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Notes for an address on the Economy
and National Unity to the Members of
the Business Council on National Issues
Montreal, Quebec
March 26, 1996
Ladies and gentlemen, dear friends,
In light of the result of the Quebec referendum on October 30, I am sure you
will all agree that the possibility of Canada's breaking up must be taken very
seriously. As I said in my visit to Vancouver on March 2, our country is in
danger. The possibility of separation has never been as real.
Many people would like Canada's situation to be comparable to that of other
countries, which are focussing exclusively on deficit reduction and job
creation, which our government has indeed been dealing with very well since
1993. We cannot stick our heads in the sand, however. We cannot ignore that we
are the only stable democracy facing the danger of secession.
Secession is a grave decision, and it is so rare under normal circumstances
that it has never happened in established democracies that have had at least ten
consecutive years of universal suffrage.
The constitutional debate is beginning to weigh heavily on the mood of
Canadians. Some are saying openly that they are tired, that they've had enough.
Others have simply resigned themselves, and have the impression that Quebec's
secession may be inevitable.
The link between the economic situation and the danger of secession is
obvious. Talking about the Canadian economy also means talking about the danger
of secession. You are living with the consequences of that. For people who do
business in Montreal, you know that you would have to be blind not to see the
negative consequences.
Even Mr Bouchard had to acknowledge that in an interview with LE POINT on
Thursday. In his own words, "... I won't deny that there may be some
foreign investors who are saying ‘well, let's wait until things are settled
between Montreal and Quebec City before going to Montreal.' (Radio-Canada, LE
POINT, Thursday, March 21, 1996)
In response to the urgent call by the business community, he has had to
acknowledge that there is indeed a link between political uncertainty and
economic instability.
It is thus imperative to shake off the prevailing climate of defeatism and
anxiety in Canada. We must awaken hope. And I believe that the Canadians who
were called on to vote yesterday in the various by-elections throughout the
country have sent a message of hope which Montreal, Quebec and Canada really
need.
Indeed, the reason I entered active politics was to combat negativism. That
is my first objective.
I. CANADA: AN ECONOMIC FORCE
You are businesspeople. You are in a good position to assess the considerable
impact of Quebec's separation on its economy and that of the country as a whole.
You are well aware of how it could affect your businesses.
You are aware of that because you know what the Canadian economic union
represents. You know its strength and, above all, you do not underestimate its
potential.
You know that Canada is the seventh largest industrialized economy in the
world and thus one of the world's strongest economic powers.
You also know that, in the past thirty years, Canada has been number one
among the G-7 countries in terms of employment growth, and number two in terms
of economic growth. Canadians have the 6th highest standard of living in the
world in terms of per-capita income. (Economic surveys, OECD, 1995).
The Canadian economic union is a powerhouse which benefits every province and
whose relevance is more than obvious in light of economic globalization.
Of course, the effects of market globalization and liberalization were widely
debated during the October referendum in Quebec.
The secessionists presented the Canadian federation as outmoded in the
current context of market openness.
They believed that a sovereign Quebec would jump the queue for entry into the
North American Free Trade Agreement; that the World Trade Organization would
automatically give a sovereign Quebec free access to the Canadian market; and
that, in the context of trade liberalization, a few common, low-key, 50-50
institutions established under a so-called partnership would be enough to
guarantee Quebecers and Canadians free movement of goods, services, individuals
and capital, as well as a customs union, a common currency and common
citizenship.
In short, the Canadian economic space has such obvious advantages that the PQ
government hopes to keep it, lock, stock and barrel, in the event of Quebec's
independence.
The secessionists also explained that the rest of Canada would agree to this
form of partnership, which would be mutually beneficial and inspired by the
European model.
The separatist leaders are still using the same arguments today as they did
in the referendum campaign. Mr Bouchard wants to incorporate partnership into
article 1 of the Parti québécois platform. This plan for partnership, however,
doesn't hold water. Let's look at their arguments, point for point.
First of all, let's put in perspective the issue of free trade and market
openness. Quebec trades more with the other provinces than with other countries.
Indeed, it is the province that is the most dependent on interprovincial trade
Despite its free-trade rhetoric, the Government of Quebec practises
large-scale protectionism, reserving billions of dollars in government contracts
for Quebec businesses.
NAFTA and the WTO tolerate that kind of protectionism from a province, but
would not be so indulgent to a country. That would force Quebec's economy to
make a wrenching adjustment. Quebec would have to negotiate admission to NAFTA
under difficult conditions, with a U.S. Congress that is more protectionist than
ever before.
Large economic blocks seem to be better positioned to negotiate international
agreements to their advantage. A new country, born out of secession, might have
to negotiate its participation in those international agreements in a context of
instability that would not be to its advantage. As a result, it could be forced
to fast-track painful adjustments to its economy.
The increased importance of international agreements is thus yet another
unknown on the path of secession.
With regard to a 50-50 partnership between Quebec and Canada, it is certain
that it would be up to Canada to deal with that offer, not Mr Bouchard. You need
only think about it for a moment to realize that it is unlikely that Canada
would feel it was in its interest to be part of a 50-50 structure that would
give a partner one third its size, with a higher debt load and a weaker economy,
a veto over every aspect of its economic policy, a partner which, moreover, had
just cut it in half.
In any event, those common institutions set out in the partnership offer of
the PQ would be much too weak to maintain the current Canadian economic
integration, which is guaranteed by a plethora of strong institutions: the
Canadian Constitution, the Bank of Canada, a solid banking system, and the
regulatory activities of the federal government.
Canada's economic integration does not come out of thin air. The economist
John McCallum has calculated that, in 1988, interprovincial trade was 20 times
greater than trade with American states, all other things being equal. Although
those data predate the free trade agreements, they show the extent to which
international borders are a powerful factor in restricting trade.
Without the support of the Bank of Canada, and without common institutions to
inspire confidence among economic agents, Quebec's trade with the Canadian
provinces would be much more restricted than it is now. The Government of Quebec
would more than likely lose its ability to use the Canadian dollar. Finally, it
would be out of the question for seven million people living along Canada's
border to keep their Canadian citizenship and all the rights that go with it
without paying Canada a penny in taxes.
The formation of large economic blocks such as the European Community
illustrates well that the future lies in union, and that division goes against
the current of history.
II. WHAT DO WE NEED TO DO NOW?
Now we have to act. I have set three main objectives for myself: first, to
debunk the myths propagated by the secessionists; second, to awaken the Canadian
identity that is dormant among Quebecers and among too many other Canadians; and
finally, to make the Canadian federation more harmonious and more acceptable to
everyone, including Francophone Quebecers.
A. Myths
Many of the myths presented by the proponents of secession depict Quebec as a
victim of the federation. On the contrary, Quebecers are the beneficiaries of
that system, while at the same time contributing actively to our country's
development and influence.
The numbers speak for themselves: Quebecers contribute approximately 22.5% of
federal revenues and receive 26.5% of total spending by the Government of
Canada. (Provincial Economic Accounts, Statistics Canada, 1993)
The secessionists are also propagating the myth that secession can be
effected without any economic disruption for Quebec or for Canada as a whole.
In a study you yourselves produced in 1992 entitled "The Cost of
Fragmentation", you listed the major repercussions for all of Canada if
Quebec were to separate. Let me remind you of some of them:
- slower economic growth;
- higher interest rates;
- unstable currency;
- higher inflation;
- possible disruptions or barriers to transport and
communication;
- a possible increase in interprovincial trade barriers.
(Source: Business Council on National Issues, The Cost of Fragmentation,
1992)
You know that this federation is more profitable than ever before.
Another myth that has to be debunked is that Canada is a centralized
federation. In reality, the Canadian federation is very decentralized. Indeed,
it is one of the most decentralized in the world. And the trend in recent years
is one of increased decentralization.
For example, federal program spending was one and a half times the size of
provincial and municipal spending in the 1950s. In 1990, it was only three
quarters their size, and that proportion will drop to two thirds by 1996.
Others say that Canada's decentralized nature is a weakness and a source of
inconsistency; in reality, it is one of its strong points, and decentralized
countries fare better than centralized countries.
It's no accident that four of the five richest countries in the world are
federations: Canada, the United States, Germany and Switzerland.
It is our diversity as a country that allows us to have different ways of
being Canadian and celebrating Canada.
When I say there are some myths that need to be debunked, I do not deny that
there are also some improvements that need to be made. But we must guard against
the knee-jerk reactions that get the better of us when Ottawa-bashing replaces
hockey as our national sport.
Let me give you an example. It is often said that there are 8,000 public
servants at Health Canada who provide no services to the public and do nothing
but monitor and duplicate the work of provincial public servants.
That statement is incorrect. Health Canada has the equivalent of 6,362
full-time employees. Only 23 of those have the task of monitoring the
application of the Canada Health Act by the provinces. A substantial portion of
Health Canada employees work in areas where there is little duplication with the
provinces and where the federal government is in the best position to act.
For example: health services to Aboriginals and northern populations, drug
product licensing, food analysis, epidemic prevention and drug products. These
are all areas where the federal presence makes it possible to achieve economies
of scale and thus avoid costly duplication that would exist if each province had
to conduct its own research and analysis.
It is thus not a question of being too complacent or too picky in evaluating
the federation, but of being accurate.
B. Awakening Quebecers' sense of identity
As the Prime Minister of Canada indicated during the referendum campaign, we
must no longer take our country for granted. The referendum also showed us that
economic arguments are not enough. We have to speak from the heart.
We must be more positive and stop giving Mr Bouchard a monopoly on the great
values of solidarity and pride.
The solidarity and pride that unite Quebecers are remarkable. But we must not
forget the pride and solidarity that unite Quebecers to people in the Atlantic
provinces, Ontario and Western Canada.
From coast to coast to coast, respect for democracy and freedom, tolerance of
others, generosity and sharing are values that unite us all and reflect what we
are.
You are businesspeople and people of heart. You know that you can be proud to
be Quebecers and have solidarity with your fellow Quebecers and, at the same
time, be proud to be Canadians and have solidarity with your fellow Canadians.
Quebecers must always see the Canadian identity as a complement to their
Quebec identity, rather than a negation of their culture, an affront to their
pride or their courage or a badge of exclusion or humiliation.
Belonging both to Quebec and to Canada is a treasure to be cultivated. It can
develop unharmed within a federation that has proven its effectiveness and that
Quebecers have helped so much to improve.
C. Changes for a more harmonious federation
We need a more harmonious federation. We must find better ways of achieving
our common goals and ideals than, for example, imposing rules on the provinces
by attaching conditions to federal spending.
We thus need to find ways of co-operating better to protect our gains and
take on the challenges facing us.
We all agree that changes are needed. The Prime Minister made a commitment
during the referendum campaign to bring about those kinds of changes.
And that is precisely what the Government of Canada is proposing to do in its
Speech from the Throne. For example:
The Government of Canada is committed to not using its spending power to
create new shared-cost programs in areas of exclusive provincial jurisdiction
without the consent of a majority of the provinces. Any new programs will be
designed so that provinces that opt out will be compensated, provided they
implement a comparable program.
This is the first time in our history that a federal government is taking the
initiative and unilaterally agreeing to this repeated demand by the provinces,
outside the context of official constitutional negotiations.
Furthermore, the Government of Canada does not need to be present in some
sectors. We are prepared to withdraw from areas such as labour-market training,
forestry, mining and recreation, which are responsibilities better suited to the
provinces and other bodies.
We will work together with the provinces to ensure the viability of our
social security system. We are willing to explore new decision-making formulas
in the area of social policy.
We will continue the work under way to reduce barriers to internal trade and
labour mobility, while still playing a key role in promoting the Canadian
economic union.
To eliminate costly and unnecessary duplication and favour economies of
scale, we propose to work with the provinces to establish a Canadian securities
commission, a unified food inspection system and a national tax collection body.
We are also committed to entrenching in the Canadian Constitution regional
vetoes and recognition of Quebec as a distinct society within Canada.
CONCLUSION
In closing, I would like to share a comment that I heard a number of times
during the election campaign I have just completed in my riding of
Saint-Laurent/Cartierville.
As I was going door-to-door, I heard this comment from a number of people:
"Mr Dion, we admire your courage, but you have an impossible task and you
will not succeed in convincing Quebecers to stay in Canada." Those people
told me that they were leaving, taking with them their love for Montreal, their
experience, their potential and their assets.
Two recent polls (Globe and Mail and CBC) confirm that those anxieties are
widespread. One out of six Quebecers, including one out of two non-Francophones,
are considering leaving in the event of secession.
I'll tell you this evening what I told those discouraged people I met during
my campaign in Saint-Laurent/Cartierville. I told them to stay in Montreal, that
they belong in Montreal, that it is their city, that they would not be happier
elsewhere. I told them that they must not lose hope, that we will keep Canada if
we all work together. I told them to continue talking with those who are
convinced that Quebec would be better off without Canada.
In everyone's interest, we must choose solidarity and reconciliation over
separation and division.
We do not have the right to fail. We do not have the right to impose the end
of the Canadian dream on the rest of the world and on our young people.
We must continue the Canadian experience and send a positive message of
reconciliation to the rest of the world and to future generations.
As Prime Minister Chrétien said so well in his speech in the House of
Commons: "We have seen that when the world looks to Canada, what it sees is
the future, or rather, the best hope for the future of the world. Together, let
us build that model of hope and confidence, that model for all mankind."
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