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"Canadian solidarity:
the example of
equalization"
Notes for an address
by the Honourable Stéphane Dion,
President of the Privy Council and
Minister of Intergovernmental
Affairs
Keynote address to the
Kiwanis Club of Ottawa
Ottawa, Ontario
March 2, 2001
Check against delivery
As Minister of Intergovernmental Affairs, I am invited to deliver speeches
everywhere in Canada. Each time, I choose a topic fitted both for the
audience and "on the air." On February 14, at the Faculty of
Law of the University of Toronto, I highlighted the perverse effects of
separatist blackmail, that is, using the separatist threat as a bargaining
tool: "Do what I say, or else I'll leave," or "Do
what I say, or else those who want to leave will have more ammunition for
doing so."
I urged all our political leaders who believe in Canada to renounce using
the threat of separatism as an argument to further their own political or
constitutional preferences. I said that Canadians were entitled to hear the
Leader of the Official Opposition, Mr. Stockwell Day, stop being ambiguous
about this new tiny separatist party in Alberta and make this simple
statement: "Nothing in Canada today justifies secession: not in
Quebec, not in the West, not anywhere else in Canada."
Since then, Mr. Day has corrected his previous ambiguous comments, making a
clearer repudiation of the separatist idea. So, I do not feel the need to
come back to this topic today.
Next Tuesday, I have been invited to speak to the Saskatchewan Institute of
Public Policy at the University of Regina. My topic will have nothing to do
with the one delivered in Toronto. It will be about the necessity for
Western Canadians and the Government of Canada to work better together in
spite of the fact that only 14 Liberal candidates were elected in the four
Western provinces in the last federal election.
On March 29, I will be guest speaker at the law faculty of the Université
de Sherbrooke. The topic will be the importance of law in the debate on
Canadian unity.
But today, I have the great honour to be invited by you, the Kiwanis Club of
Ottawa. And I must admit that I had no difficulty in finding a topic that
both corresponds with your interests and is also very topical in light of
the events of the past week. The topic will be: the importance of
equalization payments in Canada as an expression of Canadian solidarity.
Equalization payments are the program by which the Government of Canada
allocates money to the less well-off provinces - i.e. those that have a
lower-than-average ability to raise revenues. The principle this practice is
based on is that the federal government, as the government of all Canadians,
must help provincial governments to be able to deliver services of
comparable quality to their respective populations.
This
program has existed since 1957. In 1982, the principle of equalization was
deemed important enough to be entrenched in section 36 of the Constitution
Act, 1982 in order "to ensure that provincial governments have
sufficient revenues to provide reasonably comparable levels of public
services at reasonably comparable levels of taxation."
Equalization now amounts to $10.8 billion a year, the largest amount ever.
For many years now, the same seven provinces have been receiving
equalization payments: that is, all the provinces but Ontario, Alberta and
B.C.
Why
is this topic of relevant interest this week? Because last Tuesday, the
Minister of Finance, Mr. Paul Martin, announced that the payments will be
$1.8 billion higher than expected, for 1999-2000 and 2000-2001.
And
this topic is relevant to your own reality because for almost a century now,
the Kiwanis Club of Ottawa has been a model of generosity, caring,
solidarity, lending a helping hand. Well, this is what our country is all
about: solidarity and caring.
At
least, this is the ideal that we strive to reach.
We
must always try to be the country where human beings, whatever their
background, have the best chance to be considered as human beings. I am not
saying that we are that country, but I am saying that we are trying to be.
And
these efforts take different expressions, beginning by what you, the Kiwanis
Club of Ottawa, are doing to benefit your community.
And
one of these expressions of Canadian solidarity, one that is very important
for me as Minister of Intergovernmental Affairs, and one that has been in
the news this week, is the program of equalization payments.
In
the name of fairness, all federations pay particular attention to
redistributing resources from better-off to less well-off regions. Canada is
among those countries which practise such redistribution to the greatest
degree, through both its intergovernmental transfers and other federal
spending programs.
In
part, this is the result of the decentralized nature of our federation.
Since our provinces have very large responsibilities, it is important that
the federal government help them to deliver services of roughly equivalent
quality.
Look
at the results. In 2000-2001, it is estimated that Newfoundlanders will have
received $2,868 per person in major federal cash and tax points transfers,
compared with $1,708 for every Quebecer, $1,012 for every Ontarian and
$1,004 for every Albertan.
Is
that fair for Ontarians and Albertans? Let's put these figures in context:
Alberta has the highest GDP per-capita with an estimated $42,434 for
2001-2002, while it is estimated that Newfoundland will produce only 60% of
that ($24,587). In other words, Alberta's per-capita GDP is almost twice
that of Newfoundland, yet Newfoundlanders will receive only $1,867 more in
federal transfers.
Equalization payments are fair and necessary and are seen as such by
Canadians. I am very proud to see that according to all the polls that I
know, Canadians from coast to coast to coast support this principle of
redistribution between the more prosperous and the less prosperous
provinces. You Ontarians accept that and are willing to help your fellow
citizens in the other provinces, including through federal equalization
transfers.
As
Minister of Intergovernmental Affairs, I am happy to see that federal and
provincial governments of every political stripe: Liberal, Progressive
Conservative, NDP, even the Alliance, support the principle of equalization
payments. Of course, we may disagree about the formula or the amount of
money involved in the program. For instance, Premier Hamm of Nova Scotia is
currently suggesting changes to the formula, but it is not certain that all
the other provinces would agree with these changes.
The
formula is reviewed on an ongoing basis and is currently set for a period of
five years -through 2004.
So we
have frank discussions about the ways and means, but everybody supports the
principle. And we must be proud of that.
I
said that everybody supports the principle. Yes, except one government, the
PQ government. And this leads me to focus now on the case of my province.
You
heard Mr. Landry last Tuesday saying that equalization was the proof that
Canada does not work.
Is it
because Quebec is giving too much money through equalization? No, Quebec is
receiving money: approximately 47% of the total amount is going to my
province.
Of
the $1.8 billion in additional payments that Minister Martin announced this
week, no less than $1.5 billion is going to the Quebec government, partly
because Quebec's economy is growing less quickly than those of other
provinces. Premier Landry said that this was proof that Canada does not
work. In fact, he felt humiliated! He said that it is "déshonorant",
"degrading" to receive this money. But of course, he
accepted the money anyway!
Now,
imagine the opposite situation: if instead of $1.5 billion out of $1.8
billion, Quebec had received only a small share of that $1.8 billion:
is there any doubt in your mind that Mr. Landry would have said
that that was proof that Canada does not work?
And
if Quebec were Ontario, contributing instead of receiving, is there any
doubt in your mind that Mr. Landry would have said that that was proof that
Canada does not work?
In
fact, is there any scenario under which we might see Mr. Landry saying that
Canada does work?
This
is one of the difficulties with a separatist government. Whatever Canada may
do, they need to claim that Canada does not work in order to convince
Quebecers to get out of Canada (and to convince you that Quebecers will
never be satisfied).
I
remember that at the beginning of the 1990s, the PQ was saying that the
federal deficit was proof that Canada does not work. Now they say the
federal surplus is proof that Canada does not work.
The
fact is that Quebecers are less and less impressed by this never-ending
rhetoric of Canada-bashing.
Mr.
Chrétien's government is offering to Mr. Landry's future government its
full collaboration in order to help Quebecers constantly to improve their
quality of life in Canada. We do not choose the provincial governments. We
work with them whatever their political orientation. It is our duty to do
so, as the government of all Canadians.
But
another duty of the federal government is not to leave unanswered any unfair
comment on Canada. Our mode of conduct will not change: we will react to any
unfair statements on Canada coming from Premier Landry's government just as
we did during Mr. Bouchard's time in office. We will answer politely,
but clearly.
This
is why it is important today to reiterate that we have a fair federation.
Not perfectly fair; there is always room for improvement. But there is not
systematic discrimination against Quebec or any other province or territory.
Some
have said that Quebec is discriminated against, while others have said that
Quebec is the spoiled child of the federation. Let's look at the figures.
The data from Statistics Canada's provincial economic accounts are very
consistent from year to year. Take the most recent available data, from
1998. Quebec received 24.2% of total federal spending. Well, Quebec's
population is exactly 24.2% of the total Canadian population.
Now,
what is the share of Quebec's contribution to federal revenues? Is it 24.2%?
No: only 20.6%. Is that fair? Is it proof that Quebec is the spoiled child
of the federation? Yes, it is fair, and no, it is not proof that Quebec is
the spoiled child of the federation.
Indeed, one must take into account that Quebec's share of the Canadian
economy (the Canadian GDP) is 21.8 %. All in all, Quebec is contributing in
accordance with the size of its economy and receiving in accordance with the
size of its population.
Does
that mean that Quebec receives 24.2% of every item of the federal budget?
Obviously not. No more than Saskatchewan receives the equivalent of its
population share in federal fisheries and oceans spending! Quebec receives
much more than its population share of some items in the federal budget
(such as approximately 47% of equalization payments), and less of others.
It's not surprising Mr. Landry is focussing on those items where Quebec's
figures are below its demographic weight.
Mr.
Landry complains, for instance-as did Mr. Bouchard before him, and Mr.
Parizeau before Mr. Bouchard (this is an old story)-that Quebec does not
receive its fair share of federal R&D spending. The latest available
data (1997-98) show that Quebec receives 20.8% of this spending. But this
includes the spending that is concentrated here, in Ottawa, with the
research laboratories that, for reasons of efficiency, have to be located
here. All modern governments concentrate their R&D spending in their
capital cities, including the Government of Quebec. In fact, the Quebec
government spends 65% of its own R&D funding in its capital region of
Quebec City, while the federal government spends only 46% of its R&D
funding in the Ottawa area. With respect to federal R&D spending outside
Ottawa, Quebec's share is 25.2%.
As
for goods and services, Quebec suppliers receive 21.5% of federal spending,
which is roughly the size of the Quebec economy within Canada. If Quebec's
economy grows more quickly than average in the area of public service
procurement, then Quebec will likely receive more than 21.5%.
Now
take business subsidies. Quebec gets 16.5% of the total. So does Mr. Landry
have a point there? No. It must be said that business subsidies are not a
large part of the federal budget, only 2.6%. Part of this spending goes to
help farmers who do not have marketing boards, that is, mostly Western
farmers. In fact, most Quebec farmers are helped by consumers throughout
Canada through marketing quotas, and this kind of assistance does not appear
in the federal budget.
Now,
take spending on national defence. Quebec's share is only 17.3%. Is that
unfair? Not at all. First, these data include spending abroad, which is of
relevance for all Canadians. Within Canada, Quebec's share is 21.5%. But
most of the provinces have, like Quebec, less defence spending within Canada
than their population share. There is certainly nothing scandalous about the
fact that a significant part of defence spending is concentrated in Nova
Scotia. Did we not fight two world wars on the Atlantic front?
And I
could go on and on. Quebec has not got its population share of federal civil
servants? Nothing surprising in that, since the Quebec government decided to
assume some responsibilities (such as the provincial police force) that
other provinces prefer to leave to the federal government.
Inversely, Quebec receives significantly more than its population share in
many federal cultural programs. Everyone appreciates that cultural
expression in French needs specific help in this English-speaking North
America.
Conclusion
In
conclusion, I would like to tie in today's speech with the one I gave in
Toronto on February 14. In the Toronto speech, I argued that separatist
blackmail does not pay. The fact that many people in Quebec have used this
strategy has done nothing good for my province. It has been a waste of
energy and talent, and it has not convinced the federal government to give
Quebec more than its fair share in order to appease the separatist pressure.
Today, I have demonstrated, I think, that Quebec is receiving its fair share
of federal spending as a province somewhat less wealthy than the Canadian
average.
Quebec is neither the spoiled child nor the victim of the federation. By the
way, you might wonder what is behind Mr. Landry's theory that Quebec is the
victim of systematic discrimination in Canada. I will tell you what is
behind it.
It is
Mr. Landry's theory, and the PQ's theory, of the national phenomenon. In
Mr. Landry's universe, one cannot belong to more than one nation. Since
we Quebecers are part of a nation of our own, we cannot be part of the
Canadian nation. He adds that two different nations cannot have a
relationship of solidarity, only one of self-interest. You guys think only
about yourselves, and we get only your leftovers. In his own words: "...il
est immanquable que la nation qui contrôle se serve d'abord."
"...it is inevitable that the nation that is in control serve
itself first." (Speech by Bernard Landry, Hull, February 26,
2001).
Mr.
Landry's universe is a sad one. If we accept it, why would English-speaking
Quebecers, or Aboriginals living in Quebec, accept to have a confident link
of solidarity with French-speaking Quebecers? Wouldn't it be "inevitable"
that in Quebec too, "the nation that is in control serve itself
first?"
Fortunately, Mr. Landry is wrong. We can have more than one identity. To be
at the same time a Quebecer and a Canadian is not at all a contradiction,
but a wonderful complementarity. In this global world, where we interact
with people of so varied cultures and backgrounds, it is a strength to have
more than one identity, never a weakness. Identities are something one
should accumulate, never subtract.
Obviously, Quebec is a nation in the French sense of the word, that is, a
collectivity with its own sense of history and cultural references. But this
culture of our own includes our Canadian dimension, our Canadian identity.
It includes all the aspects of the country that we have built with you, all
the solidarity that links us to you and you to us.
To
renounce our Canadian identity would be to give up a significant part of
what makes us Quebecers.
And
so, Ontarians, never doubt that the growing majority of Quebecers are
willing to accept your help, just as they are willing to help you. Because
they realize, as you realize, that the Canadian ideal, this helping hand
between populations of two different languages, is a universal ideal, an
example for the world. It makes us better human beings to be together, to
care, to help one another. That is what Canada is all about.
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