VIDEO: Ottawa subsidizing risky provincial borrowing
New MLI video shows that Euro-style debt crises can happen here if status quo continues
Alberta and Ontario lead the parade of Canadian provinces running unsustainable public finances, in part thanks to the market’s belief that Ottawa will never let a province default on its debt. Based upon an exhaustive study by the Macdonald-Laurier Institute – Canada’s premier non-partisan think tank – this video explains the risk all Canadians face: that federal taxpayers will have to pick up the tab for profligate provincial governments. It also explains what we can do to fix the problem!
In today’s Globe and Mail, Tom Adams and I have another run at the proposed NB Power-Quebec-Hydro deal put forward by NB Premier Sean Graham and QC Premier Jean Charest.
As readers of this blog will know, I think this deal is a dream proposition for New Brunswickers. Ten years from now, if it goes through, people will look back and bless the name of Sean Graham, the premier who had the balls to propose it.
As Tom and I show in the essay in the Globe, far from being the “province’s crown jewel” of much overheated anti-deal rhetoric, NB Power has been a poorly managed mess for years. It has drowned the province in huge debt, locked them into high-cost and low-productivity generation, and encouraged politicians to play politics with electricity rates. The multi-billion dollar debt the utility has accumulated is a millstone around the province’s neck.
This deal will allow the province to rid itself of that debt with the stroke of a pen. It will see residential rates frozen for 5 years (they’ve risen faster than inflation — 27% in the last 5 years alone), after which they will track inflation. That’s a better deal than QC-Hydro’s own customers have got in recent years. Major industrial users will benefit from a 30% cut in their power rates, a major boost to competitiveness. Future increases in electricity demand can easily be met from Quebec’s plentiful, green and low-cost hydro base. The electricity business will still be subject to regulation by the NB authorities.
Two of the main criticisms of the deal hold no water:
1) that this gives Quebec blocking power on future electricity development in other eastern provinces because QC will be able to block access to the US market.
Uhhhh, no. Quebec is itself a major exporter to the US and would like to sell a lot more. That access to the US market comes with conditions. QC-Hydro must have a licence to export from the Americans’ Federal Energy Regulatory Commission (FERC). FERC regulations unambiguously require anyone exporting to the US to allow open market access to their jurisdiction from other suppliers. If Quebec tried to exploit their geographic advantage by blocking electricity exports from, say, NL or NS, they would lose their FERC licence and with it their access to the US market. It would be incredibly self-damaging for no gain. Won’t happen folks.
2) NB is just exchanging one electricity monopoly for another. Yes, true. And yes, I would prefer to see both QC-Hydro AND NB Power broken up and sold, creating a genuine competitive electricity market in eastern Canada. That’s not happening anytime soon. What we’ve got is this: under the proposed deal, NB is still subject to a monopoly supplier of electricity. That supplier is still subject to the regulatory authority of NBers. It is the status quo in that regard, so they are no worse off. By contrast, they get rid of more than $4-billion in debt, access to lower cost sources of electricity, remove local politics from a lot of power decisions, improved competitiveness for many major industries, and can expect much better rate performance than they’ve got from NB Power for years and years. So it’s not competition, but a huge improvement on the status quo. Let’s not let the perfect become the enemy of the good here.
My main criticism of the deal: rather than springing it, Meech Lake-like, on the public, the province should have announced that the utility was for sale and invited proposals. The QC-Hydro deal is a clear improvement on the status quo, but we don’t know how it rates compared to other alternatives that might have been put on the table. In 2009, NB’s way of proceeding seems old-fashioned and paternalistic. If they’d gone ahead in a more open manner, they probably could have managed public opinion better. Still, when the emotional reaction eases a bit, and NBers can look at this deal in the cold light of day, I think they’ll realise they’ve been given a gift — a free pass out of their own self-created electricity mess. They should take it.
First Chantal H√É¬©bert said that Fearful Symmetry should be the Prime Minister’s bedside reading.
Then she said in Le Devoir that if there was only one book that the Quebec political class should read this autumn, it’s Fearful Symmetry.
Then Lise Payette said (also in Le Devoir) that the book should be on the bedside table of every self-respecting Quebecker (yes, it’s true, she wants them to read it so they can see that there is no future for Quebec in Canada, but then she didn’t read the book carefully, because I talk in some detail about how Quebec can and should be accommodated within Confederation. What we agree on: that people should read the book!)
Then Yann Martel, the award-winning Quebec author gets all bent out of shape because he, in common with the rest of the Quebec cultural √É¬©lite, is still beating the dead horse that says that Stephen Harper is a cultural know-nothing who should read good books (preferably ones suggested by Martel…). Instead, he learns from Chantal H√É¬©bert, the PM is reading… You guessed it: Fearful Symmetry. Not a Martel novel? Quel culot…
Not to be outdone, the Leader of Her Majesty’s Official (and Loyal) Opposition, Michael Ignatieff, has just told the National Post that the last book he read was…Fearful Symmetry.
Do I detect a trend here…?
To listen to the whining of the New Brunswick Opposition and Newfoundland Premier Danny Williams, you’d think that the recently announced deal to sell NB Power, the New Brunswick Crown-owned power utility to Quebec Hydro was a sell-out of the province’s interests. Balderdash. New Brunswick has been staggering under the weight of the poorly managed utility and its burgeoning debt for years. This deal provides a profitable way out. New Brunswickers should take it and be glad. Here is a piece that Tom Adams and I co-wrote for the NB Telegraph-Journal laying out the reasons why:
N.B. Power Deal: Good News Not Bad
By Tom Adams and Brian Lee Crowley
The proposed deal between NB Power and Hydro-Quebec brightens New Brunswick√Ę‚ā¨‚ĄĘs future. Consumers and taxpayers would reap huge savings while the province√Ę‚ā¨‚ĄĘs public finances would be transformed for the better overnight. Industrial users would immediately move to rate parity with comparable users in Quebec, where power prices are among the lowest in the world. Households, small businesses and institutional customers, for whom NB Power was planning rate increases of 3% per year out into the future, would get rates frozen for five years and regulated rates after that.
Yet Conservative David Alward, Leader of the Opposition, opines, √Ę‚ā¨ŇďThis deal is outrageous. If you are an ordinary New Brunswicker, you√Ę‚ā¨‚ĄĘre being sold down the river.√Ę‚ā¨¬Ě MLA Jeannot Volp√É¬©, former energy minister in the Bernard Lord government, called it, √Ę‚ā¨Ňďa very stupid, stupid deal.”
In this the Opposition is taking their lead from Premier Danny Williams of Newfoundland and Labrador. He derides Quebec√Ę‚ā¨‚ĄĘs intention as a √Ę‚ā¨Ňďdespicable power grab√Ę‚ā¨¬Ě.√ā¬† He reserves his most vicious vituperation for New Brunswick√Ę‚ā¨‚ĄĘs government, which he accuses of √Ę‚ā¨Ňďcomplete capitulation√Ę‚ā¨¬Ě in having √Ę‚ā¨Ňďagreed to sell away their future.√Ę‚ā¨¬Ě
What does the future hold for New Brunswickers under this deal? Mr. Volp√É¬© complains that rates for non-industrial customers after the rate freeze expires will increase at inflation and that potential future growth in demand will be served by power at market prices. Of course, NB Power√Ę‚ā¨‚ĄĘs rates have been rising faster than inflation and will continue this pace if the deal does not go through. NB Power√Ę‚ā¨‚ĄĘs recently acquired new supplies of generation are priced well above market.
NB Power√Ę‚ā¨‚ĄĘs government-guaranteed debt, which Hydro Quebec is taking over, is about $12,600 per customer. That monkey will be off New Brunswick√Ę‚ā¨‚ĄĘs back. NB Power√Ę‚ā¨‚ĄĘs operating costs and rates are some of the highest of any utility in Canada and both are under severe upward pressure. In most years New Brunswickers are lucky if the utility breaks even; punishing losses are frequent.√ā¬† Those losses will no longer be backstopped by provincial taxpayers.
Notwithstanding guaranteeing rate decreases and freezes, Hydro Quebec says the transaction will be profitable from year one, with an astounding expected return on equity of more than 10 per cent √Ę‚ā¨‚Äú well above the average return for Canadian utilities.
Hydro Quebec√Ę‚ā¨‚ĄĘs decision to take over NB Power is obviously based on Quebec√Ę‚ā¨‚ĄĘs assessment that it will have surplus electricity at rock bottom cost well into the future. Hydro Quebec√Ę‚ā¨‚ĄĘs sharply declining export revenues, declining load across the region, persistent negative prices in Ontario√Ę‚ā¨‚ĄĘs wholesale power market this year, and low market prices in New England, support the view that power will remain cheap for a while. New Brunswickers will benefit from those cheap prices under the proposed deal. Where is Mr. Alward√Ę‚ā¨‚ĄĘs proposal for bringing those cheap prices to New Brunswick while servicing NB Power√Ę‚ā¨‚ĄĘs debt?
Premier Williams√Ę‚ā¨‚ĄĘ opposition actually comes from another source that has nothing to do with New Brunswickers or their interests; the politicians in Fredericton should make sure they know what they√Ę‚ā¨‚ĄĘre getting into before following this pied piper.
Premier Williams wants to build a big hydro project on the Lower Churchill in Labrador and sell the power for top dollar. He fears that anything that reinforces Quebec Hydro√Ę‚ā¨‚ĄĘs dominant position in eastern North America makes that project less likely. But Premier Williams√Ę‚ā¨‚ĄĘ ephemeral dream to press ahead with Lower Churchill cannot proceed in today√Ę‚ā¨‚ĄĘs circumstances. This is not because of opposition from Quebec, but precisely because power prices are low and will stay that way for a while. Whatever other virtues Lower Churchill has, its power once delivered to paying customers would be very dear. Taxpayers in that province should be relieved, not outraged, that Nalcor, Newfoundland√Ę‚ā¨‚ĄĘs Crown energy company, is not out in the market the trying to sell costly power right now.
Rather than denigrating neighbours for their success, a success that costs his province nothing, Premier Williams should instead turn the Quebec – New Brunswick deal to his long-term advantage. How? By negotiating a transmission access agreement with Quebec to be activated in the future, when Lower Churchill power becomes competitive. Such a deal would cost Quebec little but would help to remove suspicion of their intentions while creating a constructive relationship with a potentially important business partner.
If the Newfoundland government could find the will to be constructive, it would set out terms for the design for a future transmission tolling agreement that allocates costs fairly, moves new Labrador power to market most efficiently, permits Quebec to earn a reasonable return on any prudent investment it makes, enshrines Newfoundland√Ę‚ā¨‚ĄĘs right to market access, and establishes an arm√Ę‚ā¨‚ĄĘs length dispute resolution mechanism. An excellent model for a deal would be to follow the lead of the transmission access requirements of the U.S. Federal Energy Regulatory Commission that already governs Quebec√Ę‚ā¨‚ĄĘs exports. If and when the economics of Labrador power development turn around, the challenging transmission riddle would then be solved.
When neighbouring provinces find creative solutions making both sides much better off, it is corrosive of our federation and antithetical to the essence of Canada for another province to take a bitter, beggar-thy-neighbour position. Instead of fostering acrimony, Premier Williams should butt out of the Quebec-New Brunswick deal and position Newfoundland to get into the power trading game on reasonable terms when the time is ripe.
In their critique of my book published in Le Devoir (√Ę‚ā¨ŇďLes vraies origines de l’√É‚Äįtat providence√Ę‚ā¨¬Ě, 7th October), Jean-Luc Migu√É¬© and G√É¬©rard B√É¬©langer take issue with several of Fearful Symmetry√Ę‚ā¨‚ĄĘs central ideas. I don√Ę‚ā¨‚ĄĘt have the space here to respond to all their arguments (those who care to do so may consult an earlier post on my blog where I respond to many of the criticisms they raised in a similar article they published in the National Post: http://brianleecrowley.com/blog/.)
On the other hand, in this new piece the authors offer a counter-interpretation of Quebec√Ę‚ā¨‚ĄĘs history that really demands a response, if for no other reason than it repeats a number of tired old myths that recent Quebec historians have firmly placed in the dustbin of history.
Migu√É¬© and B√É¬©langer write, √Ę‚ā¨ŇďBefore 1960, our social conscience owed much more to the rules laid down by our authoritarian Church than √Ę‚ā¨‚ÄĚ contrary to Crowley√Ę‚ā¨‚ĄĘs assertions √Ę‚ā¨‚ÄĚ to a commitment to limited government and the rule of law. For most of our history we lived, first, under the √Ę‚ā¨Ňďancien regime√Ę‚ā¨¬Ě and thereafter as a rural minority.√Ę‚ā¨¬Ě
The authors thus repeat the myth of the √Ę‚ā¨Ňďgrande noirceur√Ę‚ā¨¬Ě (Great Darkness), according to which, prior to the Quiet Revolution, French-Canadian society was essentially a backward, feudal, rural and economically underdeveloped society living under the thumb of the clergy.
This myth has mostly been propagated by non-historians who wished to blacken Quebec√Ę‚ā¨‚ĄĘs past once they became dominant politically in the Sixties, and is now repeated widely by other non-historians (such as Migu√É¬© and B√É¬©langer) who really ought to know better by now. There is no denying that there is an important debate about whether or not the Quiet Revolution in fact constitutes a radical break or √Ę‚ā¨Ňďrupture√Ę‚ā¨¬Ě in Quebec√Ę‚ā¨‚ĄĘs history. On the other hand, to my knowledge, no serious Quebec historian today subscribes to this kind of account of the allegedly wretched and pitiful state of Quebec society before 1960.
One wonders if the authors haven√Ę‚ā¨‚ĄĘt quite simply got their societies mixed up when they talk about French-Canada as a √ā¬ę rural minority √ā¬Ľ. French-Canadians have never been even close to being a minority in Quebec at any point in Canadian history, while the statistics concerning urbanization and industrialization paint a completely different portrait than the one presented by Migu√É¬© and B√É¬©langer.
According to the Universit√É¬© de Montr√É¬©al historian Professor Jacques Rouillard,
The image according to which the Franco-Qu√É¬©b√É¬©cois are latecomers to urban life, or that they rejected jobs in the industrial economy, does not correspond to reality when one compares the relevant indicators to those observable in the rest of North America or other industrialised countries. Their rate of urbanisation and of participation in industrial activities is comparable that of other highly industrialised societies. [My translation]
What about the belief in the principles of economic liberalism in Quebec society before 1960, or what Migu√É¬© and B√É¬©langer are referring to when they reject my contention that the ideas of limited government and the rule of law were guiding principles at the time?
In his book on the economic history of Quebec, Professor Robert Armstrong of McGill University wrote,
Throughout the first four decades of the twentieth century, the government of Quebec occupied a unique position among provincial governments in Canada. Provincial government intervention in the regional economy lagged behind all of the other provinces; the Quebec government practiced the strongest of laissez-faire strategies.
The historian Fernande Roy, in her book on the history of ideologies in Quebec, explains the extent to which values such as private property and individual liberty found fertile soil in Quebec. She writes,
This liberal credo was widespread in the Quebec society of the time, and is to be found well beyond the confines of the business world. It is quite wrong to suggest, as some have done, that these ideals were somehow limited to the English-speaking community either. It is an abuse of history to attribute to all Quebeckers the ultramontanist point of view, which certainly endorsed a different set of values. [My translation]
Just a few days ago, Le Devoir published an interview with √É‚Äįric B√É¬©dard regarding his latest book, devoted to the √Ę‚ā¨Ňďreformers√Ę‚ā¨¬Ě of 19th century Quebec, people such as Louis-Hippolyte LaFontaine, √É‚Äįtienne Parent, Pierre Joseph-Olivier Chauveau, Fran√É¬ßois-Xavier Garneau and others. Mr B√É¬©dard is one of the many historians who rejects the suggestion that Quebeckers lived through a √Ę‚ā¨Ňďgrande noirceur√Ę‚ā¨¬Ě in the years prior to 1960.
These reformers were powerful and remarkable personages who contributed mightily to Quebec√Ę‚ā¨‚ĄĘs progress and development. Nor should we forget the √Ę‚ā¨Ňďrouges√Ę‚ā¨¬Ě, an even more radical group of reformers whose focal point was l√Ę‚ā¨‚ĄĘInstitut canadien. To reduce the ideological ferment and diversity of this period to a blind adherence to the √Ę‚ā¨Ňďrules of our authoritarian Church√Ę‚ā¨¬Ě is nothing more than a caricature with no basis in the historical record.
I am all the more mystified by the assertions of MM. Migu√É¬© and B√É¬©langer because Jean-Luc Migu√É¬© knows better : in a book he published a decade ago, he contradicts the assertions he makes today and instead adopts a line completely in accordance with the one I defend in Fearful Symmetry. In particular he draws a portrait of a traditionally liberal Quebec society which was developing rapidly until the fateful moment when, in the 1960s, the province abandoned its commitment to freedom and the rule of law in favour of an unhealthy reliance on the state. In his √É‚Äįtatisme et d√É¬©clin du Qu√É¬©bec : Bilan de la R√É¬©volution tranquille, Migu√É¬© wrote,
Throughout its modern history, from the end of the 19th century until the end of the 1960s, Quebec enjoyed a period of strong growth, which paralleled that of Ontario√Ę‚ā¨¬¶ The period immediately before the Quiet Revolution, namely from 1935 to 1955, a period that coincides with the high point of the rule of Maurice Duplessis, is also a period that distinguishes itself as one of the most prosperous of our entire history. Industrial production rose by 10.2% annually, a rate higher than that of both Canada and Ontario, who themselves enjoyed vigorous growth of 10% and 9.6% respectively. Between 1946 and 1958, personal income per capita grew by more than five percent per year, again a growth rate greater than Canada√Ę‚ā¨‚ĄĘs or Ontario√Ę‚ā¨‚ĄĘs√Ę‚ā¨¬¶ [My translation]
And how does Migu√É¬© explain this economic dynamism ? He attributes it to the fact that √Ę‚ā¨Ňďthe political authorities of the time applied to their work the first principle of the Hippocratic oath : Do no harm.√Ę‚ā¨¬Ě In other words, this economic success was due to an adherence to economic freedom, limited government and the rule of law!
The unjustified blackening of Quebec√Ę‚ā¨‚ĄĘs past before 1960 has for half a century reinforced the policies that, as I explain in Fearful Symmetry, have deeply and unnecessarily damaged Quebec society. It is more than time that Quebeckers read their historians and that they reconcile themselves with their unjustly vilified past.
CanadianImmigrant.ca posted a review of Fearful Symmetry by George Abraham that shows that *somebody* at least is paying attention to what the book has to say about immigrants, a vital part of Canada’s future.
The review, available here, draws attention to the fact that most commentators in Canada are reluctant to tell it like it is in any politically sensitive areas:
Brian Lee Crowley strikes me as an unlikely Canadian. In his just-published book, Fearful Symmetry: The Fall and Rise of Canada√Ę‚ā¨‚ĄĘs Founding Values, he not only debunks many myths about this country, but does it directly and without pulling any punches. Evidently, Crowley is not given to political correctness √Ę‚ā¨‚ÄĚ that quintessential Canadian value √Ę‚ā¨‚ÄĚ and does not mind offending a few people, particularly those in Quebec.
But this reviewer, unlike many others, also recognises that I am not out to single out Quebec. There are lots of people who are benefiting from the ill-advised policies of the last 50 years, policies instituted in large part to accommodate the Boomer rush into the workforce plus the rise of Quebec nationalism. On the other hand, it is not often recognised that those poor policies harm the most vulnerable in our society, including immigrants:
To sum up, in Crowley√Ę‚ā¨‚ĄĘs reckoning, immigrants who are down on their luck and have been ejected from the workforce during this recession will benefit from the looming labour shortages. But even then they will be hobbled by what the writer rightly calls a √Ę‚ā¨Ňďscandal√Ę‚ā¨¬Ě unworthy of Canada, the non-recognition of immigrant qualifications. He calls it like it is: √Ę‚ā¨ŇďTheirs is a transparent effort to protect not the interests of supposedly vulnerable and ignorant consumers but rather the interests of those already exercising these professions in Canada.√Ę‚ā¨¬Ě
Economists G√É¬©rard B√É¬©langer and Jean-Luc Migu√É¬© have an interesting piece in the National Post of 5th October arguing against some of the case I make in Fearful Symmetry attributing the rapid growth in government in Canada to a combination of the rise of the Boomer generation and a separatist Quebec nationalism.
One of the main points they raise against my argument is that growth in government was occurring all over the world, and especially in the western world, and therefore to attribute the growth in government in Canada to these two factors in Canada is to miss the larger picture of change affecting all western societies.
This would be a fair criticism, if it were true. But of course it isn’t. Indeed I spent an important part of the book tracing the growth of government spending in Canada, comparing it to our counterparts in the US (with whom we shared almost identical patterns of government growth for over a century, until the 1960s), and demonstrating that there were in fact two “camps” among Western industrialised societies. One was essentially the US, Canada and Australia, the other was much of Western Europe. The first group proved remarkably more resistant to the growth of government than the latter. But Canada in the Sixties and Seventies essentially changed teams. After a century of following in America’s footsteps, we suddenly and brutally changed camps. Over the ensuing few decades, America’s share of GDP devoted to government rose 6 percentage points. Ours rose over 20. As I say in the book, the zeitgeist in favour of larger government no doubt explains part of the growth in Canada. But it is the speed and size of the change over such a short period, that requires supplementary explanation in Canada, especially since the political class remained committed to small and limited government right up until the early 1960s, as I again show in the book.
As for the rise of a separatist Quebec nationalism only emerging in the 1970s, Migu√É¬© and B√É¬©langer must have lived through a very different history than I did. The Sixties were a time of radical nationalist ferment that was frightening the life out of the political class in Ottawa. The B&B Commission was named in response. The PQ was formed in the late Sixties from the merger of two other separatist political parties that had been agitating for some time. This was the time that mailboxes were blowing up in Montreal and the FLQ was issuing manifestos. Jean Lesage won the 1960s election on a platform of Ma√É¬ģtres chez nous, and Daniel Johnson won the 1966 election on the slogan of √É‚Äįgalit√É¬© ou ind√É¬©pendence. The federal Liberal Party went and recruited les trois sages (Trudeau, Marchand and Pelletier) in the mid-Sixties as an attempt to strengthen their response and Trudeau was clearly made leader of the party because he was seen as the man able to respond forcefully to what was happening in Quebec, as indeed he did in the FLQ crisis in 1970.
It is historical revisionism pure and simple to say that because the PQ only made its entr√É¬©e into the National Assembly in 1970 with a quarter of the vote or because the first referendum only occurred in the late Seventies (with half of French-speakers voting to give the government a mandate to negotiate sovereignty-association) that therefore nothing had happened in the decade preceding or that politicians in Quebec City and Ottawa were not already responding to the rise of a separatist nationalism in the province.
One of Canada’s most respected social thinkers and a man who has been a great inspiration to me personally, Tom Courchene of Queen’s University, wrote an op-ed in The Globe responding to my own. Mine was a summary of some of the arguments in Fearful Symmetry, focused in particular on the recent news that Ottawa was about to expand the number of seats in the Commons to reflect the growth of BC, Alberta and Ontario. Quebec and all the other provinces would gain no seats, implying a relative loss of not only population but political influence as well. Professor Courchene’s article was clearly intended to be a rebuttal to my piece, but like Andrew Coyne and several other readers who wrote to me, I found its arguments to be a bit mystifying.
OK, he spends the first third of the article agreeing with me. But the place where apparently he and I diverge is when I wrote that the shifting distribution of seats was a symptom of a larger malaise, especially for Quebec, which I described as “a society that cannot pay its own way or reproduce itself, that is highly dependent on transfers from the rest of the country, and that is losing its political influence.√Ę‚ā¨¬Ě Professor Courchene felt called upon to defend Quebec’s honour.
In so doing he said, for example, that while obviously Quebec’s weight would fall in the Commons, it would remain the same in the Senate. True but, as the French say, quel rapport? Is Professor Courchene seriously suggesting that the ultimate backwater in Canadian political institutions, our unelected Senate, will suddenly become the new avenue through which Quebec will exercise the kind of powerful political influence it has enjoyed in recent decades? If that were the case, I think you’d find Senate reform, giving Quebec the same number of seats as all other provinces, would rapidly move up the public agenda. He argues that falling seats in the Commons for Quebec will mean an abandonment by Quebec voters of the Bloc and a return to the fold of one or more federalist parties. But part of the argument I made in my op-ed is that as the Commons expands, and Quebec’s representation remains static, their ability to cause minority governments (as is the case today thanks to the Bloc) or to bestow majorities (as in much of the previous century), will be heavily diluted. It won’t disappear. It will just become less and less decisive. It is just arithmetic. Michael Bliss makes a similar point about Conservative Party electoral fortunes in today’s Globe.
But what really mystified me, coming from the father of the argument about “transfer dependency” which Professor Courchene helped to popularize in Canada in the 70s and 80s, was his attempt to make it appear that Quebec was the source of many highly desirable changes in Canada, most of which were only made possible by big, and badly designed, transfer programmes. Now far be it from me to deny that Quebec has been a valued and welcome member of Confederation, and I agree with him that the legal and linguistic diversity that Canada enjoys is in large part due to our perfectly legitimate efforts to accommodate Quebec and French-speakers. But as Professor Courchene quite well knows, because he has read my book and I have discussed it with him, many of the changes he singles out as gifts Quebec has bestowed on Canada, I argue have been the result of a sordid bidding war between Ottawa and Quebec City to keep Quebeckers from voting to leave Canada. Moreover this bidding war, by putting huge piles of cash on the table for Quebeckers to quarrel over, has created a society deeply mired in rent-seeking, or what I call PUPPETRY (people using political power to enrich themselves by plundering you).
The whole reason that Quebec is losing political and demographic weight is because its vast expansion of the state and its shift from being a society concerned with productive effort to one concerned with PUPPETRY have caused the emergence of that “society that cannot pay its own way or reproduce itself, that is highly dependent on transfers from the rest of the country, and that is losing its political influence.√Ę‚ā¨¬Ě
Among the many social dysfunctions that have emerged in Quebec since the Quiet Revolution, let’s list a few: low employment rates, low productivity per capita, low investment rates, low in-migration, low fertility, low family formation rates, high welfare dependency, high out-migration, high taxes, high debt, high divorce, suicide and abortion rates. Now why ever would you describe that as “a society that cannot pay its own way or reproduce itself, that is highly dependent on transfers from the rest of the country, and that is losing its political influence√Ę‚ā¨¬Ě?
Yes, as Professor Courchene points out, Quebec has been an innovator in social policy, although my gloss on that is that the innovation helps to create dependence on the state and is part of the problem. He cites cheap daycare as an example. On the other hand, that is a policy so far looked on in much of the rest of the country with scepticism, is very expensive and by no means an unalloyed blessing to parents and children, and is only possible in Quebec because of large transfers from other provinces who do not offer such services, when the transfers are supposed to guarantee that less well-off provinces can offer reasonably comparable services to richer ones. I think our history of transfers has been an unhappy one that has fuelled Quebec’s economic and population weakness and Professor Courchene’s defence of them makes him, in my view, a defender of a system that has done Quebec little good and much harm.
He attributes our “multiculturalism” to Quebec. Again, I disagree. In fact multiculturalism was opposed by Quebec as a dilution of their preference for a narrower and old-fashioned two-nation Canada, and the debate over the extent to which cultural minorities should be accommodated has been loudest and most ill-tempered in Quebec, leaving aside the extent to which Quebec has used its provincial powers under the constitution to marginalize the English-speaking population, a stain on Canada’s record of linguistic tolerance and diversity which I document in Fearful Symmetry.
And that brings us to Professor Courchene’s last point: Quebec has been the spear-tip of a movement in favour of “collective rights” that helps to distinguish us from the United States. Well, as a Laurier liberal, a believer in individual liberty, responsibility and accountability under the rule of law, I personally think that “collective rights” are harmful to democracy, are an unwelcome departure from our legal, moral and political tradition, and are unnecessary to distinguish us from the United States. Canadians were different from Americans before e.g. Bill 101 allowed the French-speaking majority in Quebec to oppress the French-speaking minority that wanted to send their kids to English-language schools (an example of how collective rights are really code for majorities oppressing minorities). Surely we only need to distinguish ourselves from American on points where they are wrong and we can do better. Anything else is difference for its own sake, an unworthy prize and one for which we should be unwilling to sacrifice our freedoms and moral tradition.
Some readers of this blog will have noticed that the Globe’s front page story yesterday concerned the yet-to-be announced plans of the federal government to add roughly 30 seats to the House of Commons, taking it to approximately 340 seats from the current 308. Those same readers may have also noticed that this was immediately followed by nationalist sabre-rattling in Quebec and craven commentary by so-called “experts” to the effect that Canada might well not survive an attempt to guarantee that the votes of all Canadians might have roughly equal weight in the election of the Commons and therefore the government of Canada. Check this out from the Montreal Gazette:
Bloc House leader Pierre Paquette noted that Quebec’s National Assembly had adopted a motion unanimously denouncing the federal government’s previous attempt to redraw the electoral map. He said the issue would give Quebecers an additional reason to turn away from the Conservatives in the next election.
“I’m convinced there will be a public outcry in Quebec over the Conservative proposal,” said Paquette. “For us this is a major issue, and I think it shows once again that the Conservatives have crossed out (appealing to voters in) Quebec.”
Even Michael Ignatieff succumbed to this shameful pandering, trying to make an attempt by the government to level the electoral playing field appear to be a Tory plan to do down Quebec, a province that, like 6 others, will receive no new MPs.
Only the growing provinces that have remained closest to Canada’s founding values, BC, Alberta, and Ontario, will get new seats. And they’ll do so not as a result of some mean-spirited political plot, but because those are the successful dynamic parts of the country where more and more Canadians live. That’s what believing in lower taxes, smaller government, a strong work ethic, well designed social programmes, economic growth, openness to immigration and so on will do for you.
For my take in this issue, have a look at the op-ed I wrote in today’s Globe (26/9/09), in which I draw on research in Fearful Symmetry to show that Quebec’s loss of demographic, economic and political weight is the direct outcome of the bidding war for the loyalty of Quebeckers, and that this loss of power and influence cannot be ignored in our political institutions. Indeed I point out that this is just the beginning of the coming shift in political power. By 2031, on current trends, Quebec should expect to have only 75 seats out of 375, with virtually all of the oncrease going to the new power coalition of BC, Alberta and Ontario. They have the people — they get the votes.
The nerve and hypocrisy of the extreme elements of the nationalist movement in Quebec never ceases to amaze me. Here are Gilles Duceppe and his colleagues saying that Quebec’s weight in parliament must not fall; they promise to do everything they can to frustrate the new seat distribution. These are the same people who, in the name of sacred and inviolable democracy, say that any vote by Quebeckers to leave Confederation is final and unquestionable. Apparently, however, they have no problem with waving democracy (in the form of one person, one vote) aside when its application may be inconvenient to them. Have they no shame?
I was asked by Andre Pratte, the editor in chief of La Presse, to prepare a brief overview of the argument in Fearful Symmetry about how Ottawa should accommodate Quebec in the coming years. Especially because the article (which appeared on Tuesday, 22nd September, 2009) does not appear on-line and is therefore not searchable, I reproduce the article as I originally submitted it below.
La fin de la surench√É¬®re
Paru dans La Presse du 22 septembre 2009 (cet article n√Ę‚ā¨‚ĄĘest pas disponible √É¬† l√Ę‚ā¨‚ĄĘInternet)
Par Brian Lee Crowley
La pr√É¬©sence simultan√É¬©e durant les ann√É¬©es soixante d√Ę‚ā¨‚ĄĘune bulle d√É¬©mographique et d√Ę‚ā¨‚ĄĘun mouvement cr√É¬©dible pr√É¬īnant l√Ę‚ā¨‚ĄĘind√É¬©pendance du Qu√É¬©bec a d√É¬©clench√É¬© une esp√É¬®ce de surench√É¬®re pour capter la loyaut√É¬© des jeunes Boomers francophones. Des programmes f√É¬©d√É¬©raux visant √É¬† rendre les francophones financi√É¬®rement d√É¬©pendants envers le Canada furent, par la logique du f√É¬©d√É¬©ralisme, g√É¬©n√É¬©ralis√É¬©s √É¬† toutes les provinces.
Il en a r√É¬©sult√É¬© un Canada de nouveau compos√É¬© de deux √ā¬ę√ā¬†nations√ā¬†√ā¬Ľ, mais d√Ę‚ā¨‚ĄĘun caract√É¬®re tr√É¬®s diff√É¬®rent√ā¬†: une nation qui produit la richesse (√Ę‚ā¨ňúMaking Canada√Ę‚ā¨‚ĄĘ, compos√É¬© principalement de l√Ę‚ā¨‚ĄĘOntario, de l√Ę‚ā¨‚ĄĘAlberta et de la Colombie-Britannique) et une autre qui la d√É¬©tourne (√Ę‚ā¨ňúTaking Canada√Ę‚ā¨‚ĄĘ, compos√É¬© surtout des autres provinces, mais avec le Qu√É¬©bec dans le peloton de t√É¬™te).
Sans les changements profonds que la R√É¬©volution tranquille ainsi que la mont√É¬©e des Boomers ont enclench√É¬©s au Qu√É¬©bec, le Canada n√Ę‚ā¨‚ĄĘaurait pas connu l√Ę‚ā¨‚ĄĘexpansion d√É¬©mesur√É¬©e de l√Ę‚ā¨‚ĄĘ√É‚Äįtat qu√Ę‚ā¨‚ĄĘon constate depuis les ann√É¬©es soixante. Cette dynamique est cependant en s√É¬©rieuse perte de vitesse.
La surench√É¬®re opposant Qu√É¬©bec et Ottawa a aliment√É¬© une croissance d√É¬©mesur√É¬©e de l√Ę‚ā¨‚ĄĘ√É‚Äįtat au Qu√É¬©bec qui a, √É¬† son tour, min√É¬© la croissance √É¬©conomique, approfondi la d√É¬©pendance d√Ę‚ā¨‚ĄĘune certaine couche de la population vis-√É¬†-vis de l√Ę‚ā¨‚ĄĘ√É‚Äįtat-providence, multipli√É¬© les emplois improductifs dans le secteur public, renforc√É¬© le pouvoir de chantage des syndicats, des entreprises et d√Ę‚ā¨‚ĄĘautres groupes qui cherchent √É¬† s√Ę‚ā¨‚ĄĘabreuver √É¬† la fontaine des deniers publics, affaibli la famille, et encourag√É¬© l√Ę‚ā¨‚ĄĘ√É¬©migration toute en d√É¬©courageant l√Ę‚ā¨‚ĄĘimmigration. Le poids politique, √É¬©conomique et d√É¬©mographique du Qu√É¬©bec s√Ę‚ā¨‚ĄĘen est trouv√É¬© amenuis√É¬©, tout comme sa capacit√É¬© de poursuivre la surench√É¬®re.
Selon Statistiques Canada, en 2031, le Qu√É¬©bec repr√É¬©sentera √É¬† peine 21 % de la population canadienne. Par contre la Colombie-Britannique, l√Ę‚ā¨‚ĄĘAlberta et l√Ę‚ā¨‚ĄĘOntario compteront pour les deux tiers de la population et s√Ę‚ā¨‚ĄĘaccapareront trois fois plus de si√É¬®ges que le Qu√É¬©bec √É¬† la Chambre des communes.
Cette coalition (Making Canada) repr√É¬©sentera √É¬©galement 70 % de l√Ę‚ā¨‚ĄĘ√É¬©conomie nationale. Compar√É¬©e au Qu√É¬©bec, sa population, sa natalit√É¬©, son immigration, sa productivit√É¬© et son niveau d√Ę‚ā¨‚ĄĘemploi seront tous plus √É¬©lev√É¬©s alors que son fardeau fiscal et son taux de retraites anticip√É¬©es seront de beaucoup inf√É¬©rieurs. La p√É¬©nurie de travailleurs qu√Ę‚ā¨‚ĄĘannonce le vieillissement des Boomers rendra cette r√É¬©gion du pays de plus en plus r√É¬©fractaire √É¬† participer au financement d√Ę‚ā¨‚ĄĘune partie non-n√É¬©gligeable de l√Ę‚ā¨‚ĄĘ√É‚Äįtat-providence ob√É¬®se du Qu√É¬©bec.
Il va sans dire qu√Ę‚ā¨‚ĄĘun Qu√É¬©bec qui repr√É¬©sente une cinqui√É¬®me de la population et de l√Ę‚ā¨‚ĄĘ√É¬©conomie continuera d√Ę‚ā¨‚ĄĘ√É¬™tre influent, et tous ces d√É¬©veloppements auront aussi des cons√É¬©quences positives.
Par exemple, l√Ę‚ā¨‚ĄĘinvasion par Ottawa de bien des domaines de politique sociale a eu pour mobile la poursuite de la surench√É¬®re. Sciemment ou non, le gouvernement f√É¬©d√É¬©ral a ainsi fini par subventionner une s√É¬©rie de politiques, notamment au Qu√É¬©bec, mais ailleurs aussi, qui ont profond√É¬©ment endommag√É¬© les √É¬©conomies provinciales.
On pourra r√É¬©soudre ce probl√É¬®me en mettant fin aux transferts fiscaux et en les rempla√É¬ßant par un transfert de capacit√É¬© fiscale. Lorsque les provinces auront √É¬† d√É¬©frayer la note de leurs politiques sociales √É¬† partir de leurs propres ressources, elles seront plus attentives aux r√É¬©sultats obtenus.
En contrepartie, les provinces seraient appel√É¬©es √É¬† reconna√É¬ģtre, une fois pour toutes, le r√É¬īle pr√É¬©pond√É¬©rant du f√É¬©d√É¬©ral en ce qui a trait √É¬† la cr√É¬©ation d√Ę‚ā¨‚ĄĘun march√É¬© libre et sans entrave √É¬† l√Ę‚ā¨‚ĄĘ√É¬©chelle du Canada.
Le Qu√É¬©bec s√Ę‚ā¨‚ĄĘopposera √É¬©videmment √É¬† ce renouvellement de la pr√É¬©sence d√Ę‚ā¨‚ĄĘOttawa dans la vie des Canadiens. Par contre, sortir Ottawa des politiques sociales de ressort provincial toute en s√Ę‚ā¨‚ĄĘenrichissant d√Ę‚ā¨‚ĄĘune partie de la capacit√É¬© fiscale du gouvernement f√É¬©d√É¬©ral constituerait une victoire importante vu sous l√Ę‚ā¨‚ĄĘangle des revendications traditionnelles du Qu√É¬©bec. Tout compte fait, on pourrait assister √É¬† un renouvellement du pacte conf√É¬©d√É¬©ratif qui sera dans l√Ę‚ā¨‚ĄĘint√É¬©r√É¬™t de tous.
Brian Lee Crowley est auteur de Fearful Symmetry√ā¬†: the fall and rise of Canada√Ę‚ā¨‚ĄĘs founding values qui vient de para√É¬ģtre chez Key Porter.