On June 7, 2017, Canadian thought leader and former Globe and Mail national affairs columnist, Jeffrey Simpson, provided the keynote address at our Fifth Annual Chair's Dinner. In his remarks, Mr. Simpson shared his views of Canada at 150 and provided his unique insight into British Columbia's position in the Canadian federation, our nation's partnerships with the United States, and new challenges and opportunities in a complex world He has generously agreed to share his speech below.
Check Against Delivery
Ladies and Gentlemen,
I consider it an honour and a privilege to be with you tonight, and I do not use those words lightly. In more than thirty years of writing about Canada and British Columbia, I often referred to the research done by the Council, and was always aware of the civic engagement of many of the Council’s individuals and companies.
During those decades, I visited just about every corner of British Columbia, from Fort St. John to Esquimalt, from Fernie to Prince Rupert, and of course more times than I can remember to the Lower Mainland, where my daughter, son-in-law and grandson (soon to be joined by a sister or brother) live.
Earlier in my career coming to British Columbia provided comic relief. Your politics, and the hot-line radio shows, were unparalleled, and I don’t mean that as a compliment. In terms of national affairs, B.C. was a world apart, and in more ways than geography. B.C. almost always punched below its weight in national politics, economics and debates. To paraphrase the line about Las Vegas, whatever happened here, stayed here. Very seldom did developments in British Columbia wash back across the country, the way, for example, developments in California influenced politics, economics, culture and lifestyles across the United States. I sometimes sensed during those years that British Columbians took a kind of parochial pride in turning their backs on the rest of Canada, as if you had discovered paradise which might be sullied by too much involvement in national matters.
I believe those attitudes have substantially weakened. Today – as never before in my career and this is what I want to discuss tonight – I see British Columbia as the prow of the Canadian ship, pushing against waves that the rest of the country also faces. Whether British Columbia, as the prow of the Canadian ship, makes headway or is blown off course, will influence how the entire country does in confronting these waves.
What are these powerful waves? Among them ... The death of the Trans-Pacific Partnership calls into question Canada’s trading framework with Asia, opens the door to even more Chinese influence in Asia and the world, and makes urgent the question about whether we want a free-trade and investment deal with China.
The renewal of the softwood lumber dispute, provoked by U.S. lumber interests and their political allies. The re-negotiation of the North American Free Trade Agreement. The unpredictability of the U.S. Administration. The inability of British Columbia to get anything done in a timely fashion in the natural resources sector. The lack of any consensus around a cardinal question without which timely development cannot happen: Who owns the land here? Does the Crown? Do First Nations? Do both? These are waves confronting all Canadians, especially British Columbians.
There are still other waves. The growing perception elsewhere, flowing in part from the lack of an answer to the ownership question, that B.C. is not a very good place to do business, except for a weak Canadian dollar. The search for policies against carbon emissions, here and across Canada – a search that is fraught with scenarios only those without two feet on the ground can imagine. Inter-provincial disputes, acutely now between B.C. and Alberta, and the risk of a severe conflict between the new government in Victoria and the one in Ottawa, raises the hoary old question: What kind of Canada do we have? Or want?
In our 150th anniversary year, we must ask: Is there a Canadian national interest, or a series of local interests? Can our political and regulatory institutions make decisions after proper and due consideration, and make them stick knowing unanimity will almost never be achieved; or are these decisions to be contested by cascading aboriginal claims, special interest group objections and endless lawsuits that thrust courts every more deeply into policy issues to settle the legitimacy of government decisions that critics claim to lack that most elastic of notions: social licence, which usually means their approval.
Each wave is worth pondering for a considerable period of time -- time that I don’t have, you will be doubtless grateful to hear. So my comments must scan over all these issues in a necessarily speedy fashion.
The distinctive B.C. dimension to these challenges – the waves -- is of course the new NDP-Green government. This is not the time or place to parse the election in detail. I would draw attention to three interesting results, all of which have relevance elsewhere in Canada.
First, you have now watched proportional representation in action, because PR almost always brings coalition governments in which negotiations after the votes are counted proceed behind closed doors with electors often left unsure what kind of a government will emerge from this private horse-trading. Small parties love PR because it gives them a sniff or the reality of power. All I say is that electoral reform should be isolated from elections and put to the people in a referendum, as was done twice previously here. There are defensible arguments for and against the status quo. They should be thoroughly debated. I also observe in passing that this was not an earthquake election: the NDP vote rose by only 1 per cent; the Liberals by a little less than 4 in the face of the most powerful force in all politics regardless of incumbency “time for a change” and the Greens doubled their vote from a low 8 per cent to a respectable 16 per cent. Shifts yes, an earthquake no.
Second, as the University of British Columbia political scientist Linda Erickson showed in an academic paper some years ago, the oft-repeated media adage that poor economic times hurt incumbents whereas good times help incumbents is suspect. B.C. had led the country in growth in 2015 and 2016. Even in 2017 growth was expected to be 2.2 per cent, close to the country’s best. The unemployment rate was below the Canadian average at 5.8 per cent. But as Christy Clark discovered, aggregate economic strength does not axiomatically help incumbent parties. Hillary Clinton and Paul Martin both lost elections despite strong aggregate economic numbers.
A third observation. A cleavage appeared, with some important exceptions: with the centre-right party, the Liberals, winning most of what I might call the hinterland seats and the left-of centre parties doing best in Burnaby, Surrey, Coquitlam, southern Vancouver Island and to a lesser extent in Vancouver proper. This is where the “elites,” however defined, live.
What we have seen in the U.S., in the last Canadian election, in the Brexit vote and to a lesser extent in the French election, is that the views and priorities of people in the big cities are often quite different from those in the hinterland cities, small towns and rural areas, whose residents often feel neglected and looked down upon. The B.C. election reflected this gap. It will be interesting to see how the B.C.-Green coalition whose policies – and I have read both platforms with some care – are premised on reviewing or halting major resource projects in deference to the green proclivities and sensitivity towards assertions of aboriginal title – can be reconciled – if I might use that world -- with the sense of frustration in the hinterland areas about job losses and failure to replace those jobs with new projects that are held up by title claims, protests and lawsuits, and likely now by the new government.
These are B.C. issues. But the new B.C. government, and the country as a whole, has to deal with our American neighbors led by a president who is hubristic, narcissistic, ill-informed to an alarming degree but unaware in too many instances of his own ignorance, unskilled in the political arts of compromise and negotiation despite being a self-described master of the “deal,” unpredictable, obsessed with what the media says about him and, perhaps most alarming of all, capable of and willing to repeat statements that are palpably false, creating an alternative reality that stands truth on its head.
Mr. Trump has said so many contradictory things on so many subjects over such a long period of time that it is difficult to draw a straight line through what he actually believes, apart from being in love with himself. Moreover, many of his favorite campaign promises were so improbable that they have already collapsed, or will soon collapse, in the light of conflict with realities: as in having Mexico pay for a border Wall, something the U.S. Congress won’t even do; moving the U.S. embassy from Tel Aviv to Jerusalem, tearing up NAFTA (the “worst deal ever negotiated”), ending Obamacare and replacing it with something with better coverage but lower costs; improving relations with Russia; getting tough with the Chinese; “defeating” ISIS; negotiating an Israeli-Palestinian deal; putting U.S. coal miners back to work; driving up U.S. growth to 3 to 4 per cent a year; prosecuting Hillary Clinton; driving down taxes and hiking military spending by 10 per cent without increasing the deficit, indeed eliminating it...the list goes on and on and on.
But a few constants can be gleaned, and we Canadians had better get our heads around them.
Americans feel put upon and insecure from three overlapping and powerful developments that induce a sense of anger in parts of the citizenry in a country that thought of itself, and always will, as the most powerful and best place on earth. The first is terrorism of the kind that struck the country on 9/11 and seems everywhere to be a potential menace at home and abroad; the second is globalization that restructures lines of production leaving thousands of Americans out of work or in work but with less pay and fewer benefits, and the third is immigration that has resumed in recent decades in large numbers and which is blamed by those who oppose it for increasing the risks of terror and taking or diminishing the value of U.S. jobs.
Donald Trump intuitively understood these three overlapping trends that produced this insecurity and anger, and he articulated messages and made promises that galvanized people in enough places to win the presidency. The idea of America put upon and taken advantage of by others, and done by “elites” in government, business and the media who let this happen, indeed abetted it, is hard for foreigners to fathom, but the idea defines the cultural and political frameworks for how many Americans feel and react. Remember, the sense in trade policy that others have taken advantage of Americans, and that American governments have been complicit in this situation, took hold of elements of the Democratic Party too, witness to which was Ms. Clinton’s rejection of the TPP and defensiveness over NAFTA. Therefore, we Canadians in dealing with the U.S. on trade and economic matters should remember that we are not just dealing with Trump supporters who are fearful and insecure, but Democratic voters and interests too.
Canadians, regardless of political stripe, are instinctively multilateralists. This instinct comes from being a country of modest population and means that, unable to project unilateral power, and watched closely by few people beyond our borders, prefers to deal in influence, and believes influence can be enhanced by finding like-minded countries in multilateral institutions. Donald Trump’s entire career as a real-estate developer was bilateral, me against someone else, the art of the “deal.” His career, his reading of the political mood of his country led him to promise to “Make American Great Again” by having the U.S. go it alone, or seek bilateral deals in which the country’s power could be arrayed against that of another country, one on one. He is profoundly an “America Firster.”
He has some advisers who share the view of most of the country’s foreign and trade experts that this behavior is not consistent either with the way the world works, or the way America can shape that world to its advantage. But that is not how Mr. Trump sees matters. That is not how he sees himself. And that is not how some of his political advisers see the world either, or America’s role in it. They see an America weak and shackled, prevented by entanglements from achieving its true potential, economically and politically. And all of his advisers, and certainly the president himself, seem to believe that the world is a Manichean place in which countries struggle for power, their interests clashing, their geopolitical positioning in constant actual or latent conflict, so that the idea of deep and lasting cooperation, or multilateral collaboration to spur growth through trade, treaties to curb carbon emissions or enhance military stability, let alone institutions such as the United Nations or a quasi-federal institution such as the European Union are essentially irrelevant in the thrusting pursuit of national interest by all countries.
The different world view therefore between the Trump administration and the Canadian government, indeed most Canadians, could not be more profound. Thus far, the Trudeau government has done an outstanding job of trying to deal with the Trump administration. The government has made Canada’s approach politically non-partisan, except for New Democrats with their instinctive anti-Americanism. They have used provincial premiers, mayors, business leaders – in short, anybody with U.S. contacts to correct perceptional errors about Canada, to reinforce the idea that protectionism hurts everyone and that NAFTA is worth saving, albeit in an altered form, and to do what is very hard with this administration –
to put “facts” on the table and hope they are understood instead of “alternative realities.” The prime minister has tried to establish cordial relations with the president; the Canadian ambassador and the senior PMO staff have good working relationships with the people around the president. The prime minister changed his foreign minister, sent ministers frequently to the United States, took himself to places outside Washington, re-arranged the civil service to better focus on the U.S. He has imposed the strictest discipline on his ministers and MPs to refrain from scoring political points – which would be very easy– on Mr. Trump. He has retained his own cool, refusing to rise to any rhetorical bait offered by the president’s tweets and sundry other observations about the state of the world. He and his team have done on this file – relations with the U.S. – a first-class job.
But let’s not kid ourselves. The government can state that it welcomes renegotiation of NAFTA to provide for a “progressive” trade agreement with stronger environmental and labor stands, but that is not at all what the Americans are after. That pablum is for domestic political consumption. What we will need in these negotiations is a list of U.S. infringements on free-trade, and there are many, that we would like to see included in the agreement at the same time as we try to diminish concessions the Americans will insist that we make. In other words, there has to be some offence as well as defence. Of the kind we have just seen in response to Boeing complaints against Bombardier in which the Canadian government said it was halting discussions with Boeing about buying the Super Hornet fighter jet. And as for defence, we can expect direct U.S. pressure against us for out paltry defence outlays, second lowest in NATO. In this instance the Trump administration, like previous American ones, will be correct. The only offence we can play on defence is actually to buy kit and spend more money, something this government is reluctant to do until after the next election.
Softwood lumber. I have often joked – but it is no joking matter really – that when the U.S. and Canada (then a small series of British colonies) stopped fighting after the war of 1812-1814, all remaining aggression was channelled into arguing about softwood lumber. As everyone in this room knows, this is the fifth iteration of the battle. B.C. is the most exposed province – the prow of the ship – but the dispute affects others parts of the country. The lumber script stays the same; the actors differ. It’s like a baseball game in which the U.S. batter takes three strikes but instead of heading to the dugout asks the umpire for another strike, a request which is granted because the batter’s team hired the umpire, and after the fourth strike the batter is asking for another pitch. The U.S. lumber interests know the rules of the contest. They drag things out before their own institutions. They win. Lawsuits ensue at great cost. Meanwhile penalties sap the Canadian industry and restrict market access. Eventually, the calling of balls and strikes is temporarily placed in the hands of an umpire not paid by the home team, and the batter is called out. But then a few innings later, the home team’s umpire returns, the batter asks for more pitches, and the whole saga begins again leading to a negotiated agreement in which we give and they take. What can we do, other than get the federal government’s financial support while the legal battles go forward? This saga extends back before President Trump took office, and it bids fair to go on after he is gone.
What else? Canadian business is necessarily concerned should the U.S. congress and the Trump administration slash business taxes, while eliminating loopholes, as the president has promised. What any president promises and what Congress eventually decides are often two rather different propositions. It is easier to slash rates that eliminate loopholes since those loopholes usually have powerful constituencies who got them put there in the first place. I say this because cutting corporate rate, along with reducing personal income taxes, are two centrepieces of what the president wishes to do, and the ones he actually might get done in one form or another.
We have seen what he intends to do before. It is like play we have all seen many times that always ends badly, with lines we have learned by heart. The play was in Washington during the Reagan years, and during the George W. Bush years and it now arriving for a return engagement. The play goes like this. We Republicans want to achieve three objective: cut taxes, raise the military budget, cut domestic spending, and slay the deficit. So they come into office and cut taxes. That’s the easy part. Then they also want to drive up the defence budget. So they do that. But that combination will cause the deficit to swell. So they pledge to cut domestic spending, while not touching Social Security or public health care for the elderly. But when they get around to domestic cuts for, say, medical research, national parks, aid to lower-income students and sundry other programs, they balk. But they convince themselves, despite ample evidence to the contrary, that their tax cuts will so spur economic growth that a cornucopia of revenues will flow into federal coffers so that, presto, the deficit is slain. Except it never happens: deficits always grow under Republicans because their math is so faulty. Which is what will absolutely happen should President Trump get his way.
And what happens when the deficit swells? The Federal Reserve, thankfully Alan Greenspan is no longer around, warns about inflation, and if fiscal policy is not tightened, the Fed raises interest rates which pushes up the value of the dollar, thereby making US exports less competitive, thereby widening the very trade deficit against which Mr. Trump rails. Prediction: Mr. Trump has fought with the intelligence agencies, the Republican House caucus, the mainstream media, the judiciary. It is just a matter of time before it is the Federal Reserve’s turn when his economic dreams come a cropper, as they will. When the U.S. dollar rises and the trade deficit widens, the implications for Canada will be a comparatively weaker dollar and a potential target for blame game around the larger trade deficit. There will be no border adjustment tax because it lacks enough congressional support on both sides of the aisle. But there will be targeting of Canada’s supply management, lumber as we know, labeling and various other matters.
These are things Americans are doing, or might do, to Canada. But there are things British Columbians are doing to themselves, that British Columbians are doing to other Canadians, and that other Canadians are doing to themselves, all of which benefit the United States and other countries. Everywhere I look in Canada, I see an inability to make decisions on natural resources or transportation projects for those resources held up, delayed, litigated, reviewed. I mean by this pipelines, transmission corridors, dams, mines, fossil fuel projects. Nowhere is the constellation of forces producing these situations more acute than in British Columbia, but there are present everywhere in Canada.
Understand me well. I respect that these projects need environmental review, public input, democratic scrutiny, but a combination of NIMBYism, the de-legitimization of government-sanctioned reviews, the complete lack of clarity of what is meant by social licence, an equally complete lack of clarity over aboriginal title and the “duty to consult” that is now being interpreted as requiring “free, prior and informed consent” (ie, a veto), a lack of clarity over land claims, some of which overlap in this province (a lack not at all resolved by Supreme Court of Canada decisions), and an environmental movement that is obdurate has meant Canada and especially British Columbia does not look like an attractive place to invest in natural resource projects. To put matters bluntly before this audience, I would hesitate long and hard before I put much money into natural resources in B.C. I am aware that according to Statistics Canada about 50,000 people are directly employed in the natural resources sectors – forestry, oil and gas, mining – out of 2.4-million people employed in B.C. Therefore the B.C. economy is much less reliant on natural resources than several decades ago. But there are large swaths of the province where these jobs count because they are often the only jobs available, and that is true too for First Nations people. Moreover, governments can use the money from taxes and royalties, and this is especially true for a subject about which I wrote a book four years ago – health-care, whose costs will continue to rise steadily as the population age, regardless of who is in power.
In addition to these impediments, you have the clouds coming from south of the border, the failure of a new trade deal in Asia, and a new governments whose parties’ platforms call for higher corporate income taxes, higher taxes on the better off and a carbon tax worth $800-million a year, only a portion of which will be recycled to individuals and none at all to industry, so that will count as another cost of doing business in the province, plus a host of other promises to beef up inspections, toughen further regulations and add new ones. And I have not even mentioned the vagaries of commodity prices.
If you think I exaggerate, just put yourself outside the province and the country. You all know the Chapters slogan “The World Needs More Canada.” It is an insidious slogan because it plays to the worst Canadian attribute: moral superiority. It suggests a seductive Trumpian-type falsehood, that the world really does care about Canada. From outside B.C., people will see 19 proposed LNG projects, but only one small one (at Squamish) approved and the rest sucking money from investors with no prospect of getting to the finish line. Meanwhile, while we take forever, prices have fallen for natural gas, markets have been locked up in Asia, and Americans and Australians have built LNG capacity and are building more, while here one project, the Petronas project, is held up in part by a handful of hereditary chiefs and hard-line environmentalists despite support from the other hereditary chiefs, the elected band council and other First Nations along the route. Looking at this saga from afar, who of right mind would invest in B.C.?
The same goes for Kinder-Morgan that has been studied to death, including by a special three-person group set up by the Trudeau government, approved by that government’s with almost 160 conditions, and not likely to see the light of day without yet more years of lawsuits, provincial government impediments and NGO obstacles. The world’s natural gas markets do not “Need More Canada,” nor do the world’s oil markets. We kid ourselves otherwise. We will know the projects announced but rescinded; we will never know the ones that never happen. This is regrettably the image that B.C. – and Canada – are developing.
There is no balance to natural resources development when the answer from critics is no, not now, not ever, just as there is no balance when proponents say our way or the doorway. There is no country that with 4.3 per cent of the world’s natural gas but only 2 per cent of its population, and huge amounts of oil, would not try to maximize and diversify its exports, but that is the situation in which B.C. and Canada find themselves in because of massive confusion, political disagreements, lack of clarity over aboriginal claims, and environmental obduracy. And I say obduracy as a self-described environmentalist but a realist, one who wrote early and often in column and book form about the importance of moving against carbon emissions, preferably through a carbon tax of the kind the Gordon Campbell and Carole Taylor government bravely introduced. But again, let’s not kid ourselves, jacking up the price on carbon, without recycling the revenues to individuals and business, will mean higher energy costs, a weaker competitive position for business and fewer jobs. And this will be especially true as President Trump and his environmental marauders dismantle large pieces of the carbon-fighting policies introduced by president Obama. Yes, California and other state will forge ahead, but most will not, or they will take only milquetoast measures. (You will all know neighboring Washington state turned down a carbon tax.) Under these circumstances, finding the path between being brave and foolhardy will not be easy.
Easy, my friends, is not a word I would describe for what lies ahead as we plow into the waves I have mentioned. I hope that you, and the whole country, find the skill and judgment to navigate in ways that do not to damage to ourselves for matters over which we have control, and to limit the damage for those matters over which we have only partial control.