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April 5th, 2012

A fairer Canada and a better world

Speech by Tom Mulcair to the Economic Club of Canada

I’m pleased to be here today to discuss the 2012 federal budget with a group that understands economic policy as well as any.

Since last Thursday, we’ve all been analyzing how this latest budget will impact every aspect of our lives.

It’s perhaps telling that one of the most talked about new policies in this year’s budget (beat) is the elimination of the penny.

After all, a government’s budget is the single greatest statement of its intent— the single greatest manifestation of its vision for the country.

The elimination of the penny may be sound policy, but it’s hardly the sort of stuff that a great national agenda is built on.

Past governments, of every political stripe, have used budget announcements as a call to action, a reminder of what we can achieve as Canadians.

But it’s becoming increasingly clear that this government’s vision isn’t built on a belief in what we can achieve, but rather what they believe we cannot.

Mr. Harper justifies cuts to health care and Old Age Security with claims that these benefits—benefits that Canadians have relied on for generations—have now suddenly become unaffordable, unsustainable.

The reality is that despite strained government budgets and beleaguered economic conditions, the capacity of our economy—even after adjusting for inflation and population growth—has still doubled over the last forty years.

We’re capable of more, yet Mr. Harper tells us we have to accept less—he’s tells us that our children will have to accept less.

This while the middle-class is already increasingly strained. Over the last 35 years, after-tax income has grow significantly for the top 20% of income earners, but actually decline for the bottom 80%.

In fact, if we continue on this course, we will be the first generation to leave our children less than we ourselves inherited from our parents.

Mr. Harper claims that to safeguard our most vital public services, we have to slash them. In order to save this village, we have to burn it to the ground.

But the truth is the policies of the current government are leaving the greatest social, economic and environmental debt in our country’s history in the backpacks of future generations. And this is a problem that is entirely of the government’s own making.

Years of reckless Conservative tax cuts have left Canada with no room to manoeuvre in troubled economic times.

The government has hollowed out Canada’s fiscal capacity.

Mr. Harper has created a deficit, and now proposes service cuts as the solution to the problem he himself created.

And it doesn’t end there.

Together, Liberals and Conservatives have raided more than $50 billion from Canada’s Employment Insurance fund to pay for reckless corporate tax cuts. And it’s not only workers who should be concerned about that.

Today it’s businesses that are paying the price for pilfering the EI fund, as premiums are set to rise year after year after year.

If you own a small business that doesn’t pay corporate taxes or if you run a large corporation that hasn’t turned a profit in the last few years, you’re not benefitting from Mr. Harper’s corporate tax cuts, you’re footing the bill.

The lack of forward thinking we’ve seen from the current government extends far beyond tax policy.

The reckless economic and environmental policies of the current government are destabilizing the balanced economy that Canadians built up in the fifty years following the Second World War.

In the last twenty years, we've witnessed the wholesale gutting of our manufacturing sector. But contrary to popular opinion, this has not been exclusively a product of trade agreements that have encouraged businesses to ship high-paid Canadian jobs to less expensive markets overseas.

The rising price of oil, combined with billions of dollars in direct and indirect subsidies to the oil and gas industry, have led to an artificial rise in the value of the Canadian dollar.

According to a study published by an economist from this city’s own University of Ottawa, during recent years, the inflated Canadian dollar has been responsible for over 40% of all job losses in the manufacturing sector—more than outsourcing, the recession or corporate tax rates.

Following the adoption of Canada's first free trade agreement with the United States, Canadian exports grew to nearly 44% of our economy.

But in just the last ten years, the rise in the Canadian dollar has wiped out more than half that increase—while leaving those industries that were disadvantaged by free trade in no better condition than they were before.

As a share of the Canadian economy, these years saw economic sectors such as forestry, fisheries and manufacturing decline by 40-45% while extractive industries, led by oil and gas, grew by nearly 70% over the same period.

Since the Conservatives took power, we’ve lost over 500,000 high-paying manufacturing jobs.

As some of you know well, this phenomenon is called the “Dutch disease”.

That term harkens back to the 1970s after Holland discovered large deposits of natural gas off their coast. As exports of natural gas grew, the value of Holland’s currency rose and—as buying Dutch products became more expensive—Holland’s manufacturing sector was hollowed out.

The Conservative government of Stephen Harper is following the same reckless policies today that Holland fell victim to nearly 50 years ago, and we should all be mindful that when the resource boom goes bust, those high-paid manufacturing jobs rarely bounce back as quickly as they were lost.

At the heart of the Mr. Harper’s short-sighted economic policies is the failure to apply the basic principles of sustainable development.

In many cases, this Conservative government simply fails to enforce environmental laws that are already on the books—the Navigable Waters Act , the Migratory Birds Act and the Fisheries Act .

In other cases, the Conservatives fail to even consider what responsibility they may have in federal jurisdiction—such as the impact of resources extraction on First Nations and cumulative health effects.

In short, the Conservatives are allowing a few well-connected industries to use our air, our water and our soil as an unlimited free dumping ground.

Any profit made based on business model like that, is no profit at all.

These are basic principles the Conservatives have simply refused to apply—user pay, polluter pay, internalization of environmental costs over the life-cycle of product.

For instance, in most province in Canada, when you buy a new set of tires you pay a fee of $3 to $5 per tire to cover the cost of recycling those tires at the end of their useful.

That’s only fair. Why should people who don’t drive pay to dispose of your old winter tires?

Or imagine for a moment someone tells you about a new factory they’ve just built. They show you the numbers. They tell you they’re making a tidy profit.

But when you finally get to see that factory for yourself, you find they’re dumping all the garbage produced by their manufacturing process into a river out behind the plant rather paying to disposing of it properly in a landfill.

Very quickly you would realize that that factory isn’t profitable at all, because the price their paying for their production doesn’t reflect its true costs.

The Conservative of government Stephen Harper has allowed private companies to carry out business practices exactly like these ones, and to do so on a massive scale.

This is bad environmental policy. It’s bad economic policy. It’s got to stop.

Perhaps in light of the failures of this Conservative government, we shouldn’t be too surprised by the Auditor General’s report this week taking Mr. Harper’s government to task for their mishandling of plans to purchase F-35 fighter jets.

Just as this government—time and again—ignores the principles of sustainable development, so too do they ignore the most basic principles of sound public administration.

Military contracting—as with all public works—should follow some basic principles: identify requirements, make a call to tender, lowest conforming bid wins.

Instead, this government not only pre-determined the outcome of this process before it began, it’s now been reported that even knowing which aircraft they chose to purchase all along, that the F-35 still fails to meet the government’s own statement of requirements.

Even when they’ve rigged the game, they still can’t get it right.

All of this begs the question: “How do we turn the page? How do we live up to the expectations Canadians have for their government?”

I’ve often said, Conservatives like to hold themselves up as good managers, but the truth is they are abysmal public administrators.

The reason is very simple: they hate government.

It’s hard to get interested in how to make public services more efficient for the public you serve, when can’t stand the very idea of public services in the first place.

That’s why, when it comes time to review government budgets, Conservatives always use a rusty machete rather than scalpel—they blindly hack away at services rather than taking the time to identify the waste and inefficiency they spend so much time talking about.

Our first task, therefore, must be to convince Canadians that New Democrats will be competent public administrators

Not the most exciting campaign slogan, I know, but with nearly 35 years in public service, when it comes to public administration, I have a record to run on.

Beyond restoring basic competence, we must also conduct ourselves with a genuine respect for the role of government.

Government can’t do everything. But while maintaining a healthy respect for its limitations, we should also acknowledge that government is the place we come together to build the better, fairer Canada we all want.

To understand the constructive role that government can play in building a better Canada, one need look no further than an issue near and dear to Ottawa itself—research and innovation.

As the students of new growth theory in the room can tell you, there is a pretty clear and convincing economic argument for the role of government in science and innovation.

The only way to create wealth in a society is to increase knowledge, but you can’t bottle up knowledge and sell it on a store shelf.

Our patent and copyright systems are an attempt to create a private sector incentive to invest in innovation, but they’re imperfect.

Only government can fill the gap.

Government can also provide leadership—leadership that pays economic dividends well beyond the public sector.

During my campaign for the leadership of the NDP, I made a commitment to ensure that 50% of all appointments to the Boards of Directors of Crown Corporations and government agencies would be women, and to challenge the private sector to do the same.

Some people react to a commitment like that by asking why shouldn’t all such appointments be merit based?

The fact is that the most recent figures available show that 83% of all appointees sitting on the boards of Canadian Crown Corporations are men.

This situation didn’t develop because there are 5 well-qualified men for every 1 qualified woman.

Whether it be women or any other group, every time a person in our society is denied the opportunity to contribute to the best of their ability, it diminishes us all—socially and economically.

The goals of equality and prosperity are not as much in conflict as we often assume. In fact, they often go hand-in-hand.

We are strongly in favour of a more prosperous Canada, but a Canada that is more prosperous for everyone.

As Canada’s Official Opposition—and as a party proposition—we will continue our efforts to present a vision for a Canada that just, healthy and prosperous for all.

Together, we can build a fairer Canada and a better world.