Advice to the Future Premier of Ontario

Head Table Guests

Shawn Ramos, grade 13 student, Runnymede Collegiate Institute; The Rev. Kim Beard, Rector, St. Bede and St. Chrispin Anglican Churches; Lillian Morgenthau, President, C.A.R.P.; Eric Jackman, Ph.D., President, Invicta Investments Incorp. and Immediate Past President, The Empire Club of Canada; George Cooke, President and CEO, Dominion of Canada General Insurance Company; Dr. Joseph Wong, Chairman, Yee Hong Community Wellness Foundation; The Honourable Floyd Laughren, Minister of Finance for Ontario; Herbert Phillipps Jr., President, The Canadian Club of Toronto; Edgar Ware, President, Futureware Inc. and a Director, The Canadian Club of Toronto; Joe Rotman, President, Art Gallery of Ontario; Gordon Cheesbrough, Chairman and CEO, ScotiaMcLeod Inc.; Frances Lankin, Minister of Economic Development and Trade; Lawrence McBrearty, National Director for Canada United Steelworkers; Matthew Barrett, Chairman and CEO, Bank of Montreal; and Paul Lucas, President and CEO, Glaxo Canada Inc.

Introduction by John Campion

Lord Byron Meets Juares in Ontario

George Gordon Noel Byron, Romantic poet by reputation, was 24 years old in 1812. The war between Napoleon’s France and Britain raged on. The Industrial Revolution, though little noticed at the time, was creating the impoverishment of a part of the working class at the same time it wrought its miracles of production. In that year, 1812, the high-born Lord Byron, who had taken his seat in the House of Lords at an early age, gave his maiden speech to the House.

Hand loom weavers had been hit especially hard by the introduction of large, more efficient weaving frames. The resulting loss of income for these workers led them to desperate and violent measures, including wide-spread destruction of the new frames.

In response, Parliament called for the death penalty. The Bill was sent from the Commons to the House of Lords and Lord Byron chose this topic for his maiden speech. In a slashing and passionate speech, Lord Byron opposed these Draconian measures. He lost this debate but the death sentence was seldom, if ever, used as a result of his fine speech against oppression.

Flash forward 77 years, to the Industrial Workingmen’s Association Congress of 1889. At that first Socialist Congress, four resolutions were passed which echoed Lord Byron’s concern for the miserable conditions of workers namely, an eight-hour work day, universal equal suffrage, substitution of citizen militias for standing armies and observance of May Day.

One man who attended that Congress was Jean Jaures, a Frenchman who, unlike many of his political Socialist colleagues in other countries, was to taste power in France. He was not moved by doctrine but by pragmatism. He lived by action which meant advance and retreat, adaptation and give-and-take. He has been described as a working idealist–a bridge between man and ideas.

It is these three themes–Lord Byron’s and the Socialists’ concern for the disadvantaged, Socialist doctrine and pragmatism that the New Democratic Party of our province has come to embody–possibly none more than in the creation and implementation of his social contract. This programme met the desperate need of the Ontario government to reduce expenditures while retaining solidarity and jobs for those people working in the Ontario civil service and who were under their charge.

The Ontario Socialists won power at a time when there were fundamental transformations going on in Ontario, in Canada and around the world, namely:

(1) in Canada, we were experiencing the worst recession since the 1930s;

(2) in Ontario, industry was undergoing a major restructuring brought about by the recession, free trade and foreign competition;

(3) the world economic order was under a change where labour, raw material and capital were less important resources and information was becoming the key to economic success.

The Socialists were therefore being met with numerous complex challenges in one of the most dynamic societies in North America. These five years at the helm of Canada’s economic engine have been a whirlpool only part of their own making.

The Honourable Bob Rae has been an MP or MPP since 1978. He has a B.A. and a law degree from the University of Toronto and was a Rhodes Scholar from Ontario in 1969. The Premier is a skier, tennis player, golfer, a fisherman and an avid Blue Jays fan. It is with personal friendship and pleasure that I welcome The Honourable Bob Rae to our speaking platform.

Bob Rae

Thank you very much. This speech gives me a chance to reflect a bit on the challenges and choices we have faced together and the challenges we will face over the next year. I thought I might call this speech "Advice to the Future Premier of Ontario." I hope that is me.

When I took office as premier just over four years ago, the government of relative political novices faced a deep recession, with both public and private sectors unprepared for the onslaught of massive layoffs and revenue cuts. Meech Lake had just failed to be ratified, which set off a wave of protests in Quebec. We faced a public with a mood which combined very high expectations with a deep scepticism about politics and public life. I once heard this experience described as learning to play a violin in public. Certainly no private sector institution of any size has to face a similar degree of press scrutiny or public participation.

A public philosophy should never be drawn from thin air or from pure theory, but values matter and have a lot to do with how we assess the experiences that we’ve had. My own values and experiences should be well known to all of you by now. Ontario makes its way in the world and I think at one time we began to lose sight of this. I think it’s important that we understand that this is a very important foundation of the quality of life that we share in the province.

We make our way in the world by making and exchanging goods and services with our fellow Canadians and with the rest of the world. We increase wealth by adding value to it. It used to be that we could do all of these things protected by high tariff walls, with a national policy that assured Ontario manufacturers of their pre-eminence with a guaranteed market in Canada. An abundance of natural resources and a strong market for agriculture provided the same assurances. Now, our natural resources are still strong, our agriculture is productive and our manufacturing is doing, I’m glad to say now, extremely well. But the surrounding context has completely changed. It’s no longer that of an isolated national, let alone provincial, economy. We trade our goods with one neighbour, the United States, in a way that has very few parallels in the modern world. About 90 per cent of our exports go the U.S. and that relationship accounts for about 30 per cent of our provincial wealth. Ontario is an international, multicultural and now, proudly, a multiracial community.

We have long prided ourselves on having good services, good health care, good education and a very strong sense of community solidarity. This has been a sense that this province has had of itself for generations. It’s a very strong tradition and I think it would be fair to say that it has not been confined to any one political party. We’ve always been at the centre of this country geographically, economically and politically. The changing natures of the national economy and national politics have, of course, affected that. But every premier has to remember that while others might enjoy the freedom of a marginal or even an ideological role, no Ontario premier has that luxury.

It is certainly true that with the end of the national policy, and now with the very badly over-extended federal government, Ontario’s role has changed. We did not do as well at influencing Ottawa in the 1980s as we did in the years before. The federal transfer system discriminates against us very badly and that needs to change. It will change, but it can only change if Ontario finds its voice and has the courage to be consistent in its determination to seek real and transparent fairness in the fiscal arrangements among the provinces and among the federal government and the provinces. Ideologues of all kinds have the view that there is only one way to look at the world and one way to interpret all experiences. This makes for a very blinkered life and a disastrous public policy.

My next piece of advice to the next premier is: Get a life! Laugh as much as you can at yourself and at life. The judgments of others, if always taken seriously, will drive you to distraction. Remember that the media, many of whom are here today (they’re my good friends), are not in the governing business. They are in the entertainment business, the information business, the influence business. They have, on the whole, even less of a sense of humour about themselves than politicians, and so leave them alone. Treat them with respect and courtesy, because your rudeness or short temper will only lead to further troubles. The more thoughtful among them know that something is not quite right in their world either. That the world of the tabloid and the instant judgment, instant headline, and the increasing sensationalising that has affected all of the media, has led to public scepticism about them as well.

Remember as well that most people are going through their day not preoccupied about what you do. Ontarians are public spirited, but you test this if you’re in their face every day. Politics is not the most important thing in most people’s lives. During the last referendum campaign, one citizen said to me, "I vote for you people so I won’t have to think about these things all the time."

My next piece of advice is that Kipling was right. Triumph and despair are both impostors. No victory is total and no defeat is a complete catastrophe.

Finally, and despite all this, as First Minister I have to tell you that the buck really does stop with you. There is no substitute for leadership and no excuse will do when things aren’t working well. Take charge, insist on accountability from your colleagues, from your deputies, and from your bureaucracy. When Sir Humphrey’s book is written about my experience of government, it will no doubt be called, No, Premier. Government needs direction, it needs movement, it needs inspiration, and it needs cajoling. This has to come from the premier. If you don’t have a mind of your own, it will very quickly be captured by others who do.

A large organisation, on its own, always tends to self-justification. It will always try to explain why the customer is wrong. This has nothing to do with partisanship. It is a fact of life about organisations, public and private. So reward anyone you can find in government or outside who has at least an iota of imagination and leadership. You can’t be the only agent of change. You must talk to people on the outside, and encourage people from outside the government to come and work inside the government. And encourage good people in the government to take a leave for a year or two. The trouble is that a lot of very good people find the rewards of private life too rewarding. A good public servant is someone to be treasured indeed. Be loyal to them, defend their decisions and particularly defend them when they’re wrong. Politics and government are not easy, so don’t make life more difficult than it needs to he by following a simplistic agenda.

Don’t be afraid to change your mind when confronted by facts and arguments that are too persuasive to ignore.

Being accused of flip-flopping is better than doing something that’s simply wrong. I haven’t met very many people who think exactly the same thing on every issue as they did five or 10 years ago. And the ones who do are often pretty narrow and dreary people. On the other hand, if you’re going to change your mind, make sure you have good reasons. And if you do it seven or eight times in a year, you’ve got a problem. People will accuse you of not having a compass, and they’ll be right.

I have a couple of other short rules of thumb. Here’s one: there are always more good ideas than there is money. Here’s another one: everyone is in favour of restraint in general, but no one likes restraint in particular. Those who benefit from many changes are powerless and disorganised. Those who might lose in any change are invariably powerful and very well organised and, in my experience, very vocal.

Finally, remember that a poll will tell you people’s first impression of things based on what’s on the top of their minds that day and based on what they’ve just heard. A poll will never tell you, because it can’t, what people will do when they hear arguments. It will never tell you how people change their minds. I remember the Charlottetown Accord which had support in the high 80s the day it was initialled in Charlottetown. It ended up about 35 points lower on the day of the referendum in our own province. Politics is not a simple static, arithmetic game. It involves a complicated, dynamic chemistry. You add different ingredients, you add different arguments, you add different personalities, you add different changes and the reactions are always very different. This is what makes politics interesting, and it always gives hope to those who might on occasion be behind in the polls.

The next premier will be facing a much better economy: a more resilient and competitive private sector, a public sector better able to cope with change, and a province that knew a different recession and now knows a strong and very deeply based recovery. We have growth at over four per cent with 182,000 new jobs since February and absolutely no inflation. I understand that the Leader of the Opposition was here the other week and said that Ontario had a very deep recession and a terrible recovery which was, of course, all my fault. This defies all credibility. The clouds have lifted, the sun is breaking through, the sky is not falling. Things will continue to improve through 1995. I believe, and I’ve had some external confirmation of this even today, improvement will continue through 1996 and 1997, if we keep our wits about us and refuse to be caught up in partisan rhetoric.

Keeping the economy strong will require sensible interest rates, a continuing emphasis on partnership and innovation in both the private and public sectors and an awareness that a modern economy like ours requires these partnerships. Some reject the very notion of partnership, But I think they’re wrong. When we took office, there was no real strategy either for marketing the province or for rebuilding its industrial base. We couldn’t impose it and it couldn’t come from government, but it had to come from a sense, an understanding, that we’re all in this together. In aerospace, for example, the industry in this province simply wouldn’t survive without partnership and, indeed, without leadership from the government. If government in this sector disappeared, so would all the jobs. High-tech, high-value jobs. The jobs would simply go to those jurisdictions that understood how the world really works. We’re now working with more than 25 different business and industrial sectors as part of our sector development approach. The sectors involved are convinced of the value of this approach. They predict (the sectors themselves, not us) that the industries in these sectors will produce more than 175,000 high-wage, high-skilled jobs in the medium term. These plans have not been built up by government alone.

They’ve been built up in co-operation with literally hundreds, indeed, thousands of people.

It’s interesting to notice the change that’s taken place in terms of where people look to leadership for the reconstruction of the Ontario economy. I guess the most dramatic example for me was the difference in the situation involving deHavilland. In the old days, back in the 60s and 70s, when there was an issue about the future of the aerospace industry, there was no question as to where people would go for an answer and that was to Ottawa. And yet when deHavilland went on the market again in 1990, none looked to Ottawa for a real solution. They came to the province of Ontario.

As Ottawa continues to dismantle itself (and this is something which I think we all recognise as the direction that we’re facing from the federal government), the challenges for us in our province will grow, from university education to health care, from social services to industrial research. The state that was built in Ottawa in the 50s, 60s and 70s is losing its salience and losing its vibrancy. Part of the answer lies in Ottawa, Queen’s Park and the municipalities working out a more sensible arrangement in both taxes and spending. It’s important to ensure that as this happens, Ontario doesn’t get the short end of the stick.

There are countless challenges we face as a province. A province, for example, with 11,000,000, which receives close to 60 per cent of the immigrants to Canada, has to get, should get, and needs to get an equivalent amount in transfer payments to deal with the problems and the human situation of those immigrants. We now get about 38 per cent of the dollars for 60 per cent of the problem. Quebec gets more than we do with only 25 per cent of the population and less than 20 per cent of the immigrants. This is not healthy; it’s not a sustainable arrangement.

Nothing is to be gained from not talking about this. It’s an unfair arrangement that needs to be changed. And anyone who wants to be premier has to confront this problem.

My opponents say two things. First, they say, don’t rock the boat by saying anything, and the second thing they say is, "Well the federal government has such a huge debt, how can you expect them to do anything for us?" And my answer is, Ontario’s interests will suffer even more if we do not press our case. If we do not speak for ourselves, who do we think is going to speak for us? It’s not a matter of arguing for more money. It’s matter of arguing for a fair share of whatever it is that’s being apportioned out of Ottawa. We don’t get that share now and our well-being is affected by that in terms of our own taxes, our own spending and our own deficits.

Another challenge that we face is that posed by those who say you shouldn’t have partnerships. We disagree with those who say that. And then there are those who say we need to have major tax cuts. Mr. Harris (I’m sure you’ve heard his name) is basso profundo at 30 per cent tax cuts. Mrs. McLeod is a minor variation at five per cent. Here I’m going to say something that I hope will not spoil your lunch. Neither Canada nor Ontario can afford across the board revenue cuts. The impact on services will be too severe. I’m in favour of tax reform for more of what we do to be tied to the ability to pay and for more incentives built into the system for employers to hire employees. But I would remind everyone that we did cut tobacco taxes, for example, not because we wanted to, but because we were forced to–by over $500 million last year, and we did not go back to the well to make it up. We also gave an Ontario payroll tax holiday to employers who hired new workers this year, which cost about 200 million and meant new jobs, we think, for 12,000 workers. More jobs reduce social assistance and unemployment insurance costs. It creates more purchasing power and income, and that, in turn, leads to higher revenues. But if taxes are reduced too much, the higher revenues disappear and the deficit gets bigger, not smaller.

The key for tax reform is to focus on job creation and job retention and to make sure the tax system is broad enough to generate the revenue we need for modern health and education services. And to make sure it’s equitable enough that those who can afford to pay do pay. Look at what our government did. We removed the commercial concentration tax, we raised income taxes on wealthier Ontarians, and we brought in the corporate minimum tax and some modest green taxes. We’ve also taken hundreds of thousands of low-income Ontarians off the income tax rolls altogether. We made the seniors’ tax credit far more progressive, so that those with lower incomes get more, those with more money get a little less, and those with more than a certain amount of money don’t get anything at all. We’ve received lots of attacks (this is an interesting experience) on the commercial concentration tax and it wasn’t even our tax. It was brought in by the Liberals, and I don’t recall getting any thanks when we took it off.

The loudest noises have always come from those with the most money. This is an absolute rule of thumb. This is almost an iron law of public life. There is every evidence that with the recovery, those with money are continuing to do very well. Corporate profits are up, private incomes are very substantial, private spending is up. And we’re happy that this is happening. We still see, for example, a small growth in the level of corporate and private charitable contributions. But to think that this province is going to enter an era in which we’re going to see a huge reduction in revenue which will then cause a huge reduction in services, because of the impact on the deficit–this, to my mind, is the American model in a crass form, and it’s a model which I think we need to examine very, very closely.

Massive inequality in a society like Ontario is not just bad socially and morally, though I believe it is. It is also bad economics. If we continue to leave hundreds of thousands, even millions, out of the benefits of the recovery, all of us will suffer in the end. It is a fact that large gaps between rich and poor breed many social problems. Poorly nurtured infants are more likely to be troubled kids who in turn are more likely to drop out of school, get in trouble with the law, end up in jail, or with a marginal job or social assistance. This all costs money.

Then there’s the move we already see in the States to more private security firms, and more private housing estates that are almost like medieval fortresses. The gaps between rich and poor grow. The underclass becomes permanent and feeds on itself. This is not what I want to see happen here. Those who are obsessed with American tax rates have to live with the other half of the equation: American service, and not just services for the better off (which we all know are just fine, thank you) but services for the ordinary working family, which are worse and more beleaguered than ours.

I’ve met many American governors who say with great pride that they have a balanced budget. I say that’s wonderful, but look at their schools, look at their inner cities, look at the quality of life, look at the level of pollution control, look at the level of health care that ordinary people get access to. Look at the level of crime in their cities, look at the violence which they now seem ready to accept almost as normal. None in Ontario would for a moment consider this as normal. That’s not what anyone in this room would describe as a high-quality life. If we want to avoid this, and I think we do and I think we can (I think for the most part we have), the services that allow us to maintain an element of stability in our relationships with one another have to be paid for sooner or later. And that’s why lately I’ve been talking more about how we need to control the social deficit, because that’s just as much of a challenge, I believe, as curbing the fiscal deficit. It may be a little less easy to identify or even to define, but its effects are every bit as dangerous to our whole way of life, and, I believe, every bit as dangerous to our economy.

I don’t care whether you call it altruism, collective self-interest, civic duty or economic necessity. But it all boils down to the same thing: maintaining our quality of life by maintaining and strengthening the social fabric of our society. This is not just a technical argument about tax rates. It’s about whether we are, all of us, rich and poor, well-off and less well-off, prepared to accept what it means to live in a community as a community. During the first years of our administration, we went through economic trauma and we decided that we would do what we could to buffer the impact on our society. Not only did we not cut welfare rates, we actually raised them when most jurisdictions around us were cutting them drastically. This contributed to the deficit, it’s true, and since Ottawa bailed out in 1989, we took more and more of that burden on ourselves. We did the same with every transfer agency, with every hospital, school board and with every municipality. As we reached our credit limit, because the recession lasted longer and was deeper than most observers, I think including many of you, expected, and as inflation largely disappeared from the system, we decided to share the implication of that–not just in a cavalier way, but in as thoughtful and courageous a way as we could.

We raised taxes, I admit it. We reduced projected spending by about $4 billion and we took another $2 billion out of the public sector payroll through the social contract negotiations, through the social contract agreements and finally through legislation.

Since then, we’ve held steady on all fronts. No net tax increases, programme spending down for the second year in a row and a clear message, which was delivered I think brilliantly yesterday by the Minister of Finance, that there’s no money being stashed away for the election or post-election. Yesterday Mr. Laughren told our major transfer partners that their funding will remain at current levels. Funding for social service agencies will stay at current levels and so will social assistance rates. We’d like to be able to promise this forever and ever. But if Ottawa decides to take an axe to our transfers, it is going to cause serious problems. Any discussion of our fiscal relationship with Ottawa has to lead to our social programmes. It should be clear right now what our direction is.

I believe that our government, our party have been much, much closer to the spirit of compassion and the sense of community demonstrated by the people of Ontario over many years than the mean-spirited approaches which are being urged by others. We want to reform the social safety net. We all recognise that that has to happen. But the trouble with nets is that once you get entangled, it can be tough to get out of them. Instead of a net, what we need to provide is a springboard which gives people the opportunity to bounce back from problems, to recover their balance and return to a productive way of living. We recognise that our welfare roles will never be zero, but they do need to start coming down as employment grows and as prosperity returns to the economy. That’s exactly, if I may say so, what we’ve done. We’ve given people the opportunity to improve their skills through remedial education and through training, through jobLink, through our steps to employment programmes, through jobsOntario Training, where we’ve got 65,000 positions created and a steady reduction in the rate of social assistance. And of course, we’re moving ahead with our partnership with business and labour in the development of a new agenda for education and a new agenda for training. By doing so, and by creating this new sense of balance and participation in our society, we’re bringing our fiscal deficit down, and we’re bringing our social balance deficit under control as well.

So what do we have now as opposed to what I faced when I took office? When I took office, we had unemployment heading up every month. The figures used to be dreaded; now we look forward to the Fridays when Statistics Canada comes out with the employment results. Inflation continued. Hydro rates were going up at close to 10 per cent. We had inflation, in terms of government costs, in every aspect of what government was doing. Social assistance numbers were growing. Revenues were collapsing.

What’s the situation now? Our revenue base is healthy–not spectacular, nothing unusual, but healthy. Unemployment numbers are coming down very, very healthily. Social assistance numbers have come down steadily over the last seven months and will continue to do so, we hope, across the province. And we’re seeing a much more virtuous and healthy circle than we’ve seen for some time.

Business confidence in Canada and in the province of Ontario is higher than at any point since 1979. Consumer confidence is returning. We’ve turned Ontario into a place for the productive economy to invest. Just ask somebody in the auto industry about the $5 billion that’s been invested in this province in the past three years. Our total manufacturing compensation, including wages, has not been extraordinarily high. In fact, we’re now far more competitive than we were when we took office. Our manufacture and union labour costs are down 22 per cent in the last three and a half years. That’s another reason why many manufacturing jobs, that some said were gone forever and would never come back, are back. We now have a province which is better trained, more adaptable and closer to the cutting edge.

In conclusion, I want to say a word about one other challenge that we face that I believe is quite central to our life as a province. I watched M. Parizeau’s speech and listened to him carefully in his presentation. I want to say to all of you that I, as a Canadian, am deeply confident about the future of our country, but I also want to say to all my fellow citizens in this province that we cannot afford to be complacent. This is not a time for either stridency or weakness. Many Canadians no doubt feel powerless to deal with this issue again. But the separatists are banking on that, hoping that Canadians will now sit back, exhausted with the constitutional tango. Well, as your premier I can tell you this. I am not going to sit back. And it is vitally important that none of you sit back. We have a right. In fact, I think it’s our duty as Canadians to say that the political, the economic and the cultural union that is Canada has benefited all of us. It’s benefited Ontario. It has also benefited the province of Quebec.

We don’t want constitutional uncertainty to take precedence over the economic and social recovery which is’ underway in this province and which, we believe, can be underway across Canada. Maintaining a steady climate in’ terms of our constitution as well as in terms of our economy is the key to maintaining the economic and social fabric of our country.

When I met with M. Parizeau I said directly to him, "Do not underestimate our commitment to Canada. Do not underestimate the strength and the depth of our feeling that Quebec is an essential part of Canada. And be sure of this, Ontario will always stand up for Canada." M. Parizeau might have made a point of telling us, "Don’t worry, this is all going to be easy. We’ll share the dollar. We’ll share your passport. And we’ll sort out the debt and all those other tricky issues with some good negotiations and a handshake." None of this is very real to me. M. Parizeau isn’t negotiating in front of a mirror. He’s in no position to give these assurances, because Canada is a democracy and Canada will have something to say as well. There’s no way any of us knows and there’s no way any one of us can know, because it’s an experience that none of us has ever known, what are the consequences of breaking up a country like this. But I can only tell you that I cannot see any circumstances, and I cannot imagine any circumstances, in which breaking up a country with a tradition of civility and partnership like Canada could possibly be positive either for Quebec or for any