by Derek Burney
(Speech given to the Deloitte National Public Sector Industry
Conference – Museum of Civilization, Gatineau, QC – November 15,
2006)
When Sal invited me to speak to you
this evening he explained what the main topic was but added that I
could really use that to say anything I wanted. A pretty “liberal”
opening Sal.
I had thought of something like
“Trust Your Income Trust” but Jim Flaherty eliminated that as an
option on Halloween. (Scary, eh! A government that takes tough
decisions.)
Let me turn to the topic – what I
would call the “The Challenges of Governing” in today’s environment
in the hope that what I say will not diminish your appetite and may
instead stimulate some questions and discussion to accompany dinner.
When I served on the Transition
team, I was struck most by the peaceful and orderly manner in which
political power is transferred in Canada. May well be something we
take for granted – doesn’t happen very often after all – and it is
certainly an opportunity not all citizens in our global village
enjoy. And yet, it is the essence of democracy, a reflection, too,
of the ultimate civility of our own brand of political theatre.
(Not what you might say if you watched the House of Commons on a
daily basis which is why I say “ultimate.”)
I believe that a periodic change in
political power is refreshing in itself, and not for partisan
reasons (really!), but because it allows healthy change both in the
direction and the implementation of public policy.
The fact that we may disagree over
the changes as they evolve is also what democracy is all about.
Leadership in government flows
first from clear political direction. Focus, a sense of purpose, a
short list of priorities and the stamina to stay the course.
There will always be – as Harold MacMillan once observed – “events,
dear boy” that interrupt and divert attention and compel a prudent
change of direction or emphasis; (Does anything come to mind?) but,
if leaders operate from a platform of defined goals and conviction,
they will have a rudder of sorts to navigate even the unexpected
shoals of governance and remain more or less on course.
Mr. Harper probably would have
preferred to ignore action on Income Trusts but “events” gave him
little choice.
I remember that, when Prime
Minister Mulroney invited me to become his Chief of Staff, I balked,
initially, saying that I was, after all, a bureaucrat, not a
political strategist. “Derek”, he explained “I am the political
strategist. I want you to organize my office…” As I subsequently
learned, there is a big difference between the two jobs.
Having a clear agenda and a sense
of priorities in government can be as powerful as a good idea. And
when elected politicians operate from a consistent set of
principles, they will earn respect, even from some who disagree with
the decisions they take. Ronald Reagan epitomized that example.
Many Americans disagreed with some of the things he did but they
were never in doubt about his conviction (and optimism) and they
respected him for both. It helps, too, when leaders reflect
confidence and clarity in articulating their positions.
Attempting to be all things to all
people – saying what your audience may like to hear rather than
what they need to know - is not the way to gain credibility or
respect. Because, if everything is a priority, nothing really is.
A new Prime Minister begins with a
reservoir of political capital and a limited amount of time. The
manner in which he spends both will ultimately determine the success
or fate of his leadership. With a minority government, the amount
of available capital is circumscribed and the time available for
action is even more uncertain.
Not only is there the need for
collegiality in cabinet, and for consistent support from caucus (the
Prime Minister’s “first constituents”), but also for reasonable
compromise with opponents, where appropriate, provided, of course,
that there is a mutual appetite for compromise and assuming, as
well, that the government’s objective is survival, not re-election.
Majority governments provide not
only more capital but also more time for tough prescriptions. (The
decision on Income Trusts was certainly tough and it remains to be
seen how much political capital it consumed.)
The degree to which the Tories are
able to demonstrate competence in implementing their agenda, and
establish credibility as a government, will determine whether their
fundamental political challenge is met, namely re-election,
preferably with a majority – one that would enhance both their
capital and their time for policy implementation.
The policy challenges for any
Canadian government tend to centre around three basic issues:
unity, where the pressures are essentially internal;
prosperity and security, both of which have external as
well as internal dimensions.
As very much a country of regions
in search of a binding identity, Canada can, on occasion, be
obsessed with the issue of national unity. Quebecers debate
persistently whether they will remain in Canada. Their governments
push the limits on provincial jurisdiction often obliging other
provinces into a ‘me too’ routine of demands. This issue is
relatively quiet these days but, if Mr. Igantieff wins the Liberal
leadership, or we see a change of government in Quebec, the
constitutional debate is likely to be reignited in some fashion.
There is much talk about a “fiscal
imbalance” but that is actually more than a Canada/Quebec issue.
Increasingly, there is concern about the burgeoning imbalance
between Alberta and all the others. Think of this. One-third of all
the new jobs created in Canada last year were in one province,
Alberta. That is a real imbalance, with profound consequences that
are just beginning.
In any case, talk about “fiscal
imbalance” tends essentially to be a debate about money because we
have a situation in which the federal government taxes more than it
spends while the provinces spend more than they tax. Any solution
will likely involve a decision on how much more the federal
government will pay and for what.
What would be better is some
clarification or realignment of roles between levels of government.
There is too much overlap today and, as a result, a chronic
avoidance of direct responsibility. Genuine accountability will
only come from clearer lines of responsibility. Here I am explaining
accountability to accountants. But take health care as an example.
(Someone, take it please!)
Part of the problem with debates on
things like the fiscal imbalance or health care, is that we have
difficulty at times distinguishing between myths and reality. The
myths tend to frustrate national debate and objective
decision-making. As you know better than most, the blurred lines of
accountability are the worst defect of today’s shared cost
programs. They simply add fuel to the prevailing myths.
In Australia, GST revenues go
exclusively to the States while income taxes go to the Federal
government. That would be too radical, I am sure, for Canada but it
has the advantage of simplicity and clarity for the payees, the
taxpayers.
Beyond the perennial concerns about
Quebec’s future, and the somewhat dubious debate about a fiscal
“imbalance”, I suspect that the underlying national unity issue
which cannot be ignored too much longer is the plight of our
aboriginal people. Here again, the talk (and many of the half-baked
solutions) is mainly about money. And yet, as with health care, the
more we spend, the worse the situation seems to get. More money is
not an effective answer to either challenge. Expediency over
principle.
The solution to the aboriginal
question involves harder issues of jurisdiction, and contemporary,
versus traditional approaches to administration and accountability.
The major obstacles are an unwillingness to exert political capital
at one level of government and a reluctance to relinquish any at
another. Regrettably, there is not much evidence of change coming
soon on either front.
But, if anyone thinks we can engage
in another debate on constitutional reform without addressing the
aboriginal dimension, I have some land for sale in Northern Ontario.
I am not sure whether our somewhat
complacent approach to federalism will provide real answers to this
issue or to the broader issue of role realignment. Some suggest a
Royal Commission to provide wisdom and spine for the changes needed
– to shatter some of the myths in the debate. But studies or
commissions are not ends in themselves and, in the absence of follow
through, they simply provide more process without purpose. The only
answer is leadership. Using political capital selectively but
firmly.
Governments do have a
responsibility to lead and shape public opinion – to move beyond the
whim or myth of the moment and exercise political will in a
deliberate fashion that will inspire more efficiency and more
accountability at all levels of government. But, in a federation
such as ours, this requires commitments on which several political
leaders, not just one, are prepared to take a stand and make common
cause. I am encouraged that Ottawa seems more ready to respect
provincial powers while focusing primarily on its own areas of
jurisdiction. The quid pro quo, however, would be long overdue
undertakings by the provinces to enhance our economic union.
Canada’s fiscal situation is sound
and the short term economic prospects are positive so the
prosperity dimension of the policy trinity appears to be in good
shape, at least for now. The global economy is humming along at a
level of 4% growth for 11 consecutive quarters – the strongest
upturn in 30 years. Inflation is at an historic low, despite
unprecedented prices for oil and oil products.
As always with the dismal science,
the underlying question is how long will it last? The U.S. fiscal
situation is anything but sound and there are already signs that the
economy on our southern border is slowing down. We all know what
that will eventually mean for Canada.
There may well be more to Canada’s
prosperity agenda than the U.S. market but getting things right with
our neighbour is a critical starting point. On that, I think the
government has earned good marks. Now that softwood lumber has been
settled, however, we need to inspire a more positive focus on, and
adherence to, NAFTA, using the strength and the substantially
integrated nature of our North American economies to bolster market
access elsewhere. Regrettably, the elections last week are not
likely to help on this or on trade more generally.
With the collapse of the Doha
multilateral round of trade negotiations now almost certain, Canada
needs a clearer, more concentrated and results-oriented trade
agenda, specifically targeting the emerging giants in Asia that are
rapidly becoming the new economic centre of gravity in the world.
Think about this. In the past six
years, the United States has concluded Free Trade Agreements with
more than a dozen countries. Canada’s score is zero in the same
time frame. Drift is not a practical option for a country highly
dependent on trade.
Australia does not have the luxury
of immediate proximity to its major market and so works diligently
at maintaining a pragmatic relationship with the United States
while, at the same time, cultivating closer economic ties with
China, Japan, India and Korea. A coherent, focused effort linking
all levels of government with the private sector, generating real
dividends for Australia’s economy. It is a model Canada should
consider.
Beyond trade, our government should
be preparing the ground for an increasingly competitive global
economy when natural resources will not be sufficient and when times
will not be as good.
The exceptional strength of our
fiscal situation should enable some sensible adjustments to
corporate and income tax policies designed to spur investment and
innovation. Decisions with objectives that go beyond short term,
political expedience.
We would benefit, too, from more
tax harmonization and from tangible reductions of both internal
barriers to trade and impediments to mobility of labour between
provinces. What Alberta and B.C. have done together should be
extended on a truly national basis. Imagine that. Free Trade
within Canada!
We require actions across the board
that will make us more competitive in an increasingly competitive
global society. Many also suggest that Canadian business leaders
need to be less cautious, less risk averse and more
entrepreneurial. Roger Martin of the University of Toronto has
observed that our executives and Canadian capital markets
“overestimate the risk of going global and underestimate the risk of
staying local.” (Now I am talking to accountants about more
risk-taking! Dangerous ground.)
In short however, if we continue to
rest exclusively on our admittedly abundant natural resources, don’t
be surprised if sclerosis sets in!
Our productivity challenge is
exacerbated by demographic changes. With one-third of our
population expected to retire by 2020, there will be much greater
pressure on our tax system to support already stretched budgets for
health-care and age-related benefits. Something will have to give
when we have more and more retirees paying less and less income
tax. (Younger members in the audience should take note.)
Some see increased immigration as
an answer and yet, if we simply expand the volume of immigrants,
using the current system, we will, I suspect, increase the social
burden without improving the productive capacity of our economy.
The security (and stability)
of our nation is any government’s over-riding responsibility and is
actually where the policy trinity comes together. Unity or
stability bolsters prosperity and a more prosperous Canada is likely
to be a more united Canada. But, security, in its most fundamental
sense, faces entirely new challenges in this young century, both
internal (as we have recently learned) and external.
We are vulnerable to a new kind of
war. Irrational terrorist acts which strike without warning, are
aimed at innocent bystanders and cannot be contained by traditional
military or security defences.
The enduring myth of Canada as a
peace-keeper is somewhat at odds with tasks in places like
Afghanistan that go well-beyond the blue beret model. That image
and the comfort or softness of our affluence seems to be engendering
an aversion to war-fighting as well as a false sense of immunity
among Canadians about the global terrorist threat. We need to
ensure that our strength as an open democracy, and the justifiable
pride we have for tolerance and diversity in this country do not
become sources of weakness, easily exploited by those with the
intent and the means to undermine the stability, the unity and the
potential that Canada enjoys.
Central to any leader’s challenge
of governing and to all three basic policy pillars is the manner in
which we choose to manage relations with the
United States.
It is never easy, even in relatively good times. After all, the
Americans are #1 and they know it. And there is no longer a real #2
in the world, one reason why, I believe, anti-Americanism is
flourishing almost everywhere. The Americans can play hardball and
not just in baseball. Their system of government is different and
can be difficult to fathom – even for Americans. And, after last
week’s elections, governance in Washington is likely to be even more
difficult all around.
“All politics” as they say “is
local” and Canadians, as I was often reminded, do not vote in the
United States. The attention span in Washington on issues of
concern to Canada is spasmodic at best. Difficult to gain, even
more difficult to sustain. Besides, any “dividends” on the home
front derived from a constructive approach can be elusive. Ask
Brian Mulroney. Ask Tony Blair.
As a former diplomat, I am often
asked whether leaders can really make a difference in managing this
all pervasive relationship. The diplomatic answer is that countries
have interests that transcend the personal influence – good or bad –
of individuals. The more candid answer, based on direct experience,
is that leaders can make a decisive difference … when they choose
to. I can tell you one thing for certain. We would not have
secured a Free Trade Agreement without the firm, mutual commitment
of Prime Minister Mulroney and President Reagan. But the importance
of the relationship extends beyond personalities of the moment and
should not be measured by simplistic standards of who is liked or
disliked at any given time.
The real challenge for any Canadian
leader is to try to reconcile the practical need for persistent
engagement with Washington in order to articulate, promote and
defend our substantial security, commercial and environmental
interests while also responding to legitimate aspirations in Canada
that we act, and be seen to act, as a distinct entity in North
America. The first part of this equation requires vigilance and
perseverance; the second calls for creativity, finding ways in which
Canada can make a difference or a significant contribution. It is
what some see as the “Canadian conundrum” in foreign policy even
though it is a conundrum that many countries envy.
I also believe that, if we can
establish a mature, constructive partnership on this continent with
the United States and manage it in a coherent, manner (with minimal
emotion), we will also be better able to address and influence other
global objectives.
Canada’s security on this continent
is guaranteed by the United States, as we are wont to say, “whether
we like it or not.” But, consider this and I quote: “Canadians
want to benefit from the United States nuclear umbrella but they do
not want to hold onto the handle.” Do you know who said that?
Pierre Trudeau in 1983 when he explained to the public his decision
to allow Cruise Missile testing in Canada. We could use some of
that candour in today’s North American security debate.
As the Nuclear non-Proliferation
regime becomes less certain, with the antics of North Korea, among
others, are we too smug to reconsider the merits of missile
defence? Does anyone seriously think that a missile fired from
North Korea or Iran will distinguish between Seattle and Vancouver
or between Toronto and Buffalo?
And yet, with all three Opposition
parties firmly opposed to reconsider the issue of missile defence,
the myth will prevail. Does that make any of you feel more secure?
When you live next door to someone ten times your size who has
unprecedented military fire power, you have a tendency to niggle or
whinge about their behaviour almost as a birthright. But, the
luxury of our “virtual dependence” should not prevent us from
adopting a realistic outlook about our own security nor should it
relieve us of the responsibility for contributing at home and
globally as an ally, as well as a neighbour.
The best way to move beyond
mythology, whether on security, or health care, or fiscal imbalance,
or similar challenges is leadership, unfettered leadership based on
conviction and a determination to make good use of the political
capital and the time available. That is what I see as the
essential challenge for any Canadian government.
