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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