Notes for an address on the
Economy and National Unity

Montefiore Club

Montreal, Quebec

May 13, 1996

Ladies, Gentlemen,

The Montefiore Club is just 13 years younger than Canada. Your club has existed for 116 years and is well established here in Montreal. For 116 years you have played an active role in the development of our society; you have contributed to the social, cultural and economic development of Quebec and of Canada. It is a remarkable achievement.

Your profond and sincere commitment confirms your attachment to Quebec and to Canada. That is why I gladly accepted Mr. Kussner's invitation to speak to you.

You are members of the business community, and I understand your interest in our country's future. I not only understand it, I share it. I agreed to join Prime Minister Chrétien's team so that I could play my part in preserving Canadian unity. I agreed because I wanted to fight the defeatist outlook of so many people, and because I wanted to work to bring Canadians closer, so that we can celebrate Canada together.

We do not have a lot of time. The last referendum result carried an eloquent message : the possibility of Canada's breaking up has to be taken very seriously.

Secession is a very grave decision. It is so rare that it has never happened in an established democracy that has had at least ten consecutive years of universal suffrage. Secession generally happens only when you have a colonial situation or where you have the collapse of an empire, or when you have a very new democracy like Czechoslovakia. In cases like these everything is on the table, you're unsure of the rules, you're unsure of the rights of minorities and so on. But well-established democracies don't experiment with secession. And I think there is a basic reason for that. It is that democracies don't choose their fellow citizens. Democracies don't say I will keep one person as my fellow citizen, and tell another that they are not wanted as my fellow citizen. Democracies don't do that and Canada cannot do that. We don't have the right to let that happen. We must convince people to stay together.

You know, when Mr. Bouchard speaks about solidarity and pride among Quebecers, I want to support him as a minister of the Crown and as a fellow Quebecer. I want to support him. But when the same Lucien Bouchard says that we Quebecers must not have a sense of pride and solidarity with the people of Nova Scotia, for example, and must have with the people of Nova Scotia only a relationship based on economic interest, then I want to fight this Lucien Bouchard. What he's suggesting is not good. What he's suggesting is not something that we can support.

That is why I am in politics. To counter this feeling of resignation, this feeling of abandonment that we see emerging across the country. I am in politics to fight defeatisism and negativism. To give Quebecers and all Canadians the hope that they will meet the mesmerizing and terrifying challenges of the 21st century together.

During the referendum campaign, I heard two comments that struck me. They came from foreign observers, from non-Canadian observers. The first one was from a journalist in Paris who was interviewing people in the street. And along came a little old woman, typical Parisian woman, and the journalist asked: what do you think about Quebec's and Canada's future? Do you think that Quebec must separate from Canada? And she said only this simple sentence: "ça serait quand même mieux qu'ils restent ensemble, non?" It would be better if it stayed together, don't you think? This is a very simple sentence. I think that this lady summarized in a very simple sentence what you would find in all the big books that you may read about secession. And this struck me. I think it's the most important argument we can find. We must stay together - why shouldn't we stay together?

And the second comment I received, I want to share with you today. It was made by President Clinton, and I quote: "In a world darkened by ethnic conflicts that literally tear nations apart, Canada has stood for all of us as a model of how people of different cultures can live and work together in peace, prosperity and understanding. Canada has shown the world how to balance freedom with compassion." And this is what I just said: democracies don't fall apart.

Canada is perceived throughout the world as a symbol of the capacity of human beings to live together with different populations and different cultures in an harmonious way. By separating, we would be sending a message to the rest of the world that they were wrong : it's impossible to have different populations live together in the same country; each population must have its own country. According to many scholars, there are about 3,000 different groups throughout the world that define themselves as something like a people - 3,000. If each of them was to have a state, the planet would explode. Today, you have 190 states in the United Nations. There is no way that you would have a peaceful and balanced planet if you had 3,000 countries and 3,000 borders. We have, as Canadians, a duty on this poor planet - the duty to make Canada work.

Maybe this is too theoretical. So let's look at practical problems. Many people are asking the Government of Canada to stop addressing the problem of unity and deal with jobs and the economy. The truth is that it is the same issue - the same issue.

In a recent report, the Moody's Bond rating agency recognized the federal government's efforts to reduce the debt, put public finances in order and restore investors' confidence in the Canadian market. However, despite these positive developments, the Bond rating firm has ruled out an early restoration of Canada's triple-A credit rating, noting that the political uncertainty caused by the threat of a referendum is a major road block. Well, as you are fully aware, a lower credit rating means higher interest rates and, ultimately, slower economic growth and job creation. So, we cannot say that political uncertainty has nothing to do with economic difficulties. It is the same issue.

Many of you are businesspeople. As businesspeople you would feel the negative economic impact of Quebec's separation. In Montreal, this fact is very evident. In Montreal, political uncertainty is so damaging the economy that it has even been noted by some separatists. Recently, a former minister of Mr. Parizeau, Richard Le Hir, left the Parti Québécois. In his letter of resignation, he wrote that political uncertainty is tough for the economy of Quebec.

Maybe Mr. Le Hir is not the most reliable person, because even separatists have failed to follow him - but what has Lucien Bouchard said? Well, on March 21, he said: "I won't deny that there may some foreign investors who are saying, well, let's wait until things are settled in Montreal and Quebec before going into Montreal."

And I would say that investors are right to be nervous about secession.

When I was campaigning in my constituency, many people told me "Mr. Dion, you have a lot of courage, we admire you, but we don't think that you'll succeed. So we'll leave - we'll leave Montreal. We'll leave Montreal with our hope and with our love for this city ". But I urge them to stay, because we will succeed, because Quebec and Canada will stay together, and because we must stop this political uncertainty.

As businesspeople, you know that Canada has been an economic success. You know that Canada is the seventh largest industrial economy in the world, and it's one of the world's strongest economic powers. You also know that in the past 30 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 sixth highest standard of living in the world in terms of per capita income according to the OECD. Our life expectancy is among the highest in the world. And Canada is number one in terms of the school attendance rate.

Furthermore, and this is something few people know, Canada leads the G-7 countries and is second place in the OECD, behind Sweden, in terms of the lowest long-term unemployment rate, meaning unemployment lasting longer than 12 months.

Our country is a success - even in comparison with other wealthy countries. I'm not saying that Canada is perfect; we still have too many people unemployed or living below the poverty line, and we must do something about it. But when you compare us with other rich countries around the globe, we realize the extent to which Canada's performance is enviable.

But even if Canada were not as successful, even if Canada were not an average democracy, I would still fight secession. We cannot support a proposal that asks us to choose between fellow citizens.

And even if Quebec were not the most indebted province, even if Quebec were not the most heavily taxed province, even if Quebec were a source of real equalization, instead of receiving so much that it is equivalent to around two percent of its economic wealth, even if this meant that Quebec subsidized the rest of Canada, I would still tell Quebecers to stay in Canada, because that is the Canadian solidarity we are all proud of.

But the fact is that Canada is a success, and too few Canadians know this. There are many myths that we have to destroy in order to be sure that all Canadians will see the light - that they see how wonderful our country is. It would take a long time to list all of Canada's qualities. I would begin, but you would become restless because the list is so long.

But we do not celebrate our qualities. How many times do we hear that federalism does not work? How many times? It is true that in my department of federal-provincial affairs, all I see are problems. If there is a problem, it comes my way. But when things are going well, I don't hear about them. And it is the same for Canadians. We all hear about the difficulties but never about things that are going well.

The fact is that Canada's excellent performance is not just an accident. Our federal system has something to do with it. Four of the five richest countries in the world are federations. Canada, United States, Germany, Switzerland. I think that federations work. And federations are in good shape to compete with unitary countries. I believe that federalism has helped Canada to prosper first and foremost because it is a flexible and dynamic system that has struck the right balance between two fundamental principles, solidarity and diversity.

Canada has attained a level of democracy, freedom, fairness and prosperity that is almost unequalled in the world in large part because we, Canadians, have been intelligent enough to develop a way of practising federalism that well reflects the ideals of solidarity and respect for diversity.

Let's deal first with solidarity. We have put in place a network of social programs and a system of equalization payments so that all citizens can have a comparable level of well-being. We have even entrenched that principle of equalization in section 36 of the Constitution Act, 1982. That commitment to social solidarity is unparalleled, unmatched, in the world. And its results are impressive. Over the last 30 years, the gap between the richer and the poorer provinces has narrowed considerably. During that period, the seven provinces benefiting from equalization payments have seen their per capita GDP rise faster than that of the three richest provinces, according to a recent article in the Canadian Journal of Economics, April 1996. This is solidarity.

Now let's talk about diversity. The constitutional division of powers which gives the provinces exclusive jurisdiction over such key areas as health, education, natural resources and welfare illustrates our commitment to extensive local autonomy. Indeed, in terms of both sectoral powers and taxing and spending powers, Canada's provinces are in many ways stronger than American states, the German Länder or even the Swiss cantons. This is diversity.

Solidarity and diversity are two strengths that we share. When I talk about the advantages that federalism gives Canada, I am not talking only to Quebecers who might be tempted by secession. I am also talking to those who feel that our country is overgoverned and who dream of a unitary Canada and see the provinces as an obstacle to rational management.

Centralizing powers to a national government is not the solution. Imagine for a moment the bureaucratic monster we would have to put in place if we had only one ministry of education in Ottawa to administer every school in the country from St. John's to Victoria. Imagine! The strengths of our federal system have served us well so far and will continue to do so more than ever in the coming years if we give our federal system the chance of survival.

This is the first myth; that federalism does not work. The second is that Canada is "passé" - something that Mr. Bouchard said recently. Mr. Bouchard said that recently: Canada belong to the past. The future is the partnership between equals of Quebec and Canada.

Throughout the world, we see countries and supranational organizations such as the European Union trying to strike a balance between solidarity and autonomy. In that regard, Canadian federalism has a lot to teach the rest of the world in terms of how to balance those principles.

I am confident that our federal union will also help us to take on the new global challenges for which the balance between solidarity and diversity is more essential than ever. The truth is that together, we will be stronger, that the future is for countries that are strong and united. Because of economic globalization, more and more decisions with major repercussions on Canadian lives are being made at the international level. Belonging to the G7, to NAFTA, the Commonwealth, la Francophonie, the Organization of American States and the Asia Pacific Economic Cooperation Council is a considerable asset for Canadians in defending their interests internationally. Without the federal union, we would lose a number of those assets.

Diversity now. Diversity and the future. Trade liberalization at the international level favours specialization of regional economies. The Canadian federation's characteristic respect for diversity and regional autonomy will also serve us well in that regard.

Solidarity again. In social terms, a number of relatively new phenomena are contributing to radically changing the challenges Canada must meet. Our aging population, more lone-parent families, job insecurity, more people dependent on income security programs - these are issues that concern all Canadians and that are forcing us to review our social safety net. And, once again, solidarity and diversity, the basic principles of our confederation, will prove to be invaluable assets as we face these new challenges. On the one hand, the extensive autonomy of the provinces in the social policy field helps them find innovative solutions suited to their specific needs. And on the other hand, Canadian solidarity will ensure that all people, no matter where they live in our country, have access to comparable services.

Now, is Canada really overbureaucratized and overgoverned? If our system of government were truly cumbersome and inefficient, our public spending, our tax burden and the size of our public sector, including all levels of government, would be higher than in other comparable countries, particularly unitary countries. And yet, this is not the case. When compared with the average among OECD countries, total government spending, the size of the public sector and the tax burden in Canada are not particularly high. In fact, our performance is much better than many unitary countries in the OECD, such as France, Italy, Norway, Denmark and Sweden.

Another myth: is Canadian federalism truly an adversarial system where everything is subject to endless squabbling between Ottawa and the provinces? Although disagreements between the federal government and the provinces often get a lot of press, it should not be concluded that our federation is plagued by disagreements and conflicts. Many issues are resolved every day without attracting any media attention. The most recent inventory of federal-provincial programs and activities, which came out last year, contains no fewer than 457 bilateral and multilateral programs or agreements between Ottawa and the provinces - 457. That clearly means that the federal government and the provinces are managing to get along and coordinate their activities in a host of areas.

In addition, contrary to the claims of secessionists, no isolated province could do better in any area than a united Canada, specifically when it comes to repaying its debt. A few years ago, the secessionists used to claim that under the Canadian Constitution, we could never find a way out of the financial quagmire. But they are not saying that any more. Because eight provinces out of ten have found a way to balance their budgets once again, without so much as a comma of the Canadian Constitution being changed.

This means we are on the right track. And with the dynamic policies of our Minister of Finance, our deficit is now below the average of the developed countries. It will soon be one of the lowest deficits among OECD countries. Why? Because Canada is a country that can face up to its problems. It is a country that provides a model of generosity, tolerance and peace for the entire globe.

On April 26 this year, the European Credit Rating Agency suggested that Canada might become a better risk for investors if Quebec were to leave the federation. Its report pointed out that the country's financial situation could improve, mainly because Quebec is a clear beneficiary of transfer payments. This study indicated that separation would also reduce the net debt when compared with exports, since interprovincial trade with Quebec would then be included in exports.

Canada's economic and social union is a source of great strength that benefits every province: the relevance of this union is more obvious than ever as the economy is modernized.

However, we all agree that our federation could be even more harmonious. During the referendum campaign, the Prime Minister made a commitment to address this issue.

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

Reconciliation and solidarity must guide us in our quest for a strong, modern and united Canada. We must not take our country for granted.

We can and will make the changes that will lead us to an even better country, a Canada where all Canadians will feel at home from coast to coast.

We do not have the right to fail. For if we fail, our legacy to our children and to the rest of the world will be the end of the Canadian dream.

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