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Speech - Reconciling East and West with the Right Economic Policies (Saint John, NB)

Maxime Bernier, Leader of the People’s Party of Canada
The Saint John Region Chamber
January 17, 2019

What I would like to discuss with you today is how so many of our economic problems derive from the malfunctioning of our federation. Especially for you here in Atlantic Canada. And because Canadians in many regions of our country believe other Canadians are responsible for these problems, this is threatening our country’s unity.

There are two aspects to this problem.

On the one hand, the federal government today intervenes massively in provincial jurisdictions, and in particular in health and education, two areas where it has no constitutional legitimacy whatsoever.

At the same time, provinces make policies that interfere with federal powers and block some of the economic benefits that we should be getting from living in a federal union.

Or in some cases, the federal government itself is simply afraid to use its powers to impose national solutions, because it doesn’t want to offend important voting blocks in some provinces.

This is not what the Fathers of Confederation had intended. The objective of the 1867 Act was not to subordinate provincial governments to a central authority. Or the central authority to regional whims.

But rather to have sovereign provinces within the limits of their powers, dealing with local matters that directly affected citizens; and a sovereign federal government within the limits of its own powers, dealing with matters of national interest.

As you may know, I propose to put an end to Ottawa’s intrusions in provincial matters such as health and education. And to transfer tax points to provinces and let them manage their affairs with complete autonomy.

My focus today however is on Ottawa’s failure to use its authority to adopt the right economic policies for the whole country, whether we’re talking about pipeline construction, equalization, or interprovincial trade barriers.

When it comes to pipeline construction, there have been so many bad decisions on the part of the Trudeau government that it’s hard to know where to begin.

Let me summarize them.

There is the ban imposed on oil tanker traffic on the north coast of British Columbia, effectively killing the Northern Gateway and the Eagle Spirit pipeline projects. 

There is bill C-69, which will make everything much more complex and difficult. That’s the bill that requires projects to be analyzed based on “the intersection of sex and gender with other identity factors” – whatever that means!

There is the Trans Mountain pipeline expansion project, bought by the government for $4.5 billion when the investors got cold feet after years of uncertainty.

And the most important for you here in Saint John is the decision by the National Energy Board in 2017 to consider upstream and downstream emissions from the Energy East Pipeline that it was reviewing.

This would have required the company to account for the entire climate-warming impact of the project, including during construction and operation of the pipeline, and from the oil shipped on the pipeline.

It made no sense. And a few months later, TransCanada predictably cancelled its project.

The Energy East pipeline would have allowed Saint John to become an even more important energy hub.

It would have brought more energy security to Canada.

It would have allowed exports to Europe and made our allies there less dependent on energy from Russia.

It would have reduced the risk of another tragic disaster like the one in Lac-Mégantic.

It would have brought more wealth to New Brunswick and reduced its dependence on federal equalization payments.

Unfortunately, all of this did not happen.

The Liberal record on pipelines is just one disaster after another. And it’s costing you, here in New Brunswick, and all of Canada, tens of billions of dollars in lost investments, as well as tens of thousands of lost jobs.

But to get back to our problems with the way our federation works. There is a widely held belief that Ottawa doesn’t have the power to get these projects approved.

Justin Trudeau said that “While governments grant permits for resource development, only communities can grant permission.”

But that cannot be true. There never is unanimity on anything. Which communities? Those directly affected or any lobby group? And if 99 communities say yes but one says no, what do we do?

That’s why we have a federal government. The purpose of having a country is to have a level of political authority where we can debate, coordinate, and if necessary impose decisions that are in the national interest. If we don’t use this power, what’s the point of being one country?

Of course, we must consult. Of course, we must try to accommodate as many people and communities as possible. Of course, we must answer as many security and environmental concerns as possible. But there has to be an authority with the final say.

During the debate about Energy East, you could have believed that Montreal Mayor Denis Coderre had the authority to block the project, just by himself.

More recently, the newly elected Quebec Premier, François Legault, implied that he too could block a project for a national pipeline when he said that there was “no social acceptability” for it in Quebec.

It’s just not true. A poll done for the Montreal Economic Institute a few weeks ago showed again that a majority of Quebecers prefer to get oil from Western Canada rather than from anywhere else in the world. And they believe that pipelines are the safest way to transport it.

But more importantly, neither the city of Montreal, nor the Quebec government, nor the BC government, nor single aboriginal communities, have the power to block the construction of a national pipeline. It’s a decision to be made by the federal government.

That is why I propose to reassert federal jurisdiction over this issue when necessary by invoking section 92(10) of our Constitution.

This section grants federal jurisdiction over modes of interprovincial and international transportation and communication. Our Parliament can overcome local opposition and exercise this authority by declaring any project to be for the general Advantage of Canada.

I said on Quebec television, in French, that I would be using this power to ensure the construction of a new Energy East pipeline through Quebec, if the project can be revived.

Justin Trudeau will not do this. Instead, he agrees with Legault that there is no social acceptability for a pipeline in Quebec.

Andrew Scheer will never propose this either. He is just too afraid of the pushback from his Quebec MPs, and getting bad press in Quebec.

I am not afraid.

Andrew Scheer has not said anything concrete about energy, apart from promising to abolish Trudeau’s carbon tax.

However, that’s only going to remove a burden in the four provinces that don’t have a tax or cap-and-trade system already.

Scheer’s first act after he became leader was to whip a vote in favour of the Paris Accord. He has promised a new plan to reach the Paris emissions target. He will add more burdensome regulation and more subsidies, across the country, to those already in place.

A People’s Party government will scrap the carbon tax. And we won’t do anything else. We will let the provinces experiment with their own programs. That’s it. The choice is clear.

Let’s move on to another federal issue that is dividing our country: equalization.

As you know, Canadians who live in the West, in provinces that never get any equalization payments, believe that the program is unfair to them. They have a point.

But I would argue that it is also unfair for the citizens of provinces that have been on the receiving end for decades: Manitoba, Quebec, Nova Scotia, New Brunswick and PEI.

There is a myth that equalization at least has the benefit of helping them. But the opposite is true.

Studies have shown that equalization money encourages the growth of the public sector in the recipient provinces, which bids away resources and workers from the private sector and weakens it.

Equalization money encourages recipient provinces to keep taxes high and to intervene more in their economies. They don’t have as much incentive to make their economies more competitive and develop their resources, because more private sector growth will lead to less equalization money. It prevents them from developing to their full potential.

The system is similar to badly designed welfare programs that used to discourage recipients from working, because they would then lose all their benefits and would be worse off than if they stayed on welfare.

That’s what we call a poverty trap.

It’s time to stop rewarding provincial governments for not adopting better economic policies.

A province should not be receiving equalization payments for decades. Just like an individual should not be receiving welfare cheques all his or her life.

The program is enshrined in the Constitution and we cannot simply abolish it. But we can make it less generous and more efficient, like the welfare reforms that were adopted in the US and Canada in the 1990s that led to a significant reduction in the number of welfare recipients.

Two years ago, I proposed to review the current formula and adopt a new one that would avoid the welfare trap and perverse effects identified by economists.

It should encourage provincial governments to take responsibility for their bad decisions, provide incentives to adopt pro-growth economic policies, and reduce their dependency on federal money, instead of the opposite.

This will not only benefit citizens in these provinces. It will make all Canadians more prosperous. And instead of breeding resentment between givers and receivers, it will make our country more united. 

It was very encouraging a month ago to hear your Premier, Mr. Higgs, essentially agree with me and say that the federal government should cut equalization payments to force provinces to develop their natural resources.

Here is what he said: “We just don't seem to want to move as a province. We're happy to accept handouts, but we don't seem to be as readily willing to make the changes necessary to allow us to contribute to our own well-being.”

This is a significant development, from one of the recipient provinces. It should be encouraged. We must have a frank and open discussion on this issue.

You will not get it however with Andrew Scheer and the Conservative Party. Again, because his Quebec MPs would freak out.

When the current equalization formula was renewed last June for five years by the Liberal government, I was the only one to say anything in Ottawa. The Conservatives remained silent.

I am the only one who is not afraid to have this debate. Not afraid to go to every part of the country to talk about it.

I said it in Quebec many years ago. I said I was not proud, as a Quebecer, to live in a poor province that has received equalization for fifty years.

I am sure you too, in New Brunswick, would prefer to live in a more prosperous province rather than getting more money from the rest of the country.

The real question is not how much money should be redistributed. It is: How can we create the best conditions for Atlantic Canadian entrepreneurs to create wealth and jobs?

That is my focus. To propose solutions that will benefit all Canadians. Solutions that will make all Canadians more prosperous, and unite us instead of dividing us.

I want to briefly raise a final issue where the federal government has failed for decades to take the leadership and to use its legitimate constitutional authority: interprovincial barriers.

These barriers could cost us as much as $130 billion every year, according to a Senate report.

It’s a total shame that 152 years after it was created, we still cannot trade or work freely across our country.

These barriers are even more costly for small provinces with small markets that are more dependent on trade. They cannot benefit from the economies of scale of a larger market. It's more difficult for their businesses to grow. And costlier for their consumers who cannot buy goods and services produced elsewhere. 

The Atlantic Provinces Economic Council released a report two years ago explaining why your region can't afford these barriers. It said that removing all trade barriers between provinces could create gains as high as 3.3 per cent of GDP. But that the gains would be more than double that for the Atlantic provinces at 7.6 per cent of GDP. 

Unfortunately, we did not have the legal breakthrough many of us were hoping when the Supreme Court issued its decision in the case of Gerald Comeau, a New Brunswick man who was fined for bringing back too many beers from Quebec.

But this is too important to just abandon our efforts. It’s crucial for all of Canada, and in particular for you here in Atlantic Canada, that we solve this problem.

Section 91(2) of the Constitution clearly assigns responsibility for “trade and commerce” to the federal government.

A People’s Party government would have one minister whose sole job would be to solve this problem. We would establish an Economic Freedom Commission with the power to investigate breaches of the act by the provinces, to recommend arbitration, to help citizens and businesses prosecute their case or to initiate legal action on its own.

It’s time for the federal government to reassert its authority on this issue. It’s time to unite our country around policies that will make us more prosperous. And to have a federal government that will dare use its powers to make the right decisions.

What I am offering Atlantic Canadians is real solutions, not paternalism. Instead of pandering to those who like the status quo, we should be supporting those who are fighting for change. Those who are working for less government and more free-market solutions at the provincial level. 

I’m offering a vision based on freedom, responsibility, fairness and respect. So that Atlantic Canada can one day take its rightful place among the prosperous regions of our country.

My party is only four months old. But we are the only party that has the audacity, the courage, and the vision to make this happen.

We are the principled alternative. It’s time to try something new.

Thank you.