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Notes for an address by
The Right Honourable Brian Mulroney
Business Council of Canada
“Leadership in Uncertain Times”
April 19, 2016
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I am delighted to be here to celebrate the Business Council’s 40th Anniversary. While I will resist the temptation to stroll down memory lane on this celebratory occasion, I do want to single out the historical role the Council played in supporting major economic initiatives of my administration, notably the FTA and NAFTA, the GST, privatilisation, deregulation and our low inflation policy. These were the foundational policies for Canada’s subsequent growth and I want to thank the Council for its strong and unwavering support.
As recorded in my memoir, Tom d’Aquino and the Business Council “spoke out bluntly and took out ads in favour of the (initial) trade agreement.” His support, along with that of Chairmen like Rowlie Frazee, David Culver, Paul Desmarais, Guy St. Pierre and Ted Newell, among many others, was “unprecedented” and indispensable to our ultimate success.
The results exceeded even the estimates of the most ardent advocates. Since implementation of the FTA in 1989, Canada – U.S. trade has more than tripled, constituting the largest trade between any 2 nations in the history of the world. In the same period, our GDP has more than doubled to $1.8 trillion and the Canadian economy has created 4.6 million new jobs. Many see the trade agreements as the major catalyst for that growth and the strong, public support by prominent Council members was instrumental to that success. But the best compliment of all is the fact that many who had been opposed ultimately became champions of the agreement.
I believe that, over the years including today under the able leadership of John Manley, your Council has provided valuable steady, non-partisan policy advice to various governments – a rudder of continuity in fact on a range of issues extending beyond basic business concerns such as fiscal policy, taxes and regulations.
Your support was certainly crucial for many transformational changes implemented along the way and I begin by congratulating the Council for exemplary service to the national interests of Canada.
Today, I want to share with you some thoughts on how I think Canada should meet the challenges ahead in what promises to be an increasingly complex, uncertain and more volatile world.
My premise is that whoever wins the U.S. election in November is likely to be more inward than outward focussed, coping primarily with immediate problems on the home-front – serious income inequality that has shattered the American dream for many in the middle class, a decaying infrastructure in major cities, a highly polarized political mood that stymies major initiatives and a pervasive fear about the threat to the U.S. from terrorism.
It is not a pretty picture. It is also increasingly evident that America is becoming weary and wary of inconclusive global entanglements and less enamoured with its role as leader of the western alliance.
None of this is good news for Canada or frankly for any U.S. ally but the most worrying aspect of the presidential campaign has been the fervent, anti-free trade rhetoric that has monopolized the debate in both parties thus far.
None left in the running is openly supportive of free trade principles or initiatives.
Though normally supportive of free trade, the Republican candidates are pitching populist, almost nativist positions that are simply protectionism wrapped in a pretty ribbon.
The leading Democratic candidate has been pulled leftward by her surprisingly strong competitor and not just on trade.
Prominent members of the private sector have been remarkably silent.
The mood of America seems to have moved a long way from the wisdom of past Presidents like JFK who said “economic isolation and political leadership are incompatible. A creative, competitive America is the answer to a changing world.”
Or Ronald Reagan who warned bluntly, “We should always remember, protectionism is destructionism”.
We could certainly use more sentiments and more leadership embodying those sentiments these days in Washington.
If there is a saving grace it is that, despite all the campaign rancor, the U.S. economy continues to grow. Employment numbers are increasingly proving that the resilience of the economy continues to be an underlying strength for America.
Regardless of the election outcome, Canada will definitely need to be “on guard” as never before to defend what is still our most vital market access, emphasizing to the new Administration and Congress the mutual benefit and advantage of our bilateral trade and investments.
We should take nothing for granted.
The role of our respective private sectors will be pivotal in maintaining a sense of balance and a better appreciation of mutual, self-interest. The network of personal and private sector ties between us is the strongest bulwark against punitive lunges by Washington.
You do have credibility on this score and my most important suggestion is that you use every opportunity you have to underscore the shared (reciprocal) value of our economic relations to your American counterparts.
I would also encourage you to engage openly and directly with our own government on major policy issues. For one thing, I know firsthand the value and credibility of third party endorsements
One lesson we should have learned from the unfortunate veto of the Keystone pipeline is that we must not rely exclusively on the U.S. market for any single export – energy or otherwise.
With that in mind, I believe that we need as a matter of priority to broaden our global footprint on trade while simultaneously building the necessary infrastructure in Canada to support an expanded trade horizon.
First of all, we need to conclude and implement the Comprehensive Economic and Trade Agreement (CETA) with the EU swiftly. Many of your European counterparts are as concerned as many of you about the protectionist mood growing in America. By implementing what has already been negotiated with the EU, we would inject a counter- balancing note of confidence into the trade debate, one that may encourage like-minded Americans to speak out as well.
Secondly, since the prospects for early ratification of the Trans-Pacific Partnership (TPP) are dim at best, we should quickly implement what has already been agreed bilaterally with TPP partners like Japan, Malaysia and Vietnam; agreements that are estimated to generate more than $10B in benefits for our economy. After all, TPP is the umbrella of basic principles under which a cluster of bilateral negotiations were concluded. By moving bilaterally and expeditiously, I believe we would reinforce the prospects for eventual ratification; and
Thirdly, we should initiate systematically negotiation of an FTA with China, now the world’s second largest economy. If it made sense for Australia and New Zealand, we should not hesitate any longer. We do have different political systems and different geopolitical concerns but closer economic ties, anchored by a broad agreement, can be conducive both to more candid dialogue and greater stability.
Each of these initiatives has significant merit of its own but I would add that each would also enhance our leverage on trade in Washington. After all, that is the essence of healthy competition.
III. For these trade initiatives to bear fruit, we do need to adopt a more concerted and more coherent strategy to approve and build infrastructure – LNG plants and pipelines – that will enable us to ship energy products, in particular, to markets beyond North America.
We have enormous potential – the third largest supply of crude oil in the world –
174 billion barrels – much of which lie in the oil sands. More importantly, what we have in Canada represents more than half of the global oil reserves that are open to the private sector for development. Can there be any better magnet for investors?
Just think of this as well:
Canada ranks first in the world in potash and titanium, second in uranium, third in natural gas and aluminum, fourth in diamonds and fifth in nickel. We are also a significant source for iron ore.
We are the world’s third largest producer of hydroelectricity and have the potential to more than double our current capacity.
And it is important to recognize that the natural resource sector generates a disproportionate share of Canada’s wealth accounting for roughly 15 per cent of nominal gross domestic product (GDP) and nearly 800,000 jobs.
An additional 800,000 jobs in other sectors were supported by the purchase of goods and services by the resource sector.
Bear in mind, too, that extractive industries are also some of the most innovative and productive sectors of the economy, now being driven by space age technology and computers.
Yet, while Canada does have abundant supplies of oil and gas, we do not have the capacity to export either to more than one market. That is precisely why we are obliged to sell at a discount to the world price.
A senior Chinese official has already expressed concern publicly about our ability to move forward on essential infrastructure projects that would enable exports.
Other potential investors like Petronas of Malaysia are expressing frustration about the cumbersome and uncertain regulatory review procedures in Canada.
We need to correct those concerns before it is too late. It will not happen by osmosis, nor will more consultations and lengthier reviews magically produce a national consensus.
Despite all that you may have heard or read, the age of fossil fuels is not about to end any time soon. In fact, the International Energy Agency estimates that demand for oil, coal and gas will increase steadily into 2040. Heavily subsidized “renewables” will also increase but will still be a small part of the total. That is the reality of the world we are in.
The debate has become highly polarized with more emotion than analysis at center stage.
The biggest challenge in Canada today is uncertainty. The resource sector has hugely capital intensive projects with a long life. But these projects cannot go forward if they become captives of seemingly endless processes and reviews. Public policy has a critical role to play in reducing some of that uncertainty and promoting the Canadian resource sector in emerging markets.
Your voices need to be heard in this debate.
We cannot allow our regulatory regime to be gamed by those who simply want to disrupt any form of development. There are clear lessons from history on this tendency.
35 years ago, the Government of Canada introduced the National Energy Program. This crippled the energy industry in Western Canada, drained the treasury of Alberta in particular of billions of dollars, significantly damaged our international
reputation for reliability and trustworthiness and established a new low in Federal- Provincial relations in the modern history of Canada.
Four years later, my new Government abolished this NEP and consigned it permanently to the dust bin of history. I thought we would never again see political attitudes in Canada that would give rise to such egregious and nation wounding policies.
But I was wrong.
Recently a group of Luddites attempted to seize control of a major political party in Canada by articulating a new philosophy of economic nihilism that would devastate the economy of Western Canada and seriously damage the long term economic prospects of our country as a whole. This must be resisted and defeated.
As it is, by arbitrarily extending the scope, the time and the expense of the regulatory reviews the government is actually injecting more uncertainty into the process and undermining the credibility of the regulatory institutions charged with that responsibility. There is a growing risk that, due to protracted delays, mounting opposition, escalating costs and the lack of distinct political support, essential pipeline projects may die stillborn- just like the ill-fated MacKenzie pipeline – with severe damage to a vital sector of our economy that is already reeling from depressed prices.
We need sensible environmental policies, of course, because Canadians are justifiably proud of our pristine environment. My government earned plaudits for our action on the environment, which was an important priority for us in all of our initiatives. I was greatly honored to have been voted Canada’s Greenest Prime Minister in history, by leading environmental groups. But we were always conscious of the need for balance between sustainability and growth.
There will be no powerful explosion of development in our entire energy sector unless there is agreement among the major players and interests.
And who are they?
Without their active involvement and enthusiastic cooperation, our natural resources will remain in the ground.
Dead as a doornail.
Canada is a vibrant federation. We are not a unitary state. The Government of Canada cannot act unilaterally to resolve this matter. The Federal Government must urgently initiate avenues of cooperation with all stakeholders to ensure that we move forward in the national interest.
This vital initiative must be led by the Prime Minister himself. In this area, there are no substitutes for him. He strikes me as having the style, the interest and the instinct necessary to bring the Premiers and the Aboriginal leaders and environmentalists together and emerge with a common position that speaks to Canada’s future with optimism and hope.
A vigorous national commitment to develop the resources and build the necessary infrastructure must be complemented by three essential undertakings:
1) a principled partnership with the provinces through meetings with the Premiers – as my government did successfully on Free Trade;
2) honourable agreements with First Nations that move beyond debates about past grievances and focus on opportunities for employment and economic growth in the future, as we did in creating the vast new aboriginal territory of Nunavut;
3) a realistic plan harnessing new technologies to reduce Green House Gas emissions, as we did with Acid Rain. I say “realistic” deliberately because, while Canada should do more, we are a very small part of the global problem;
The most essential ingredient, however, is political leadership. Leadership that anticipates the need for change and is determined to implement change. Not in pursuit of popularity but to serve the national interest;
Change of any kind requires risk, political risk. The perfect should not become the enemy of the good.
The best tonic would be bold, political will to lead the debate in a manner that is most compelling to the Canadian public and is consistent with major, national infrastructure achievements in our proud history. As the management guru Peter Drucker once opined; “The best way to predict the future is to create it”.
It is time for Canada to move to create our future by serving notice to the world that we intend to turn our competitive advantage – our immense resource base – to our national advantage in a respectful, responsible manner, before it is too late.
IV. Looking beyond trade to the global geopolitical scene, the brutal bombings last month in Brussels and Pakistan were the latest grim reminders of the global threat from radical Islamic terror perpetrated indiscriminately by ISIS and its clone Brussels, Lahore, Paris and San Bernadino capture headlines but rarely a day goes by without a suicide bombing, a rocket attack or kidnapping by these groups somewhere in the world.
ISIL rejects peace as a matter of principle; it hungers for and feeds from genocide. It thrives on the publicity its barbaric acts attract. Its religious dogma is inflexible and not open to diplomatic dialogue. It needs to be eradicated.
ISIL clearly despises Christians and Jews and wants nothing less than their domination and elimination from the face of the earth. This enemy is no Junior Varsity.
It decapitates Christians but also burns alive in a steel cage a young fellow Muslim – and murders thousands more elsewhere – simply because his philosophy differs from theirs.
This enemy must be resisted by all who value freedom. Strongly. Loudly. And Immediately. This enemy must be crushed, marginalized and eradicated from all civilized societies. It must be denied a safe haven in what was Syria and Iraq before the cancer spreads even more vigorously around the world.
Canada may seem like a sanctuary immune from the threat but the attack at our Cenotaph and in our Parliament a little more than one year ago proved otherwise.
The terrorists strike at the values democracies cherish – freedom of speech, freedom of religion and the freedom to choose who will govern us. They try to exploit the openness of our societies. Their aim is to weaken our resolve.
Some years ago, President Reagan called to thank me for the support Canada had given him when he launched a highly effective bombing attack on Libya to obliterate the spread of terrorism there. I said: “Ron, you don’t have to thank me. This was your decision. Your action. I congratulate you” He said: “Brian, you know what I learned in the movies? When I said “no”, he replied: “Every once in a while, you’ve got to show them a little ankle”. Now is such a time.
American leadership in the war on terror is not simply something to be wished for – it is something the world cannot do without.
In my view, while the role of the U.S. and allies like Canada is indispensable in the battle against ISIS, neighbouring Muslim countries also need to shoulder more of the responsibility on the ground.
We are witnessing depths of depravity seldom seen in history. Meanwhile, much of Europe is reeling from the mass influx of refugees and from increasing attacks by home-grown terrorists. It is estimated that more than 5,000 ISIS combatants had been residents of Europe and that some 400 are now poised to strike as suicide bombers throughout the continent.
The Europeans know they must do more, much more, to intensify security arrangements and intelligence sharing. Collectively we cannot allow the situation in the Middle East to spiral further downwards. Along with a more concerted military effort, we need more determined diplomacy to salvage a political settlement that will provide a semblance of stability.
These are not challenges against which we can afford to sit on the sidelines debating semantics and presuming ourselves to be inviolate.
We have molded our still young democracy peacefully and successfully by embracing cultures and languages as diverse as those on our planet. Our positive experience offers a model and a beacon of hope. But, we should never allow any group in our society to become ghettoized or marginalized to the point where they have no hope for a better future. That is the sobering lesson from many of the recent attacks.
We need to be vigilant in preserving what we have achieved and our commitments need to be more than rhetorical.
This is not the time to let our guard down. We need to strengthen our security system on the home-front.
This is not the time to curtail defence and security spending. We cannot talk our way into more relevance in the world. We need to have the capacity to engage credibly in efforts to contain manifestations of global conflict.
If we truly want Canada to play a stronger role in the world, we need to reinforce it with more than nostalgic sentiments.
Like other privileged nations, Canada is often extremely resistant to change. Deep and important structural changes are indispensable however to maintain a growing economy and ensure the flourishing of peace and liberty and they can only be brought about by a firm expression of political will.
In fact, “transforming leadership” – leadership that makes a significant difference in the life of a nation – recognizes that political capital is acquired to be spent in great causes for one’s country. This is precisely such a time.
Prime Ministers are not chosen to seek popularity. They are chosen to provide leadership. There are times when voters must be told not what they want to hear but what they have to know.
And what they have to know is a quotation from the Book of Proverbs inscribed on the Peace Tower in Ottawa: “Where there is no vision, the people perish”.
Leaders must have vision and they must find the courage to fight for the policies that will give that vision life. Leaders must govern not for easy headlines in 10 days but for a better Canada in 10 years – and they must be ready to endure the attacks that often accompany profound or controversial change, while they await the distant and compelling sounds of a verdict that only history and a more reflective nation can render in the fullness of time.
20 years ago, the Kennedy Library Foundation saluted President Gerald R. Ford with the Profiles in Courage Award for pardoning Richard M. Nixon. It was an historic decision, deeply unpopular for Mr. Ford at the time but, as it turned out, right for America.
In an insightful essay, David Gergen, counselor to 4 Presidents, wrote that, in saluting President Ford for his courage in making the tough decision, the trustees of the Kennedy Library were actually doing more: “They are telling leaders everywhere to pay less attention to daily polls and more attention to their inner voices. Give up the slavish obedience to popular opinion so embedded in politics today, and take up the standard of what’s right, even when it threatens one’s political survival. As Jerry Ford found, you may be condemned by millions but one day – perhaps a quarter century later – you will win an honored place in history”.
As we seek the courage and wisdom to rid the civilized world of the scourge of terror, I commend to all our leaders the words of Judge Learned Hand when he welcomed immigrants to America 65 years ago by defining for them the spirit of liberty he hoped they would find in the government of their new country. His words have universal reach. They apply to us all. They are the antidote to the craven and twisted appeal of the terrorists who behead with insolence and besmirch their religion with impunity.
“The spirit of liberty is the spirit that is not too sure it is right. The spirit of liberty seeks to understand the minds of other men and other women. The spirit of liberty weighs their interests against its own without bias. The spirit of liberty knows that not even a sparrow falls to earth unheeded. The spirit of liberty is the spirit of Him who, near 2000 years ago, taught mankind a lesson that it has never quite learned and never quite forgotten — that there may be a kingdom where the least shall be heard and considered side-by-side with the greatest.”
If we summon the courage to defend the values that made our country, “an example for the world and a model for all mankind”, as Winston Churchill said, then we will have contributed to building a world that resists terror everywhere and promotes peace and prosperity for all.