Interview

With W. O. Twaits, cochairman, the Business Council on National Issues

July 24 1978
Interview

With W. O. Twaits, cochairman, the Business Council on National Issues

July 24 1978

With W. O. Twaits, cochairman, the Business Council on National Issues

Interview

After a career that began as a 58-cents-an-hour laborer with Imperial Oil during the Depression and ended as the company’s chairman, William Osborn Twaits is today retired and serves as cochairman of the Business Council on National Issues. Unlike trade associations, BCNI admits only chief executive officers (CEOS) as members, making it the most powerful gathering of top business in Canada. It is not, cautions Twaits, the voice of business, just a voice of business, which happens to include the heads of the Canadian Manufacturers’ Association and the Chamber of Commerce. The 150 CEOS, however, speak with a voice governments heed after a decade of poor communication. Founded to focus public attention and supply facts for debate on national issues through meetings with the prime minister as well as policy statements, BCNI has, for the past 18 months, been developing views on social and economic policy, government processes, capital investment, business cycle? and indexed pensions. w

Twaits spoke recently with Maclean's business editor Roderick McQueen.

Maclean’s: Are there any policy areas where you feel you've had some success so far?

Twaits: In the U.S. legislative process, it’s very much easier to see the positive effects, because you make your points in front of a committee and the committee accepts or rejects it. Our committee system in the House of Commons is not well developed. It’s a very frustrating experience to appear before a House committee. They do not have the continuity or staff to dig into a subject so they fully understand it. Go back to tax reform: It was very clear in appearances before the House committee that they didn’t understand the present tax system, and I make no apology for that remark. On the other hand, the Senate committee was knowledgeable. Under our sys-

You cannot distinguish between a country’s economic health and its social health

tern, legislation is thrown on the table without any pre-discussion and becomes politicized. Party lines develop. Then you hand it to a committee—but the committee’s on party lines, too. We should improve our committee system, give them adequate research facilities. Obviously that has some conflict of interest with the way cabinets like to operate, where they fi-

nally agree on a policy and then the parties fall into line.

Maclean’s: Isn’t there a paradox in your perceived difficulty in presenting a case properly to government on the one hand, and the general public view on the other, that big business has got enough clout?

Twaits: I hardly think that anyone could look at the scene over the past decade and say that business has had any clout with government. Legislation has been confining industry rather than helping it out. Maclean’s: Is one of BCNI’s goals to get more clout?

Twaits: I don’t think the word clout enters into it at all. BCNI stands on its own feet on the credibility of the material it presents; we are not standing up hurling stones. We always try and take a national viewpoint.

Maclean’s: If a particular company in the U.S. gets into a debate with government, it tends to get support from others in business. In Canada there doesn’t seem to be the same capacity.

Twaits: That’s exactly one of the things we hope the BCNI can avoid. When one industry comes under some kind of illogical and destructive legislation, that affects the whole economy and every other industry. If the mining industry is in trouble, then the steel industry is in trouble, the chemical industry is in trouble. You just can’t take a crack at one industry without affecting the whole thing, in particular if it’s a major industry.

Maclean’s: I recall hearing you say that Imperial Oil is under the thumb of375-odd regulations and statutes.

Twaits: Our industry was particularly open to this for many years, but now bureaucratic regulation has grown into almost every aspect of daily life, and it’s costly. It can’t be all positive. Another thing which governments are concerned with, and our society as a whole should be concerned with, is income support policy, whether that’s UIC or welfare or whatever. This is an increasing cost coming out of the taxpayer’s pocket. There’s no use just saying we’re going down the drain because governments are now taking 43 per cent of the gross national product. That’s a generalization. What you’ve got to do is dig in and ask are these programs doing what they’re supposed to do? Are they positive or are they negative? Can we afford them? Maclean’s: Who do you talk to and what is your relationship with the Canadian Labor Congress?

Twaits: We talk to the CLC executive, not about labor relations and wage rates, but about our views on the economy and possible courses of action. This is not a group where you expect to come out with agreement, it’s a dialogue group, and I think it’s a very useful form of dialogue.

Maclean’s: There was a point a year ago when your cochairman, A Ifred Powis, and Joe Morris met with Minister of Finance Donald Macdonald who talked about an historic breakthrough. What happened to the historic breakthrough and what has happened to tripartitism?

Twaits: It was a general, in his view, breakthrough that a business leader and a labor leader had similar viewpoints in connection with removal of controls. Maybe the occasion will come when something like that will happen again.

Maclean’s: There seemed to be a particular note of optimism at the time that has dissipated.

Twaits: I don’t think the optimism’s dissipated at all. I don’t suppose there’s emerged a single question which could lead you to that kind of a joint approach. I don’t necessarily expect that that one could be repeated. It could be and it may not be, but that doesn’t reduce the importance of having each group understand the other’s viewpoint. As these conversations mature,

we’re hoping we can develop a structured agenda where both sides will suggest topics, because in that kind of a discussion, or any kind of a meeting—even a prime ministers’ meeting—you’ve got to confine yourself to certain things or else you tend to digress all over the place.

Maclean’s: Is there a point in the future where you see a body representing business, labor and government meeting on a regular basis to exchange viewpoints?

Twaits: I don’t know, it could be. Labor historically and rightfully believes that they should put their position before government. BCNI believes it should put its position before government. To the extent

Businessmen who go into politics sacrifice their careers; they lose their capabilities

that we can meld those viewpoints, that gives added strength.

Maclean’s: The government’s working paper, The Way Ahead, suggested a consultative forum of 30 to 50 people representing business, consumers, farmers, etc. Why has that suggestion been such a non-starter with business?

Twaits: It was a non-starter with anybody who thought about it. Ifyou put that forum together, it merely becomes a hodgepodge of people within which the government can draw any form of consensus it wants. That is not a consultative mechanism. A consultative mechanism, in the advisory sense, is where people make an input based on some thought and study, not just

politics. The fisheries already have their developed system; Lord knows the farm organizations do and so on. Consumers are already well represented, anyway. You’ve got a department of consumer and corporate affairs, which some people call the department of consumer affairs.

Maclean’s: You smile when you say that. Do you feel there’s no corporate affairs side? Twaits: A lot of people looking at the Competition Act wouldn’t think the department of consumer and corporate affairs was striking much of a balance, BCNI has expressed itself on what we believe should be in the Competition Act, for example, to make the system work, but not strangle it. All business has been seriously concerned with the development of an effective new competition act. We don’t believe the legislation that came out both in the first instance and more recently in Bills C-42 and C-13, accomplishes the objective. It takes out a hammer to trap an ant. Maclean’s: Do any of your plans include mobilizing public opinion to assist you in making your case?

Twaits: No, I don’t think there’s any such thing as a business group, or any group, mobilizing public opinion. Public opinion should be informed and it should assume its responsibility in the democratic process. One federal minister told me that less than four per cent of his constituents ever contacted him. When you talk to people about this, the response you get is: “Oh, what’s the use of talking to my member? He’s going to vote the party line.”

Maclean’s: Yet there are very specific examples where public opinion has been mobilized.

Twaits: I don’t think it was mobilized, it’s a general reaction to forms of crime. That’s not like mobilization of public opinion on the subject of fiscal policy or monetary policy or what it means to the average citizen that we have a huge federal deficit. It’s a strange contrast. The American public are worried sick about their federal deficit. The accumulated Canadian provincial and federal deficits are very much larger proportionately, and yet the public doesn’t seem to be concerned. Sooner or later the government has to overcome this deficit either by extensive borrowing or by printing. Budget deficits are one of the greatest factors in inflation. If that issue’s not mobilizing public opinion ...

Maclean’s: Is there a feeling among CEOs that social policy is needed to make the country better or to create a better environment only for business purposes?

Twaits: Most CEOS think that is synonymous. There is no way to distinguish between economic health and social health. Governments have been living beyond the means of Canadians. Our social objectives have exceeded our economic capacity, so you won’t find any CEO who is not just as concerned with our social objectives as he is with our economic objectives. Maclean’s: In the past that’s very often been stated by the “what’s good for General Mo-

tors is good for the country,” comment which sounds, perhaps, more self-interested than it was.

Twaits: You don’t become a CEO or even a manager of a company these days without being thoroughly involved in the social health of the country. You can’t avoid it. Even if you were entirely self-centred, you just can’t operate a business without taking into account the balance between social and economic objectives.

Maclean’s: What specific areas do you see coming forward that might involve social policy?

Twaits: How much can we afford in the way of income support policy and what are they doing? Should there be a yearly review of programs, instituted to accomplish something, which automatically keep on going? Are they doing the right thing? Obviously uic has proved to be much more expensive than anybody ever contemplated, but did they contemplate it when uic in its present form was passed? Was it given adequate cost-benefit analysis? Another area is escalating health costs. Should there be a deductible? Are there ways that we can reduce what might be called unnecessary expensive diagnostic examination or hospital visits? These health costs are an enormous burden on society.

Maclean’s: What’s ahead for the next year as we come out of controls?

Twaits: I have been very unhappy with AIB controls. Controls have not worked in any country. You might almost parallel the rate of inflation with the tightness of the program. Firstly, AIB set a floor for wages, automatically asking for challenges and interfering with the normal bargaining process. Secondly, it has introduced distortions in the price system. Thirdly, some 85 per cent of prices under AIB control are well below permissible prices, simply due to competition. It will be a great help to the economy to come out of controls. We have not analysed this problem correctly. We used the Consumer Price Index as a measure of inflation; it’s a very poor measure. We’re not differentiating between what are true cost increases and inflation. For instance, if world prices for coffee or energy or something else go up—that’s not inflationary forces in Canada—that’s an increase in cost you can’t do anything about. What we’ve really got to start to deal with are the controllable causes of inflation within the country, not the symptoms. Maclean’s: Isn’t the argument there’s a difference between inflation which nobody wants and cost increases which you can’t prevent just an argument for creating a state ofmind attuned to continual cost increases? Twaits: No, I don’t think so at all because over 80 per cent of the prices under AIB control are well below the limits of AIB today. Competition has driven the price down. If you don’t have increases in the price of oil, you can’t produce oil in the North Sea or you can’t produce oil in the tar sands—it’s just more costly to get at.

And there are other things in the same category.

Maclean’s: Then you don’t see any price bubble effect when the A IB comes off? Twaits: I don’t see any bubble under existing circumstances. There may be some excessive wage demands but I’d leave that to the system. Once you remove controls, then you haven’t set a floor level for bargaining.

Maclean’s: You’ve taken one approach to getting input into government. Another is to have more businesses allow their employees either to run for Parliament or get involved in the political process.

Twaits: One of the unfortunate things that

No one who looked at the last decade could say business has any clout with government

has developed in Canada—as opposed to the United States and the U.K.—is that if a chief executive expresses his preference for a political party, it immediately becomes in the media a corporate position. He really has to look like a political neuter. If I were head of an American company, I could stand up and trumpet my Democratic views as much as I want and nobody says that company is a Democratic supporter.

Maclean’s: What is it within the psyche o) Canadians that hangs labels on so quickly? Twaits: I don’t know. I’ve really never understood it. A businessman entering politics sacrifices his career. Removed for a very few years, he has lost his capability. You can’t say,“I’ll reserve your position for

you.” Somebody’s got to move in. You don’t have to be out very long before you lose confidence in the field. He goes in and he sits as a back-bencher and he’s totally frustrated. He’s used to having a specific sense of responsibility and accountability and he feels he can’t do anything. This is why you see so many lawyers in politics. They can go back into law as a partner, which some of our recent ministers of finance seem to have done with great success.

Maclean’s: The approach of running for Parliament as a businessman is a nonstarter, then?

Twaits: I don’t see it as a way of influencing legislation.

Maclean’s: Yet in the U.S. you get Treasury Secretary Bill Simon and others who switch back and forth.

Twaits: To the advantage of both sides. They come in and out of the cabinet. Clearly there are grounds for looking at our whole governmental process to make it more effective. No question about it. Maclean’s: There seems to be a better atmosphere now between business and government than there was, say, two years ago when the prime minister was musing about the new society.

Twaits: Well, the prime minister and the premiers are stressing increasingly that if we’re going to produce jobs and reduce the unemployed, we’re going to have to have a healthy private sector, that government, any government, does not make jobs. This is a much healthier atmosphere. Aside from international conditions over which we have little control, some measures are necessary to relieve the mining industry so it can start to work again, to encourage exploration. This tax resource battle between the provincial and federal governments is an absolute disgrace. Once an industry is hurt, you can’t give it a shot of penicillin. Lead times to all these programs are too long. What is very necessary in this country is to establish a period of confidence and stability where you’re not going to have sudden, inhibiting legislation under which you don’t know how to plan or finance. We’ve got a temporary reprieve in the form of a cheap Canadian dollar but you can’t base your competitive position on that.

Maclean’s: Is Canada yet to that period of confidence?

Twaits: Not yet. What we want to do is recognize we have a widespread mood of defeatism in this country, with the exception of Alberta. We have a high ratio of resources to people, a competent work force, great transportation and communications system, and we have the great advantage of proximity to that U.S. market. Those are pretty basic advantages that some countries don’t have. Let’s strengthen our strengths and not try and continually return to what we see to be perceived weaknesses. We’ve got to start competing with the U.S. That’s where 27 per cent of our standard of living comes from, fip