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Ottawa, June 21, 1995
1995-052

Notes for an address by the Honourable  Martin, Minister of Finance, before the Ottawa-Carleton Board of Trade

Delivered text is official version

Not long ago, one of my sons asked me a question. He was reading my Father's memoirs -- the history not only of one Canadian, but the history as well of the evolution of the Liberal Party over some 60 years. He wanted to know whether the Liberalism as set out in the recent budget, differed from the Liberalism his grandfather so strongly believed in.

That is in fact the question you have asked me today.

It is one I am delighted to begin to answer, in both its facets: to respond, on the one hand, to those who feel that we have focused too much on the deficit compared to previous Liberal governments; and to respond, on the other hand, to those who would call for an end to the historic partnership embedded in Liberal philosophy -- a partnership between the people, their government and the market. A partnership some would end because they feel the consequences of debt and deficit mean government can no longer stay in the game!

Let me begin!

To the former -- those who feel we have turned our backs on our past -- let me make two points: first, economic failure has never been a tenet of Liberalism; second, Liberalism is a belief in a better future, it is not a set of programs fixed in time.

Sir Wilfrid Laurier made that point almost 120 years ago. "Experience," he said, "has established that institutions, which at the outset were useful, often end by becoming intolerable abuses owing to the simple fact that everything around them has changed...and they have not."

Well, as in Laurier's time, so too in ours.

The essence of Liberalism is, in fact, innovation and reform. Liberal principles are constant, but our policies and programs have continually evolved because the world, and the needs of Canadians, have continuously evolved. Liberals have never seen nostalgia as the foundation for policy. Nor have we ever sought success in following old ruts in old roads.

The fact is that our country today faces forces and facts that no Canadian government has ever had to face. We live in a world where the global village is real, not rhetoric. Where Canada must compete with dozens of countries whose productive capacities a mere ten or fifteen years ago were but a speck on the horizon compared to what they are today.

It is a world where the old levers of nationalism no longer work. It is a world where many of the old instruments of economic sovereignty have eroded. A world, for instance, where no country not even Japan or the United States is able to control the fate of their own currencies on global markets.

It is a world where old economic assumptions are giving way in the face of new technologies, and the requirement for new skills. In short, it is a world that demands new kinds of leadership.

We live in a society where many of our social programs, reflecting a pattern of life that has long since changed, simply do not match modern needs. And, finally, we live in a reality where the possibility of governments spending still more money is simply not on. Where the necessity of spending less is crystal clear.

The fact is governments don't have money, they are given money -- money from the pockets of hardworking Canadians from coast to coast. And that means government must behave as if every dollar counts, because every dollar does.

It is a fact that no Liberal government ever before has had to confront the cancer of compound interest. Twenty years ago, our interest charges were a little over $3 billion a year. By this year, they'll be close to $50 billion. And if we do nothing about the deficit, in 10 years our annual interest bill will approach $100 billion. Compound interest is not ideology, it's arithmetic. It's reality as cold and as hard as it gets.

Our new interest charges this year alone were over $6 billion. That is money we did not have to pay last year. It is a new charge on the future of each and every Canadian -- not because of new government spending, but because of old government debt.

Think of it, $6 billion in new burden in one year alone. That's the federal government's entire R&D budget. It's three times what we spend on culture. It's more than what we spend on the child tax credit. That interest is money that cannot go to social programs, cannot go to child poverty, cannot go to science & technology, cannot go to the lowering of taxes. It robs this country of its potential. It robs our children of their future. And ladies & gentlemen, if we don't deal with it, it will rob the Liberal party of its purpose.

The fact is chronic deficits threaten to put the social conscience of government out of business. If we are to keep that from happening -- and we must we simply have to put the deficit behind us and we will.

It is for this reason that I wonder about those who say we are focusing too much on the deficit, that we are tossing aside compassion. I tell you, if we do not to act with determination today, we will not be talking about reformed social programs, we'll be talking about abandoned social programs. We will not be talking about a new system of transfers to the provinces, we'll be talking about no transfers at all.

If Jean Chretien's government is fighting the deficit with a determination previous governments have never shown, it is because as Liberals, we believe in government. It is because we know the damage that compound interest will do, not only narrowly to our finances, but broadly, to our nation.

That is why I believe that last February's budget is indeed an economic statement in the Liberal tradition -- one suited to its times. For if the task in the 1940's through 70's was to interpret Liberalism in a time of abundance, our obligation today is to interpret it in a time of austerity.

This then brings me to the second aspect of question you and my son put to me -- Has the burden of deficit reduction so limited the role of government that it must now become little more than a silent observer of the unfolding Canadian scene? Or, to put it another way, where do we go from here?

Well, looking ahead, there is one thing that should be absolutely clear -- this country will balance its books, and it will be a Liberal government that does it. But let me tell you, deficit elimination does not even begin to embrace the Liberal vision. It simply makes fulfilling that vision possible. Our goal in beating the deficit is not simply to make the Bond Market feel better, our goal is to be in a position to tell the Bond Market to get lost.

The deficit is not what defines us as Liberals, it isn't what motivates us as Liberals. But no responsible government can shirk it -- certainly no government that ever dreamt of preserving Medicare, or fighting child poverty, or investing in the economic levers of the future. Today's Liberal challenge goes well beyond getting our finances in order. It requires reforming the very role of government itself. To rethink it, not simply shrink it.

The Liberal Party is founded, above all, on an unconditional belief in the equal worth of the individual, their right to freedom, and their responsibility to each other in exercising that freedom. For Liberals, every Canadian has an equal right of access to the avenues of success. To get there, we believe in a government that gives people a helping hand when they need it, and a government that knows enough to step aside when they don't.

Liberals believe that the role of government is to expand individual freedom. We do not believe that survival only of the fittest is any way to build a civil society. This is a fundamentally different perspective than exists on the right-wing, some of whom see government as a bunker from which to protect privilege. Others see government as either something to occupy or to abolish.

Our agenda includes the elimination of the deficit. It does not include the elimination of government. Let there be no doubt. strong, activist government in the future must be very different than what it was in the past. We must provide a government with the wisdom to do that which only it can do best, leaving the rest for those who can do better.

Ours must be a government that does not define its strength by the power it accumulates, but by the partnerships its has constructed with others. That's why we are privatising Crown Corporations. Our view is straightforward, if government doesn't need to run something, it shouldn't, and in the future, it won't.

Liberals have always been able to distinguish between principles and programs. As I said at the outset, principles last forever, but programs exist to serve a need, and needs change.

That's why we are getting rid of business subsidies, which do a much better job at propping up the past than promoting the future.

That's why when we look at the need to reform our social programs, we are following in the footsteps of their Liberal authors. Their purpose was not programs written in stone, it was programs that worked, that evolved with evolving needs. The Liberals who created UI more than half a century ago, did not intend it to become an obstacle to a better future. Their goal was to give the unemployed a better chance to find the right job, and that must be our goal today.

The authors of our system of transfers to the provinces did not intend that bureaucratic rules would prevent innovation, preclude, for example, the use of those transfers to fund school lunch programs for poor children.

So, today, we must not see innovation and new flexibility as contrary to compassion, but essential to it. For Liberals, the burden of proof is not on those who challenge conventional wisdom, the burden of proof is on those who advocate the status quo.

Lester Pearson stated the challenge twenty-five years ago when he said: "The principles of Liberalism are as old as humanity, and as deep-rooted as the instinct for freedom. We must stand firm on our historic foundations," he said, but then went on to say "but that is not enough, It is building on them that matters."

That is why our economic policy must be one of entrepreneurship. That's why we support small business -- today's job creators, tomorrow's multinationals.

That is why we must be a government, as the Prime Minister has so effectively demonstrated, that sees trade policy as the new industrial policy not just on this continent, but on all continents.

That is why we must foster a national science and technology effort, focused on Canada's strengths, forged in partnership with the best minds Canada has to offer.

Twenty years ago, the Microsoft Corporation did not even exist. Today, it's near the top of the Fortune 500. Bill Gates, Microsoft's founder, has said that their biggest single source of new recruits is our University of Waterloo. That is a great tribute to a great Canadian university, but it also raises one fundamental question -- If we have the talent, why isn't Microsoft a Canadian company?

Creating the climate to make that happen ten years from now must be a Liberal priority today.

Social policy. Let me turn once again to Sir Wilfrid Laurier, who well over a century ago, in defining the purpose of this party, uttered his famous words: "I am a Liberal. I am one of those who thinks that everywhere, in human beings, there are abuses to be reformed new horizons to be opened up, and new forces to be developed."

That call to action endures. For all our success, we cannot rest any of us as long as the level of unemployment remains what it is. We cannot rest any of us until the reality and the roots of poverty are addressed. We cannot rest any of us until the hope that has been lost by so many young people returns, their faith in their future restored.

A hundred years ago, Laurier was not afraid to look ahead. He predicted that the 20th century would belong to Canada. Some have said he was wrong. Well, he was right. Not according to the crude calculus of power or empire, but because of the quality of our Canadian life. Not because of any single value we have pursued, but because of the many values we have advanced together our freedom, our compassion, our security, our prosperity, the peace we enjoy and the tolerance we show towards each other.

Many people other than Liberals have contributed to this Canadian century. But more than most, it has fallen to us to sustain that spirit, to build this country, to carry forward our national dream.

It is now time to plan for the next century. To give Canadians a Liberalism that is worthy of their confidence because it is relevant to their lives. How do we address the welfare trap and the skills gap? How do we ensure that Canada's seniors are protected at a time when our society is ageing? These are questions we must be asking today.

Liberals must always look ahead, focusing on the needs of the next decade, the next generation, not the next month or the next poll.

Liberals must always reach outward to the world, to the future, to each other. A nationalism of windows, not walls.

Where do we go from here my son asked?

The answer is it is time to provide Canadians with a new vision of what their country can be. A place where our equality is deeper, our social programs more focused and our economy equipped to take-on the very best the world has to offer.

If Canada is judged one of the best places in the world in which to live, it is not because of our prairies or the peaks of our mountains. It is because of the actions and the achievements of our people.

Liberals have always believed that Canada's future must not be a pale imitation of our past. We have always believed the past must be a platform from which we can reach higher still. And if this party, like our country, is to continue to succeed, it will be because we hold on to our values, not by standing still but by moving forward. Today, more than ever, that is the Liberal tradition we must follow.