Quebec and Ontario need an honest broker before they both get hurt
Quebec’s economic pressure on Ontario firms is a greater divisive force in Canada than the threat of arms by separatist extremists, Louis Hodgson (PC, Scarborough East) said yesterday. — Recent news story in the Toronto Globe and Mail.
One has the impression that certain financiers cannot conceive of any system in Canada other than Quebec’s economic enslavement by the omnipotence of Toronto. How else does one explain the protests and threats offered following Quebec’s decision to encourage our own firms in preference to those from outside? — Recent editorial in the Trois Rivières Le Nouvelliste.
BEHIND THE ANGRIEST SINGLE ISSUE so far raised between Frenchand English-speaking Canadians are a few understandable and probably negotiable facts. With forty percent of all Canada’s unemployed, Quebec is even more anxious to encourage industrial growth than most other parts of the country. What she is doing about it is hard to distinguish, in most respects, from what Ontario is doing with the same end in mind.
But Quebec has taken one or two steps Ontario hasn’t, including a recent decision to give local firms a ten to twelve percent preference when they are bidding against non-Quebec firms for provincial government contracts. As soon as Quebec made this scheme known loud demands went up elsew’here, particularly in Ontario, for retaliatory measures against Quebec firms. The louder these demands have become, the more frustrated have become the replies from Quebec. “Accusations of discrimination and threats of retaliation from industrialists in Ontario are so much hypocrisy,” Jean-Paul Gignac, a member of the Quebec Hydro-Electric Commission, said in a Canadian Press interview early in February, and Mr. Gignac’s language was relatively temperate.
Anybody less excited than the combatants has probably noticed by now that both parties to the quarrel are mainly right and slightly wrong, in charging unfairness against the Quebec preference —
which amounts to a tariff — an Ontario businessman is letting himself be seduced into hypocrisy. Ontario industry has grown up behind Canada’s tariff wall, subsidized by consumers in all parts of Canada, and the Canadian Manufacturers’ Association is still defending the tariff. When the international tariff scale is renegotiated at Geneva in May, the CMA asks that the federal government “resist pressures for large cuts in Canadian tariffs on manufactured goods,” and “resist any reduction of the Commonwealth tariff preferences.” If tariffs are fair for Canada, preferences in government spending that amount to limited tariffs are fair for Quebec — but that is not to say they’re wise in either case.
The statesman of this conflict, although he hasn’t said much specifically about it, is Premier John Robarts of Ontario. At about the same time the CMA was making its pitch to the federal government on behalf of tariffs, Robarts made a speech in which he said that “Canadians recognize the necessity of tariff cuts as a preliminary to placing their manufactured products on the world market.” He wasn’t, obviously, speaking for the CMA; hopefully, he may have been speaking for most other influential Canadians. Without saying so, Robarts was making the real case against the Quebec preference: not that it’s unfair, but that it will do Quebec more harm than good. By encouraging high-cost industry Quebeckers will be spending their money to no real purpose; Quebec’s economy, like Canada’s, can only grow substantially if it learns to be more efficient. By making it seem logical to Ontario and other provinces to retaliate against her products, Quebeckers will shrink the market for the goods they make; but in fact Quebec, like Canada again, needs larger markets to prosper. “If provincial barriers to free trade grow up,” Robarts said, “all the provinces will be worse off.”
This is the plainest kind of common sense to almost anybody who is not directly eligible for a tariff subsidy, and Quebec has shown acute common sense in most of the measures she has taken to stimulate employment and industrial progress. This makes us think that the federal department of trade and commerce might constitute itself an honest broker in this dispute, to the great advantage of the entire country. If Quebec is shown evidence that local price preferences will stunt her economic growth in the long run, and the angry Ontarians are reminded by experts that retaliatory preferences will merely double the damage to Canada, why, there must be at least a fair chance that an end to this noisy episode can be negotiated with no real damage done anyone.
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