibilities are
clearly pan-Canadian or multilateral in scope. The negotiating framework is
flexible, and gives those provinces that want it maximum autonomy. The others
that opt for maintaining the federal role in active measures will be able to
count on federal support. Here again, equality does not mean uniformity.
Health
Now let's look at health, social services, and national standards, the main
topics of discussion at the Premiers' Annual Conference in Jasper in August.
Let's begin by debunking some myths and exaggerations. I do not believe that
the Canada Health Act is the soul of Canada. Our federation has existed since
1867, whereas the CHA as we know it was passed only in 1984.
I do believe, however, that the health system Canadians have built helps to
give them a level of well-being and a life expectancy that are almost unequalled
in the world. As well, Canadians can be proud of having developed a social
safety net comparable to what is enjoyed by Europeans, even though, here in
North America, our giant southern neighbour has a very different social
perspective.
The Canadian system of health and social protection is based on strong
subsidiarity: the provinces manage and deliver care and services. It is also
based on strong solidarity among all Canadians. The federal government
contributes to that solidarity by transferring funding to the provinces,
provided that they respect certain moral principles on which there is consensus
in Canada.
There are only five of these principles, and they do not constitute a
straitjacket. Those principles are as follows: universality, accessibility,
comprehensiveness, portability and public administration, with regard to health;
and no residency requirements for social assistance.
Those principles correspond to a social imperative: the absence of federal
transfers conditional upon compliance with those principles could lead to a
"race to the bottom" type of Americanization of our health system and
threaten Canadians' constitutional right to comparable services throughout the
country.
But those principles also reflect economic concerns. A private,
American-style health system places tremendous costs on businesses, making them
less competitive. U.S. car makers spend more on health insurance than they do on
steel. It is no accident that Canada, which represents 6.8% of the North
American automobile market, generates 15.8% of automobile production.
If Canada had ten very unequal health systems, and a patchwork,
compartmentalized system of social protection, labour mobility would be
adversely affected. In other words, the social union and the economic union
reinforce each other.
It is also noteworthy that federal intervention in the health field is
completely constitutional. The division of responsibilities in the Constitution
refers to legislative power, not spending power. Federal spending power within
jurisdictions of member states exists in all federations. It is considered a
prerequisite for flexibility. There is only one federation where spending power
is subject to the approval of the majority of member states, and it is ours,
ever since the commitment made to that effect in the Speech from the Throne in
February. The Government of Canada has thus made an important move toward more
harmonious, consensus-driven relations between the federal government and the
provinces.
The federal government has constitutional responsibility for health care for
a number of groups, mainly status Indians and Inuit. It can be seen right away,
by looking at the main components of health care, that the federal government's
responsibilities are appropriate. This is the case with drug regulation,
research, and medical eligibility of immigrants.
We realize that the area of health care has become a field of
federal-provincial conflict. It is understandable, as the federal government for
fiscal reasons has had to reduce its contribution to health care, that provinces
feel they should have more flexibility in the design and implementation of our
national health care system. The federal government has used the route of
financially penalizing provinces that violate the five fundamental principles
only rarely and reluctantly, but we recognize that there is a desire for more
consensus in the way the principles of the Canada Health Act are enforced.
Forests
The Government of Canada has committed to withdrawing from what have become
known as "the five sisters": forestry and mining development; tourism;
social housing; and recreation. Some critics have claimed that those sectors are
unimportant, that they are only minor areas. But do you really think that
forestry and mining, for example, are not important to the Canadian economy and
the well-being of Canadians?
If we look at forestry, Canada's forests sustain an industry worth $44
billion a year, accounting for 25% of all manufacturing investment and more than
750,000 direct and indirect jobs. Forest products form the lion's share of
Canada's net trade balance. In British Columbia, for example, forestry accounts
for 62% of the province's manufacturing industry and 60% of its total exports.
Forestry is a provincial jurisdiction under the Constitution. And that's a
good thing, because the provinces are closer to the resources, and thus are in a
better position to exercise that responsibility. On the research and development
side, the federal government is giving individuals and companies in all
provinces access to a unique database and a world-renowned expertise, thus
yielding substantial economies of scale, while avoiding overlap and duplication.
No one who is properly informed is challenging those responsibilities: to the
contrary, a coordinated national effort is obviously needed in those areas.
Let me give you an example of the type of research the federal government is
conducting in the forestry sector. During my visit to a forestry centre in
Quebec City, a researcher explained to me the problem of spruce bud moths, which
are destroying our forests from Manitoba to New Brunswick. The spruce bud moths
don't recognize interprovincial boundaries and know even less about the
Constitution! I asked the researcher how many colleagues he had working on this
problem, and he answered: "No more than about 20 researchers for all of
Canada".
Those cutting-edge researchers need to talk to one another, to work together
and consult one another, without having to go through a lot of red tape. It's
very desirable for that critical mass to remain together, within a single
system. The federal government thus has a clear role to play, which everyone can
appreciate.
Fisheries
The Constitution gives the federal government jurisdiction over "sea
coast and inland fisheries". It's the same for most federations.
In practice, however, the Government of Canada has delegated the better part
of management to the provinces for inland fisheries where there are no
complicating factors such as migratory species or ongoing international
negotiations. Even the coastal provinces are involved in fishery management,
playing an important role with regard to habitat through regulations on urban
development and forestry practices. They also participate in an advisory
capacity on numerous allocation and international fishery advisory boards.
It obviously makes sense for the provinces to play such an active role,
considering how important fisheries and the processing industry are to local
economies. Nevertheless, a clarification of roles is required today because of
major changes stemming from the modernization of fisheries, such as increased
fishing capacity, environmental problems, and increasingly complex international
relations.
That's why we've agreed with the Government of British Columbia to proceed
with a comprehensive bilateral review of federal and provincial roles and
responsibilities in managing the Pacific salmon fishery, a resource that is
crucial to that province.
CONCLUSION
I've outlined how the Government of Canada plans to change our federation so
as to improve services to citizens and inspire them to take on together, within
a united Canada, the tremendous challenges of the 21st century.
Canada's future hinges on an objective assessment of reality, and on
enlightened decisions to improve that reality. That is how we will ensure that
our country continues to be one of the most admired in the world for the
opportunities it gives its citizens.
We are open to your suggestions and advice, as public and private
administrators, to the extent that they speak to improving public service. The
Prime Minister of Canada is listening to your ideas, as long as they are in that
vein. The only way to convince Mr. Chrétien that your suggestions are relevant
is to show him that they will serve Canadians. That is what he cares about most,
and that is what makes him a great government leader
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