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History Table of Contents
1998 Summer Conference
 
Summer Conference 1998
Rethinking Canada for the 21st Century

Keynote Address: Governing Canada in the Next Century

The Hon. Paul Martin, Minister of Finance

Let me begin by extending my sincere thanks to this weekend’s organizers for the invitation to join you as your keynote speaker. It is a great honour.

The historical contribution of Couchiching to the public policy discourse within Canada is, I think it is fair to say, unmatched.

For more than 60 years, this has been where the most experienced and most expert have gathered together to exchange their views. This is where the great issues of the day are discussed and debated.

And, of course, this is where guest speakers find their most informed and, no doubt, most challenging audiences.

Beginning in 1936 my father spoke at Couch four times; as an MP, a Parliamentary Secretary, as the Minister of Health and Welfare, and finally, as the Secretary of State for External Affairs.

You will notice however, that he never came as the Minister of Finance and no doubt he would be aghast to learn that you had invited one to come and speak to you.

I was asked to speak on "Governing Canada in the 21st Century," a topic tailor made for Couchiching; it’s ambitious, complex and important.

Indeed, it is important, not just the eve of not just a new century, but of a new millennium it captures precisely the kind of questions we should be asking ourselves.

What sort of nation do we seek to build? What are the great forces of our day that will shape our tomorrow? How will we build upon the quality of life that Canadians enjoy?

Now, some here may be surprised that one of those questions is not about the current behaviour of the current dollar. Let me simply say that I am far from indifferent about what is happening to our currency. What is happening simply does not reflect the true economic picture of Canada.

However, I was invited here to discuss the longer-term view and, since 1993 we have been successfully — as a country — following a plan to strengthening our economy and our society.

The results are clear: there has been strong economic growth and job creation; the deficit has been eliminated; the debt-to-GDP ratio is now on a steady downward track; investment is strong.

And of great significance and should not forgotten, productivity growth is up. In fact, it is the strongest it has been in well over a decade and we have started the process of reducing taxes, a process that will continue.

In short, not as a result of the actions of government, but as a result of the actions of Canadians and the tremendous focus they put on the issues of cleaning up the balance sheet and putting things right, the stage is now set for a stronger Canada, now and into the 21st century.

One thing is very clear, it is only by taking the long view, as Patrick [Boyer] has said, it is only by having a plan and sticking to it, that we will build a better future for the Canadian economy and for Canadian society.

But that’s not where I want to begin.

I would like, somewhat perversely, to begin at the ending.

Rather than describing the circumstances of the present and then debating where they might take us into the future, I will attempt rather a suggestion as to the kind of future we should seek to build and then discuss how to shape our circumstances to suit that ambition.

Given, as I mentioned that my father spoke here four times over a 28-year period, I thought it might be interesting to cast tonight’s discussion in the context of what Canada might look like when I deliver my fourth address to Couchiching 28 years from now. This you will recognize as a somewhat unsubtle hint to the speakers’ committee.

So in the year 2026, what will our country look like? Or, more to the point, what should it look like?

Well first, the business cycle with its ups and downs will not have been abolished. Nor, unfortunately, will shocks to the system — the result of global economic integration — be a thing of the past.

Having said that, Canada will be a nation of abiding prosperity.

In terms of skills and productivity, our workforce will be the envy of the developed world. We will lead our trading partners in the creation of jobs and growth by building more than our fair share of the great value-added industries of a day that is yet far off.

Our middle-class — the backbone of any country — will be expanding; family incomes will be rising; and — importantly, this prosperity will touch all parts of our country; from Victoria to St. John’s, in Chicoutimi and in Chatham.

And as a result, Canada will be a strong and united country; one where shared success and mutual optimism will have marginalized the cause of Quebec separatism and joined all Canadians in a common sense of national achievement.

Canada — in the year 2026 — will boast a social infrastructure that is without compare in terms of its progressivity. Our health care — health care that is universally accessible — will remain as an enduring symbol of our values. But more than that, it will have evolved to meet the needs of a changing population and a changing technology.

Well into the retirement of the baby boomers, we will have secured the best public pension system possible.

And looking to the future, we will have created a network of support that will make today’s increasing rates of child poverty an unpleasant distant memory.

There are as well other important observations that one should make about Canada in the year 2026.

The economic and social blight that afflicts the Inuit, the Metis and our Indian peoples will have been largely replaced by an optimism in a future of equal opportunity.

Environmental indicators will form as fundamental a measure of our success as economic and financial ones do now. In short, sustainable development will have become a widespread practice, not simply a widely-praised concept.

The heart of Canadian culture will beat strongly in our works of art, our music and our film; stories told by Canadians and for Canadians but which also will be sought eagerly by those around the world in a living and breathing expression of our nation’s soul.

And finally we will accomplish all this while maintaining our commitment to sound fiscal management.

Our debt-to-GDP ratio will have long since declined past the point of any concern and our taxes will be competitive with any industrial country.

Now, to those who would roll their eyes and dismiss this portrait of our future as a Utopian dream, mark my words: there will be a great nation in the year 2026 and it will look just like the one that I have described.

Whether or not, however, that nation will be Canada is up to us. It is up to the ambitions we set for ourselves today, perhaps tonight, and the rigour with which we pursue them over the course of the next number of years.

How do we ensure that this future turns out to be ours?

The answer of course demands a response that in terms of its breadth goes much beyond that permitted by the 30 minutes that have been set aside for my opening remarks.

Part of the answer, however, does lie in defining the appropriate role of the national government: the subject that you have asked me to address.

Indeed, I would like to be even more specific by focussing my comments on the role of the state as conditioned by the ensuing era of globalization, an era that many feel will render national governments increasingly irrelevant.

In short, I want to challenge the myth that as globalization takes hold, the ability of national governments to act positively in the furtherance of their peoples needs and ambitions must wane.

Globalization, the emergence of a single world market for goods, for products, and, as importantly, ideas, is clearly transforming our lives and our livelihoods. It has in fact, been doing this for a very long time.

It was felt at the end of the 1800s with the laying of Trans-Atlantic cable, and seen centuries ago with the establishment of the mercantile navies of the English, French, Dutch and Portuguese.

Western missionaries extended the reach of an exported set of beliefs and ideas to virtually every corner of the world long before Karl Marx or Nicholas Negroponte.

What distinguishes these earlier manifestations of globalization is, of course, you know as well as I, is the startling leap forward that has occurred in our technological capacity.

A new world of quicksilver communications coupled with the architecture we have fostered to support international trade, lend globalization a reach that is pervasive and an impact that is overwhelming and instantaneous.

Let us be clear: this creates for us as a country many exciting opportunities. Open economies experience growth that is faster and that reaches higher than those closed to the rest of the world.

Greater innovation, improved productivity, and higher incomes all flow in the wake of open trade.

For a nation such as Canada, with such a small domestic market, the ability to penetrate economies elsewhere, to sell our products, our services and our ideas, is key to a prosperous way of life.

The problem with globalization, if I may coin it as such, is that it appears to have given rise to a market that outstrips the power and the values of national government.

The result is increasing anxiety on the part of populations everywhere. People have come to fear that they are losing the capacity to shape their own destiny because they feel hostage to forces over which they have no control.

Their confidence in the future is shaken by the suspicion that their national governments have no more ability to shape these forces then they themselves do as individuals.

This is not so. But in the absence of a competing vision, it threatens to become a self-fulfilling prophecy.

Let me repeat something I said in the last budget: globalization is a fact. It is a reality. But it is not a faith and it is not a religion. And we commit a very serious mistake if we ever come to believe that there is no role, no responsibility on the part of the national government to provide opportunity and security at home.

What is the role of government in the 21st century?

The answer lies within both the international and domestic fora.

Internationally, among other things, it is to establish the Rule of Law in all areas where the reality of global economic interdependence threatens domestic stability.

For example, over the course of decades we have established agreements that foster the movement of capital and goods with fewer restrictions and with greater speed than ever before. We have built institutions that protect the interests of trade. This is good.

But now we must strengthen those institutions that are intended to protect the interests of people.

Clearly, these must include those that protect human rights and the environment.

Also important are those that restrain the commercial and financial excesses of the market.

Let me just take the most obvious example.

The recent experience in Asia illustrates graphically the key role that the failure of financial institutions play in the spread of economic pain.

Indeed, imprudent banking practices are the common thread that weave together such otherwise disparate examples as Mexico, Thailand, Indonesia, Korea and, most recently, Japan.

The problem is that the combination of imprudent domestic banking practices, together with globalization ensures that in each and every case, the fallout is felt not just in the country of cause but around the world as well.

Well, where does the solution lie?

Ironically, I would suggest to you that the means to combat and manage these crises can be found in the tools created by national governments decades ago.

Even the most libertarian among us has long since acknowledged the need for banking regulation, for securities commissions, for combines legislation and other such instruments to protect individuals — individual citizens, people like you and I — from the excesses of an unfettered market.

Given that these tools are welcomed within our borders, by what logic would we not seek their development beyond those borders? Why would we build an international model that has all the market freedoms of our national economies, but none of its protections?

So smaller countries like Canada, I would submit, must act through multilateral means to strike the same balance internationally that we have determined is necessary at home:

  • Through more sophisticated oversight of all financial activity, private sector and public sector;
     
  • Through a stronger set of international rules that will protect the interests of people everywhere.

National governments must turn their attention from making globalization happen to making globalization work; to lead a march to the top rather than getting trapped in a race to the bottom.

Domestically, in terms of the role of government, the course must also be reset. For many, the debate over the prerequisites of a successful economy is over.

In 1998, when the Ministers of Finance from around the world gather together, the consensus is startling. An orthodoxy has emerged as to the desirability of low inflation, balanced budgets, less debt, lower taxes.

Where the debate now lies and where it will intensify in the years to come is between those on the one hand who believe that this is all we can, indeed all we should do, and those on the other who believe that sound financial management, while a given, is only the very least that a national government should be asked of.

You can count me firmly among the latter.

Why?

For the same reason I would advocate action internationally, because the forces at play if left unchecked will exact an unacceptably high cost on our people. Quite simply, we must now understand the necessity of forcing change to work for us, rather than the other way around.

For instance, at the heart of globalization lies an inherent bias toward inequality. The immediate availability of virtually unlimited choice means that we are creating a world where the best will do very well, indeed, but where second best will fall far, far behind. This cannot but exacerbate the existing disparity between a small number of winners and everybody else.

Consequently, it threatens to turn ours into a rigid society of haves and have-nots.

And we’re not just talking about the difference between Wayne Gretzky and a journeyman hockey player. Look at the income gap between unskilled workers and those working and employed in the growth industries and ask yourself whether income gap is likely to narrow or widen in the years to come?

Then ask yourself if the number of Canadians employed in such value-added jobs is more or less likely to rise with a government that insists its only responsibility is to mind the balance sheet.

The answer of course is that successful governments will have to do much more.

The great nations of the 21st century will be those who recognize the incomparable value of a vibrant and expanding middle-class:

  • One where the gap between rich and poor is always narrowed;
     
  • Where the mainstream is constantly widened;
     
  • Where the quality of life is lifted for all so that the most vulnerable among us can be assured of a better future.

How do we facilitate the growth of this middle-class? First, to be sure we must avoid the financial constraints that have indebted us in the past.

If we hope to attract investment and opportunity, we can ill afford to lag behind the rest of the world in maintaining sound economic fundamentals. We will keep our taxes competitive. We will get our debt-to-GDP ratio down to levels that are acceptable.

But by 2026, I would suggest to you, that high deficits and heavy taxes will be yesterday’s fight. The battle between the most successful countries will be waged on higher ground.

The pace of the new economy will not slow in the years ahead. It will only accelerate.

To stay ahead of its wake and to harness its opportunities will demand maximum flexibility and adaptability on the part of national government.

That is why we must strengthen, that’s why we must renew the institutions of support that define us as a caring society. Not only because they speak to our values as a compassionate nation, but because they offer an incomparable advantage in managing the impacts of change.

Those on the far right trot out a series of arguments why strong social programs cannot be sustained.

They tell us that in an era of globalization they represent a cost we cannot competitively assume. They tell us that they mask real-world consequences that will affect our productivity.

In my opinion, not only are these arguments flawed, but they fundamentally miss the point.

The fact of the matter is that universal access to high quality medical services, to simply give you one example, is the key to recognizing and realizing our full potential as individuals and as a country.

No one can take on the challenges of the new economy while preoccupied with the availability of basic care. No parent of an ill child. And no child of an aging parent. Medicare. Employment Insurance. Public pensions. Individually these each address a critical need. Collectively, they form a foundation of personal security and a platform for greater achievement.

To those who argue that social programs destroy initiative, I would reply that if we are going to ask Canadians to stretch for opportunities at the top of the ladder, then we have a need to provide a strong safety net should they fall.

Why? Because we want them to climb back up. We want them to try again. And we want them to keep trying until they succeed.

How will we build that ladder — the ladder of opportunity?

Now and in the future, we must inspire a culture of excellence that pervades every aspect of our endeavour; second best is simply not good enough! We must have a commitment to innovation and to achievement that extends to every walk of life.

Our objective must be excellence itself because excellence creates its own potential and leaves Canadians best positioned to compete and succeed in whatever area of endeavour they are interested in.

Quite simply, the acquisition of skills and knowledge forms the essential infrastructure for all that we seek to accomplish.

Of course we will develop the resources that lie buried deep within the ground. But first and foremost, we must develop the skills and the talents of those who walk upon it.

This will mean many things, but at a minimum, it will require of governments that they find ways to make post-secondary education, vocational training, and importantly — life-long learning — all the tools for self-improvement more affordable and more accessible.

So too we must invest in the infrastructure of innovation and excellence in our schools, and in a world class system of research and development that attracts private investment and creates the intangible synergies from which progress emerges.

All of this being said, not everybody in the 21st century will be an engineer or a software designer. Nor will everyone need to be such.

That is why, most importantly, we must remain faithful to the principle of equal opportunity. The premium placed on knowledge makes it increasingly difficult to gain access to the ladder of opportunity through any means other than higher learning.

In the 28 years to come, we know that this trend will only accelerate.

Therefore, while government must focus on the engineering student at Waterloo University, so too, it must help the humanities major at Sir Wilfrid Laurier. And so too, it must remember the unskilled worker whose formal education is limited and whose means are few.

The single mother who had to leave school to care for her child; the 50-year-old factory worker who has been "restructured" out of their job, [and] those for whom the inaccessibility of the new economy encourages withdrawal. We must not allow their potential to be lost.

Even more to the point, years of study demonstrate unequivocally that their children — those who have withdrawn — are more likely to continue down the same path, laying the foundation for a permanent underclass of unskilled workers with little hope for advancement.

Our goal is very clear: We have got to break the re-occurring cycle of child poverty.

We know that basic literacy has no equal when it comes to determining future prospects. We know that dependable assistance to the parent will almost always lift the possibilities of the youngster. And we know that early childhood development is of immeasurable importance.

But what we don’t seem to understand is the consequences of that; the challenges of child poverty might not often get raised in the context of preparing for the information economy, but they are every bit as fundamental to our future success as wiring the workplace or building new labs.

The challenge is clear. We must expand the reach of our investments in education to all Canadians. We must target in the design and delivery of our programs not just the most promising, but also the least fortunate.

Another important example of how our perspective must change is in recognizing the value and legitimacy of the social economy, the work that goes on within our communities. The jobs that are created within the voluntary and social services sector.

These are the people that are on the front lines of the battle against inequality. Their intervention is often the only chance we have to make a difference in the life of a troubled youth or in putting someone back on the track to employment.

Inexplicably, however, too often we dismiss the skill-sets associated with such vocations. We structure employment programs and apprenticeships away from these jobs.

In the future, as part of a truly integrated and comprehensive attack against disparity, as part of a balanced approach toward a more prosperous future this, too, will have to change.

What we are really talking about, whether it is expressed in terms of the need for stronger financial supervision internationally, or the social economy at home, is the need to constantly redefine the role of government.

Multinational corporations have not hesitated to restructure and refocus themselves to deal with world-wide change. Similarly, NGOs — non-governmental organizations — have succeeded in adapting their practices to meet new realities.

Only national governments, rigid in their organization and unbending in their perspective, risk being paralyzed by the prospect of globalization. Only national governments have been willing to conclude that sacrificing sovereignty is somehow preferable to renewing and redefining it. This is the laziest answer of the least courageous and the most unimaginative.

The fact is that the room for national governments has never been greater. Their role might change and their focus might shift but their fundamental obligation will remain resolute: and that is to protect the interests of people.

In the 19th century, classic liberalism told us that it was against the oppression of the state that the interests of the individual had to be defended.

In 20th century Canada this was reversed as and the tools of the national government were employed to support the objective of equal opportunity.

In the 21st century national governments will be asked to extend the use of these tools still further by mounting the defence of their citizens’ interests at home, as well as abroad; to impose human values in that crease between borders where protections are few.

The single world market does not trade in the currency of individual needs. Only governments will recognize their inherent worth and only governments will fight on their behalf.

Thus, to return to your question: what will it take to govern Canada in the 21st century?

It will take sound financial management, let there be no doubt about that. It will certainly take strong social programs. It will take a culture of excellence. It will take all of these things.

But above all else, it will take a determination:

  • to adapt and assert a bold new vision for government itself; to stretch and to bend our structures;
     
  • to build them up, to build that great middle class;.
     
  • to do whatever it takes in the struggle against inequality; whatever it takes to recognize what the markets cannot: that the wealth of a nation is not measured simply by the output of its economy but by the quality of life it provides for all of its people.

That is the standard to which we should hold ourselves for the future.

That is how we will create the great nation of the year 2026.

That is how we will govern Canada in the 21st century.

Questions

You are proposing an extension of national government and the values of national government into the international arena to protect the individual against the forces of globalization.

It struck me that it’s fundamentally against the policies of the United States, which are going to foster globalization, foster the power of the enormous juggernaut of American multinationals.

If that is the policy of the Canadian government in the future, such as the international criminal court proposed by Lloyd Axworthy, or the convention against land mining, the Canadian government is going to go against what American policy is going to be. Your comment?

Are there going to be differences of opinion between our two countries? Yes, I think it’s conceivable. But, essentially, I don’t suppose there’s ever been a nation that’s had such a high degree of hegemony as has the United States today. Perhaps Great Britain at the height of the British Empire and the world as it was then.

But nonetheless, having said that, when you see how the United States is affected by environmental degradation, when you see how the United States is affected by economic shocks to the system, I believe that in the end even as powerful a nation as the United States will realize that it cannot go it alone.

One of the better examples of that is, in fact, the United States has been very supportive of the Canadian initiative to establish world-wide banking regulations, because they themselves are getting sideswiped just as the rest of us are.

I think ultimately any country, including the United States, will act in their national interest and I think that on most of these issues it will be in the United States’ national interest to do so.

*     *     *

Would you lend you support to making citizen engagement — how we plug citizens in the political process — a priority?

Overwhelmingly. I can explain from a very practical point of view why that is so important. Essentially, if you look at the political process in this country it is largely the most articulate groups and individual interest groups who have their point of view. It is left to government — and I think it’s one of the reasons governments have problems — to reconcile all of these and come out with a position that largely satisfies no one.

The best example of that is what’s going to happen as we start to develop surpluses and there are going to be tradeoffs — how are you going to use that?

The reason I would support citizen engagement is that when there is a national consensus, the support of the nation and the ability of government to do things is overwhelming.

The fight against the deficit — I take credit for having built up this great national consensus, but if the truth be known that consensus was there when we took office. Basically, we took office and the Canadian people said we’ve had enough, clean this up.

It is very interesting to follow between the first budget and the second budget, the buildup of that national consensus. That enabled us to do 1995 budget. It could never have been done without that consensus. So, the answer to your question is unequivocally, yes.

*     *     *

When you’re talking about exporting Canadian values, are you talking about imposing Canadian values and standards overseas in business practices?

What I’m essentially saying, and we see this within our own country, [is] the great advantage of the market is its ability to create wealth. It also allocates resources in a more efficient way than could any government.

But, fundamentally the market does not have value. National governments, within their own countries, have values. It is not the market which first had the idea of creating a medicare system. It is not the market that essentially said we must go to mass public education.

The market may play a role, but the basic concepts came from people gathered together, forming a consensus and saying these are things we want to do. We understand that fundamentally within our own country.

I’m not saying that Canadian values are necessarily superior to British values or someone else’s. What I’m saying is that the mechanisms to basically bring those values into play exist within the national government.

Within our own countries, we understood that those governments had to play a role in simply moderating the hard edges of the market.

Surely to Heaven it doesn’t take a rocket scientist to understand that what we must do internationally is bring that same pressure to bear.

*     *     *

What do you see [as] the government’s role in bringing us from a situation where we have winners and losers to a point where we can accept the idea everybody is entitled to a decent life? That doesn’t mean an equal life, but it seems to me there is a need for a change in human psychology and, I suspect, that may be a problem for most governments.

First of all, I think it is the responsibility of government to guarantee equality of opportunity. That being said, I do not believe government can guarantee equality of outcome.

Our responsibility, however, is to make sure that people have an equal chance; a level playing field as much as possible, whether they be economically underprivileged or whether they be physically disabled.

I certainly am not against winners. I think we as a nation want winners. The problem I was attempting to address is that, in fact, what is happening around the world — and this is the reason for the disappearance of the middle class — is that winners are being created and a middle class is being created worldwide, but we are, in fact, allowing an underclass to develop in each and every one of our developed countries.

And we’re not giving these people a chance to come back. I think that will bear with it the seeds of its own destruction. We have a responsibility, a moral, ethical and a practical responsibility, to make sure that those who are losing as a result of the system that is in place have an opportunity to make a comeback and those who can’t are taken care of.

My problem with national governments — when I talked about the response of the laziest and the most unimaginative — is that we’re, doing the same thing we’ve done so many times. We’re fighting the last war, glorifying old history. And none of us are looking ahead. The fundamental difference between those who succeed and those who don’t are those who understand that old wars are never re-fought.

We have a responsibility as a society to produce winners. We’d better understand that we will not be able to produce those winners unless we create an opportunity for those who otherwise would have to withdraw from the economy to become winners themselves.

*     *     *

Twenty-five years from now, will we see a stand- alone Canadian currency?

I believe so. The fundamental difference is between NAFTA and the European common market and, in fact, the European Commission. We’ve got to understand that NAFTA is a trade agreement, whereas what they are doing in Europe is building a new Europe, a new country.

Essentially, I believe the Euro is going to be a very powerful reserve currency. It’s going to be heavily dependent upon a set of political structures that certainly are not contemplated in North America.

*     *     *

What do you believe the role is today or in the near future of the federal government in protecting children in their development, given that more than $6 billion has been taken away from provincial governments with respect to child develop, health and education?

There are a lot us here who are disciples of Fraser Mustard. He, essentially, is the person who inspired a great deal of what I said. And I think that a number of the federal government programs are certainly an important aid in that area.

I don’t want to give you a partisan response in terms of the money that was reduced. It wasn’t $6 billion. There really was an increase in tax points.

Yes, there were reductions in transfers. We had our back against the wall. We had to do what we did. We did some other things which I wish we hadn’t had to do, like cutting research and development, which we’ve been able to put back.

And that money will go back in. That money was taken away from provinces that have a much stronger debt-to-GDP ratio than Canada, from provinces that are either cutting taxes, or have increasing surpluses.

Is that an answer to your question? No, it’s not. And is waiting until 2026 the answer? Clearly it is not.

John Kennedy once said the role of government is to set before the people the great unfinished business of the nation. I think he was right. And I believe that as you establish what those objectives are — the great unfinished business of the nation — the question of child nurturing and child support has clearly got to be one of those.

And going back to the question of how do you build strong national consensus, there is a strong national consensus today in terms of protection of the health care system. That again is part and parcel of the Canadian people.

I believe it is the role of all levels of government to say the elimination of child poverty— that getting the money back into the [their] hands so we don’t raise successive generations — has got to become a national objective.

*     *     *

Given that we now live in a very regional world on one level and a global world on another level, how does the federal government retain both the economic clout and power — and also economic relevancy — to obtain the objectives that you spoke about?

The federal government has a debt-to-GDP ratio of about 68, down from 72, on its way to 60.

The average for the provinces in this country is about 30 per cent.

The federal government spends 30 cents out of every dollar — it was 36, but it’s down to 30 — on interest. That’s money that can’t go into other things. The provincial average is 14.

So, essentially, the federal government will be bale to maintain it’s economic clout if, in fact, it has a balance sheet that is at minimum not twice as bad as any of the provinces.

*     *     *

My concern is unemployment, specifically among our young people — even those who are well educated. I think this situation is a threat to our future. Do you have any ideas about this problem?

One of the anomalies you point out is, in fact, the anecdotal evidence of people with educations who are finding it somewhat difficult to find jobs.

The reason is that the anecdotal evidence, for instance from the high tech industries, is people asking us to go hire abroad because, in fact, the skills were not available in Canada.

There’s some kind of anomaly we’ve got to deal with. The numbers are overwhelming. The numbers are clear.

Over the course of the last two to three years there have been about 1.6 million jobs for people with education and a loss of 900,000 jobs for people who did not have a post-secondary education or a skill set of some kind.

The answer to your question is clearly education. That’s why I think it’s got to be such a focus for any modern government.

*     *     *

The gap between the rich and the poor is widening. I’m not sure we’re putting enough effort on giving the highest risk kids the kinds of opportunities they need. We have the highest participation rate in post-secondary education in the world. We’re saying we need more of that, yet at the same time we’re never really going to reach a point where 100 per cent, or even 60 per cent go to post-secondary education. So, what they learn in primary and secondary and the kinds of differentiation of what is delivered by the federal government and what is delivered by the provincial government are not mutually exclusive.

Could you comment on these comments that the silent majority doesn’t necessarily make public policy, it’s the vocal minority and sometimes many of us believe that students who sit in the CIBC bank teller seem to have more influence than the ones who are not seen or heard?

First of all, your point about the absolute necessity in terms of education, in understanding that it’s not all post-doctoral students and, in fact, there’s got to be a much broader base is something were very cognizant of, which is why in the Millennium Fund, as an example, we did not limit the funds to post-secondary education. It’s available to anybody who is going to get a vocational certificate. So, it’s available to a broader group.

Another example of what we’ve done in the last budget to try and respond to that was the $3,000 grant to parents with children who want to go back to school, primarily it ends up being single mothers. Again trying to recognize that there’s a segment of society which is at risk that we’ve got to deal with.

Yes, we don’t have jurisdiction in education but we certainly have jurisdiction in the whole question of affordablity and accessibility. That is a very important issue and I think the federal government can play a very important role in that area.

I met with the ministers of education about three months ago and I must say it was a very good meeting. There’s no doubt in my mind that we can work together on these issues.

I think that there’s an enormous amount that we can do along the lines that you’re describing.

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Where does the whole of the environment fit into your vision for Canada in the future?

It’s very clear. I do not believe that a rational economist and a rational environmentalist in addressing an issue can come to a different conclusion.

My own belief is that sustainable development is every bit as much an economic thrust, as it is an environmental thrust and that they come together.

What I talked about in my remarks was the whole question of environmental indicators.

Let me give you an example. When the Exxon Valdez went down off the coast of Alaska the gross domestic product of Alaska went up as a result of the cost of the clean up and nobody took into account the degradation of the environment that resulted. That’s simply silly.

My own view is that there should be no conflict, but we have to develop a set of national indicators because there is one thing I have learned since becoming minister of finance and that is if you can’t count it, people won’t take it into account. That may be absurd, but that is the truth. So, that’s why I made the reference to developing a better set of computers.

I find that it’s really not at the forefront of the agenda. When we listen to the news or read the newspapers, one rapidly comes to the conclusion that the environment is really at the bottom of the list. I find it surprising that politicians talk about wanting to pass down their country to future generations, [but] they say nothing about the environment and the quality of life from an environmental perspective.

That’s not correct. It is very much at the top of the list and, by the way, going back to the earlier question about how do you build consensus? It is very much at the top of the list for Canadians. When you do the polling at the present time it is a latent issue. When you ask the question explicitly, it’s right after health.

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As a young person, I look forward to living in the type of society that you envisage for us in 2026.

But, I can’t help but wondering about the current difficulty that the government and other leaders in this country have had in communicating to the rest of the world how strong our economy is and that we’ve made a fundamental shift over the past 25 years away from commodities and more towards services. We’re far more diversified.

Yet, every time the commodity market takes a hit, we also take a hit.

In light of this seeming inability to communicate with the rest of the world that there’s a lot more to Canada than trees and the stuff we get from the ground, and in light of the emergence of the single currency in Europe, how likely is it that Canada in 2026 will have an independent currency?

If we are to survive this needs to be addressed.

First of all, I believe we’re going to have an independent currency because we’re going to have an independent country.

If you look again at what’s happening in Europe and you look at the nature of the economic integration that will not work unless there’s political integration, then I think you’re essentially dealing with a different situation.

I also believe that long before 2026 we will have three great reserve currencies, the U.S. dollar, the yen and the Euro. It may well be by the time we get to 2026 that the Chinese currency will be approaching. It will be interesting to see what happens in the case of Brazil, but that is a long way off.

It is not only a question of communicating the strength and diversity of the Canadian economy and where we’ve been and where we’re going to the world.

It’s also a question of communicating it to Canadians. What has really happened, [is that] we’ve been obsessed, quite properly so, with the need to eliminate the deficit.

Essentially, we built a great national consensus on eliminating the deficit. I’ll tell you my problem now. We’re taking such huge pride eliminating the deficit, we’re prepared to rest on our laurels.

We eliminated the deficit, that’s wonderful.

Now, I wish somebody would come along and say to me, "I’m tired of that, let’s get on with the next thing."

Now what is the next thing? Well, the next thing is to basically make sure that this trend to higher productivity continues, that the trend to lower taxes — putting more money into peoples pockets continues — and that we focus on education the way a number of you have talked; that we focus on environmental indicators and the kind of society we want to build.

One of the reasons that we have not communicated [the diversity and strength of our economy] is that we have focussed on the deficit. [but] that battle has been won.

Now what we’ve really got to do is focus on how to build a stronger economy. It goes back to the Kennedy quote — one of the great unfinished business of the nation is, in fact, building an economy that can withstand the slings and arrows and the changes that are going to happen in a very volatile world over that period.

There’s no doubt in my mind that we aren’t going to have to wait until 2026. It’s going to happen a lot sooner than that.

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When and how is the federal government going to put resources into all these areas from which resources have been systematically stripped over the past few years?

How and when will the provincial horses be stuffed back in the barn, so that we have some kind of national vision around these things?

Over the course of the next number of years are we going to put more money back into education, more money into health care, more money into the development of environmental technologies, more money into research?

Absolutely! But understand that at the same time we are going to be retiring debt and we are going to have to give this country a competitive tax system. And so there are going to have to be tradeoffs. We’re not going to be able to do them all at once. Our resources are going to be restricted.

What the country is going to have to do is to, in fact, engage in the great national debate as to those tradeoffs, because if you don’t do it at some point the natural reaction of some politicians is going to be to do all things at once, in which case we’re going to find ourselves exactly where we found ourselves 20 years ago.

The question about the devolution of the provinces is an important debate and one that ought to be held. But I also think there is another debate that has got to be held and I can’t think of a better place to do it than at Couchiching.

When we talk about devolution, what we really ought to be talking about is the community. We ought to be talking about the front line workers in the community in the voluntary sector.

We really ought to be talking about who’s on the front line — and that’s not Queen’s Park or Ottawa. It is the community drop-in centre. That’s where the real action is taking place.

How do we as government get money into the hands of people who are on the front line — who can actually solve the problems? We’ve done nearly enough on the whole question of the voluntary sector, the whole question of community involvement. That’s where I believe the major thrust has got to be.

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The provincial governments are becoming non-players in all these areas, like education, like health care, like training standards. That’s an incredible thing to say; that the action is at the level of drop-in centres in Orillia.

Talk to people in the voluntary sector, ask them about the work they’re able to do on the front line, then ask them about their funding. And the second thing is ask them about the status of the people who work in them.

I’ll give you an example.

In my own riding there’s a low-income housing district and it has huge numbers of children, it has major social problems along the lines that we have.

What are the kinds of people that we allow to go to work in there? Essentially, it’s a make work project. You go in there, you work for six weeks or maybe six months and you’re not allowed to be re-hired. They’ve got to hire somebody else to come in because what they’re doing is they’re simply saying we want to give somebody a job. They’re not saying, how do we solve the drug-related problems that exist within this area?

This requires in my opinion a fundamental re-thinking of the way the government goes at it. Because you aren’t going to solve the problems in that area either at the federal government level or the provincial government level. You’re going to solve it by getting the money into the hands of those on the front lines who are going to deal with that problem.

What we’ve really got to do is value what those people are doing.

There’s something the matter with a society when what we do is enshrine the values of a hula hoop maker and we basically say that the social services sector worker who is on the ground is doing something that we can afford to do without.

That’s wrong!

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I have a sense that a nation’s destiny is somehow linked to the quality and nature of its culture. If environment was at the bottom of a list, I don’t think that arts and culture made your list. Given what’s happened in the magazine industry, given what I think will happen with the new measures introduced for the magazine industry — I think they will be trouble at WTO [the World Trade Organization], given the next Uruguay Round that will cover the whole range of cultural artifacts, will you see arts and culture fitting in to your vision of Canada in the 21st century?

One of things we’ve been talking about here is the necessity of communicating Canada’s strength. In my remarks I actually spent a reasonable amount of time on the environment — on culture — and nobody heard either one.

Maybe this is one of the reasons I’ve been successful as the minister of finance — nobody listens.

I did deal with culture and your point is well taken. Let me deal with it in two ways.

One — it is very much an economic issue. If you take a look at the job creation that is now occurring in the film industry in places like Montreal Toronto, Vancouver.

In fact, the film industry is now creating jobs in Prince Edward Island and Newfoundland, where [one] would not have thought that would happen.

There is no doubt that in terms of job creation that culture — the whole question of multi-media — is a major factor. There are more jobs being created in that area than in our natural resource industries; new jobs. It’s something we should clearly push.

If you go back to other part, I talked about the necessity of not holding on to archaic versions of sovereignly, but understand modern versions of sovereignty.

If you’re not only able to not only tell your story in your country, but have stories that other people around the world want to listen to, you’re going to lose your sovereignty.

It’s as clear as that.

The manifestation of sovereignty in the modern world is through may different ways, but certainly one of them is through your films, your books and, essentially, your culture. So we will lose the battle, if the only thing we do is win the economic side, but we’re not able to sell the nation, we’re not able to communicate what the nation stands for, and its soul and its history. We’ll lose it.

It’s not enough to simply sell to our own. We’ve got to communicate to the world.