Speech - Reconciling East and West with the Right Economic Policies (Saskatoon & Regina)

Maxime Bernier, Leader of the People’s Party of Canada
Saskatoon Chamber of Commerce & Regina and District Chamber of Commerce
January 14 & 15, 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. 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 impinge upon 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.

Upon taking office in 2015, the Trudeau government imposed a ban on oil tanker traffic on the north coast of British Columbia with Bill C-48, effectively killing the Northern Gateway pipeline project. A year later, the government officially rejected the pipeline.

Bill C-48, which is still in the Senate, will also prevent the construction of another pipeline, Eagle Spirit. That’s a $12-billion investment project that could provide First Nations with a golden opportunity for economic development.

There are no reasons to ban tankers on the north coast of BC, but not on the south coast, or on Canada’s east coast, or in the St. Lawrence River.

What we should do is adopt the best measures to prevent spills, contain them, and rapidly clean up if they do happen.

But this government is not really concerned with balancing economic development with environmental protection. It’s concerned about balancing vote buying among certain groups and regions with vote buying in other groups and regions.

Another bill, C-69, will negatively impact not just energy projects such as pipelines, but other industries as well: mining, forestry, port expansion. It will make everything much more complex and difficult.

Any group not directly affected by the project will be allowed to intervene, multiplying the number of opponents.

That’s the bill that requires projects to be analyzed based on “the intersection of sex and gender with other identity factors.”

This government is so obsessed with sex and gender—and how they… intersect, whatever that means!—that it believes it should delay pipeline construction until its sex and gender experts have analysed how pipelines impact them.

Forget about any new project development in Canada if this bill is adopted. Investors will just go elsewhere.

The National Energy Board then decided 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. Last week, TransCanada decided to call itself TC Energy instead. This is not surprising since most of its business it now outside Canada.

Finally, there is the Trans Mountain pipeline expansion project. Here again, the investors got cold feet after years of uncertainty and the government bought it for $4.5 billion last May.

It’s just one disaster after another. And it’s costing us 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 an even more insidious aspect to this situation. It’s the idea that Ottawa doesn’t really 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. Which is not surprising considering the tragic accident at Lac-Mégantic.

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.

So here is what I propose to do to make sure that we can build pipelines again in this country. And that the development of our oil resources once again brings prosperity and unites our country instead of dividing it.

First, scrap bill C-48.

Second, scrap bill C-69.

Third, simplify and streamline the process for approving pipeline construction.

Four, find a private buyer for Trans Mountain.

And fifth, 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’m 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.

I know that this is one of the biggest sources of resentment and disunity here in Western Canada.

At a time when your economy is hurting because of the downturn in the energy sector, you are still paying for a program that is sending billions of dollars to other provinces.

And you are right. This program is unfair and inefficient. For you.

But also, I would argue, 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 the new Premier of New Brunswick, Blaine Higgs, essentially agree with me and say that the federal government should cut equalization payments to force provinces to develop their natural resources.

Listen to 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.

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.

For two reasons. One, they take Westerners for granted. They believe they don’t have to tackle these issues to win here. They have abandoned you.

And two, they’re afraid to create a controversy in Quebec. Everything I just told you, I already said in French in Quebec. Scheer will never do that. His Quebec MPs would freak out. They’re not real small-government conservatives. They’re just traditional politicians who will say and do whatever it takes to buy votes.

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 will be in St. John and Halifax later this week and I will say the same thing.

Because I know it’s not a question of pitting some Canadians against others. But of proposing 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.

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. 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 that is so crucially important for our economy. 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.

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.