Western Canada in Confederation

The West Today

In the mid 1970's, Peter Lougheed painted a picture of the Western Canada  he saw developing:

                      "I think it will be a stronger part of Canada a decade from now, both in terms of population, in terms of distribution of income, in terms of spending of a more balanced industrial economy.  I think the West will have more confidence and hopefully more input into decision‑making nationally...  Canada will be a stronger nation, because we'll be a stronger West"

Edmonton publisher Ted Byfield described our current situation a while ago thus:

                      "...something is grievously wrong in Western Canada.  Farmers can't afford to seed their crops, mines are closed, oil rigs lie derelict, shipyards are idle, food banks are besieged, the savings of many lifetimes have vanished, homes have lost their value, and a host of unemployed burst the welfare rolls of every town and city."

There is probably some literary licence in this, but is the present reality in Western Canada much different from what Byfield described?  I think not!

It is against this background, that I would like to offer a few thoughts on the West in Confederation today.

To fully comprehend the magnitude of western alienation today, one must look directly at the Industrial and Regional Development Program, at the figures of federal procurement, and most importantly at the employment and procurement schedules of Crown Corporations.

For Ottawa's Industrial and Regional Development Program (IRDP) the 1986/87 figures indicate that our four western provinces received 77 of 850 projects across the entire country.  This amounted to $18.8 million, which was 9.1 percent of the total amount spent on large programs.¹ On both a population and regional unemployment basis, this is outrageous.  Reform here is long overdue for all the regions outside the Windsor to Quebec City corridor.  The Western Diversification Strategy and Atlantic Development Corporation are steps in the right direction, partly because they should put more economic decision-making into the hands of people in the two affected regions.  Left to themselves, generations of Ottawa policy makers have all but forgotten that some parts of Outer Canada exist.

Federal Procurement  

The various federal departments spent approximately $8.1 billion during fiscal 1986/87 on goods and services.  The four western provinces with about 30 percent of the national population received only about 11.5 percent of these procurements by total dollar amount.  Atlantic Canada, with about 10% of the population, received only about 7 percent.  Ontario and Quebec received fully 76 percent of the dollar totals of these procurements.

This situation, which appears to have persisted for many years, is defended on the basis that western and Atlantic Canadians just don't produce the right kind of goods and services.  According to the best information I can obtain, between 45 and 55 per cent of the federal procurements are now services.  In the case of Western Canada, a recent Organization for Economic Cooperation and Development (O.E.C.D.) study indicated that well over 50 per cent of us are in the services sector (B.C. - 66%, Alberta - 54%, Saskatchewan - 59%, Manitoba - 66%).  Our work force is thus fully entitled to a fairer share of federal procurements both in services and in products if enough necessary political will is there.  If the West received 30 percent of federal procurements of $8 billion instead of 11 percent as now, another $1.6 billion annually would be spent in Western Canada.  Elemental fairness in this area would of course help get a lot of unemployed Western Canadians back to work.

Crown Corporations

As of 1986, there were 53 federal Crown Corporations thought important enough to be "scheduled".  Only 16 of the 53 have their head offices outside the two Central provinces.  Why, for example, does the federal Farm Credit Corporation, which evidently does most of its business west of Ontario, continue to have an Ottawa head office?  Why is a good deal of the Energy Department not located in Alberta?  Or the Energy Section of the Canadian International Development Agency?  Why isn't the Asia/Pacific section of the Canadian International Development Agency located in B.C.?  And why isn't part of our federal Environmental department located in each of environmentally-sensitive P.E.I. and B.C.?

Take the example of Telefilm, our so-called national film and television production agency located in Montreal.  On telephoning their head office last year, I was told that Telefilm had financed 22 films in the previous twelve months, 14 in English, 8 in French.  How many of these were done outside of Ontario and Quebec.  One in Halifax.  I suppose it's possible that no-one else applied from outer Canada, but is it likely?

The Chairman of Telefilm indicates that the current administrative budget for its western office was $185,214, 1.6 percent of its national administration budget of $11.5 million.

Our largest federal Crown corporations should demonstrate an exemplary national attitude.  In late 1987, I wrote to the chief executive officer of each of them inquiring what portion of their employees live in Western Canada and what percentage of their goods and services purchases are made in the region.  A number of the worst offenders (eg. CBC) didn't reply within three months in substantive terms.  Even some of those who did provided some disturbing information.  In transportation, Air Canada has 25 percent of its employees living in Western Canada, compared to our roughly 30 percent share of our national population, but during 1986 bought only 12.7 percent of its goods and services in the region.  Canadian National concedes that fully two-thirds of its freight business originates and/or terminates in the West, but has only about 37 percent of its employees living in the region and overall makes only 25 to 28 percent of its purchases in the West.  It contends that western railroading is somehow less labour intensive than in the East.  VIA Rail, while conceding that 17 of its 22 Canada tours now feature western and northern distinctions, has only 19 percent of its employees living in the West.  Ports Canada has only 23 percent of its total employees living in the West although 42 percent of its overall operating expenses and 46 percent of its current capital expenditures are now occurring in the region.

The Canada Mortgage and Housing Corporation is doing reasonably well in the West in terms of employment (26 percent of total employees) but less impressively in terms of procurement (e.g. only 13 percent of furniture and equipment purchases).  The National Research Council has a dismal seven percent of its employees living in the West and made only 16 percent of its entire 86/87 expenditures within the region.  Defence Construction Canada has both 25 percent of its employees and expenditures in the West.  The Export Development Corporation has 13 of its approximately 500 employees living in Western Canada (Vancouver and Calgary only).  The Canadian Commercial Corporation, on the other hand, is now making more of an effort to be national in perspective.  Western suppliers of goods and services to foreign governments through the CCC amounted to only 8 percent of the total number of Canadian suppliers in 83/84, but by 86/87 were up to 19 percent.  The dollar amounts of the purchases by region would, of course, be a more meaningful indicator.  The agency admits that its recent improvement might be linked to adding a number of western suppliers to its source list since 1983.

Raising and Spending Ottawa Dollars

Fortunately, regional justice is becoming a growing concern for some academics, who have come to realize that an unemployed Albertan, Newfoundlander, or northern Ontarian must have more equality of action by Ottawa than has been the practice over many years.  Western and Atlantic Canadians paid for the old National Policy in considerable measure and we believe it is now our turn to be the net beneficiary of national policies.  More affirmative action is needed for all disfavoured regions.

One place for a New National Policy designed to strengthen the outer regions (not to weaken Central Canada) to begin is to recognize that knowledge-based industries can be located in many parts of Canada.  To illustrate, a university chemist friend of mine has pointed out that the high-tech products he orders from the U.S. come from many locations there, east and west, north and south.

In the case of Western Canada, let's have Ottawa for once recognize that our real strength is not rocks, wheat and oil but our people.  A study commissioned by the governments of the four western provinces in 1986 by the Science Directorate of the OECD assessed the general strength and needs of the four provinces.  It concluded that we westerners are well-equipped for a knowledge-intensive economy, this being attributed to our thirteen universities in the west, already existing quality technologies, and a diverse multicultural population.  The 1986 federal-provincial Task Force of Regional Development Assessment stated that "it is increasingly evident that...those sectors that are most knowledge-intensive are fastest growing and represent the most promising avenues for new wealth creation."

The federal government, and the country as a whole, can aid in the endeavour, for "public investment in university research, post-secondary education and training can, over time, have a significant impact on the development of specialized, knowledge-based regional centres..."  Note that the term development was used we westerners have not only the ability to continue the existing technologies, but to develop new ones as well.  This is beneficial not just for the West, but for Canada as a whole.

"Moreover," the task force study continued, "the development of such regionally based centres would act as a further stimulus to the expansion of the service and small business economies of the regions".  With the growth of the knowledge intensive industries, regional performances will increasingly be related to the skills of those entering the work force.  Again, this requires direct government commitment to invest not only in education, including literacy in light of the most dismaying results released by the Southam study, but also in the programs needed to encourage the characteristics of self-learning and initiation associated with the qualities of entrepreneurship.

A recent report on Job Generation and Wealth Creation process, by the Faculty of Management Studies of the University of Toronto, concluded that fully 55% of net employment growth in Canada between the years 1979 and 1982 was created by companies with less than 20 employees.  Most of these firms are service businesses, which happen to also form the majority of the western enterprises.  Small knowledge-based high-tech firms arise in the presence of higher education and research and development.

Lastly, the largest and most promising element in bringing the West into the Canadian Confederation is the proposed Free Trade Agreement with the U.S.

Present Trade Reality

Today approximately 77% of our entire exports of goods and services go to the U.S.; about ten percent go to Western and Eastern Europe, including the U.S.S.R.; and roughly 10 percent to Asian and Pacific Rim countries.  The rest go to many different destinations, mostly in the developing world.  For Western Canada, the Canada West Foundation estimated a month or so ago that about two thirds of our exports now go to American buyers.

Roughly 30 percent of every service or product we create in Canada is exported.  An estimated three million of us today depend on trade directly for our livelihoods.  As far as I can determine, 2-2½ million depend in whole or in part on the U.S. market.  Take away all access to that market, admittedly still a remote possibility, and approximately one fifth of all jobs in this country disappear.

Western Canada

On the premise that Western Canada holds about 30% of our national population, it seems reasonable to me to infer that a minimum of 600,000 western Canadians today depend on American customers directly for their pay cheques.  How many more depend on exports to the U.S. partly, or are involved in the importing, distribution and sale of U.S. goods here, unfortunately appears to be unknown, but I'm quite certain that it's a great many western Canadians.  If you're a public employee, teacher, retired person or small businesswoman, your ultimate economic security is thus closely bound up with the fate of westerners in the export sector as well.  Most of you here today are probably in the service sector, the new frontier of international trade.  World trade in services is now about $350 billion yearly and either you or some of your children may well be selling services either in the U.S. or elsewhere for a living.

Western Canada's major exports to the U.S. include a good share of the almost $3 billion in agricultural products of all sorts sold by Canadian farmers yearly in the U.S.  particularly grains, beef and pork, natural gas and oil, potash, forest products, and other minerals.  A number of these products, as you know, have already faced severe access problems under current U.S. trade practices the practices are often the real problem, not the laws themselves and in the absence of an agreement will face many more if the proposed Omnibus Trade Act, or even a weakened version of it, makes it through the U.S. Congress and the presidential veto.

As I do not have time to rebuke all the questions of those who fear a free trade agreement with the U.S., there is one question that I wish to address:

Some critics say the agreement will probably be good for our economy generally, but will weaken our sovereignty and should thus be rejected.

We must remember that the agreement can be terminated at any time by either country with six months notice if Canadians decide that it impinges too heavily on our economic independence.  For example, it appears that the agreement will make it more difficult for any future government of Canada to re-enact certain aspects of the National Energy program of 1980.  If you liked the NEP regardless of its consequences for Western Canada, as both opposition parties essentially did, you'll obviously dislike this feature of the agreement.

Do the critics also want us to renege on the agreement on an international oil program we signed because it too reduced our energy sovereignty?  Doesn't it have a reasonably similar consequence for 19 countries in times of oil shortages as the bilateral agreement has with one?  Indeed the provisions of the international oil program will take precedence over the bilateral agreement here.  The same might be asked of our membership in a host of international organizations, including the United Nations NATO and NORAD, and our full participation in numerous U.N. and other international treaties such as the Helsinki Final Act and the U.N. Declaration of Human Rights.

By agreeing to share our energy with the U.S. in times of crisis proportionally to the total supply of oil available in Canada, the U.S. in turn will drop its embargoes on Saskatchewan uranium, create no further restrictions on Canadian energy exports (which now amount to more than $10 billion and employ thousands of us across Canada in our oil, gas, electricity and uranium sectors), and allow Canadian access to the Alaskan oil fields.

There are today approximately 23 large industrial democracies in the world.  Virtually all of them have since World War II voluntarily surrendered a degree of independence in respect to the imposition of tariffs and related issues by entering into trade agreements.  Indeed, if Canada and the U.S. ratify this agreement, the only one of the 23 not to be in a trading community will be Japan.  In other words, a world trading pattern has been set whether Canadians like it or not.  If we can obtain some relief from the application of present and future American-trade laws, I think most Canadians are prepared to agree to some loss of sovereignty in respect of tariff-making and other trade issues only during the currency of the agreement.