Speech to the Burlington Chamber of Commerce, December 13, 1979
It has been evident for some time that fundamental problems face the nation, and that they will be solved only if governments and citizens are prepared to take difficult decisions now, in the interest of building a stronger Canadian future. Tough decisions are always easier to talk about than to take -- and some suggest a minority government should be particularly cautious.
It is important for the nation to know that I do not intend to let the minority status of our government stop us from attempting the basic reforms we were elected to achieve.
If those reforms are stopped, the only reason will be the opposition of the Liberal and the Socialist Parties -- whether the question is tax credits for homeowners, energy self-sufficiency for Canada, reform of our Parliament, or cutting the cost and reducing the deficit of government. We have introduced major initiatives in all of those fields -- and on one issue -- tax credits for mortgage interest and property tax -- are facing what amounts to a filibuster in Parliament now. We intend to see the tax credit measure through this calendar year, so Canadians can claim it this tax year, and we will do that even if it means having Parliament sit Christmas week.
The budget came down Tuesday and, as we warned it was not a sunshine budget. The size of the budgetary deficit we inherited -- the fact that we are paying 8.6 billion dollars as a nation in annual interest charges on our debt; approximately $365 per person this year -- meant that, to get that debt down, some taxes had to go up. The increases range from 1 cent extra on a bottle of beer to 5% extra on the tax paid by every corporation. This year the government had to borrow $10 billion to finance its spending. By increasing government revenues, and keeping government's spending at or near zero in real terms, we hope to cut that borrowing to less than $5 billion by 1984. For the foreseeable future, such new expenditures as we authorize will be to strengthen the Canadian economy, whether through job creation, capital projects, research and development, export promotion, or other investment in growth. It should be understood that, where the old government gave a priority to social policy and to language policy, we give our priority to economic policy and to energy policy.
It also should be understood why we are so determined to reduce the federal deficit. We see a lower deficit as absolutely essential to achieving our far more important goals of lower inflation and lower unemployment. The deficits created by the previous government -- larger this year than the entire federal budget during our Centennial Year of 1967 -- have become such a drag on the economy that they are creating inflation and unemployment, not solving them. They are pushing up interest rates, they are claiming capital resources that otherwise would be available for job-creating private investment, and, perhaps worst of all, they stand as a message from Ottawa that you can continually spend beyond your means. If large deficits could solve our economic problems, we should have a very healthy economy, because we have the largest deficits in our history. Canada's recent record put the lie to that argument -- and we intend to change the record, and cut the deficit.
But I did not come to Burlington today to talk about deficits. I am here to talk about energy -- about why this nation, which is energy-rich in a world that is energy-poor -- has to establish today a comprehensive long-range national energy program. More particularly, I want to tell what our energy program will do to help build Ontario.
Let me start with one distinction. The policies of the old government focussed on petroleum, on price and on the short-term. Our program looks beyond petroleum, to other energy sources; beyond price, to security and variety of supplies; and beyond the short-term to give Canadian industries a permanent competitive advantage over the world.
New oil prices will take effect July 1st, 1980. Well before that time, we will have in place a federal tax which will take from the companies all of the new money they do not need to carry on new explorations or production. Over five years, that will yield more than 6 billion dollars, and all of that money will be invested in energy projects. We will establish a new financial institution, the Canadian Energy Bank, to help Canadians invest in Canadian resource development, particularly in frontier regions; projects like pipeline construction, which need high front-end financing; development of hydro, coal and more experimental sources. We will help fund home insulation, furnace retrofits, fuel substitution, urban transit, and other conservation measures. We intend to work with Canadians to examine or develop every potential energy source, from biomass to tidal power, from wood waste to nuclear.
Now what does that mean to Ontario? Most quickly, most painfully, it means higher prices. But they are prices with a purpose. And the purpose is to bring Ontario energy security, competitive advantage, and jobs.
Let me deal with those in order. Today, Canada depends more upon foreign oil than it did last year. Next year, with the old policy, that dependence would grow again. On a national basis, Canada's net oil imports this year amount to 50 million barrels; if nothing is done, that figure would climb to 200 million barrels by 1985 -- assuming we did get the oil. We are relying more and more on energy supplies over which we have no control, and on which we simply cannct depend. The evidence of that is on our television screens every night. Today the problem is in Iran; tomorrow it could well be in another country on whom we now depend to fuel our cars and heat our homes and run our industries. I do not intend to let the industrial future of Canada depend on OPEC or the Ayatollah.
If we were a country like Japan, and had no energy resources of our own, we would simply have to accept that we were a captive of world oil politics. But we are not that kind of country. Almost alone among western nations, we have the energy supplies in Canada to meet Canadian needs. We need not be an energy hostage to any nation -- if we are prepared to do what is necessary to develop our own energy potential. That starts with price, because our present low and subsidized oil prices do not encourage producers to explore or consumers to conserve. The hard truth is that higher prices are the key to more energy production, more energy conservation, and, most important, more energy security in Canada.
The second advantage to Ontario is that our program provides a large and permanent competitive advantage for Ontario industries against American industries. Under the oil pricing agreement of the old government, Canadian prices could rise all the way to American level. Under our program, Canadian prices will not rise above 85% of American prices. That 15% competitive edge for Canadian industry is particularly valuable for this part of Canada, where industry is already established, and where domestic and American markets are close at hand.
The third great advantage in that our program of building Canada's resources means new jobs, new growth, new money for Ontario industry. In the next ten years, more than 100 billion dollars will be spent on Canadian energy development on finding and extracting new supplies, and on building distribution systems to bring supply to people and to industry.
Every region of this country will share in that energy investment. But the greatest economic impact will be here in the industrial heart land of Canada.
New energy.projects mean new markets for steel, for machinery and equipment, and for other support services. Even when the projects are located elsewhere, much of the buying is done here in Ontario. It is estimated, for example, that 40% of the Canadian content in the Alaska pipeline would come from this province. About 15% of the investment in a new tar sands plant will be for Ontario products and Ontario services. And that is only the direct economic benefits. New wealth creation means new demands for automobiles, refrigerators, toasters, and other manufactured goods -- and 50% of the manufactured products made in Canada are produced here in this province.
Energy developments can mean real benefits for Canada, too, in our economic dealings with the rest of the world. As you know, we now have a deficit of more than 7 billion dollars a year in those dealings; energy can help us cut that deficit and thereby strengthen out dollar and ease interest rates. Projects like the tar sands involve a new generation of oil extraction technology, applicable and exportable in the future to other parts of the world. We are determined that Canadians share in that technological advantage, and thus in the world opportunities that lie ahead.
If we do our job well in finding and developing new energy, we will have surpluses in some commodities which can be exported at premium prices. That is precisely what has happened with natural gas. Thanks to special incentives initiated by the government of Alberta, and the all out efforts of several Canadian companies, we now have a gas surplus well beyond what we can consume in Canada in the foreseeable future, even with large scale substitutions of gas for oil. That allowed the National Energy Board -- and our government -- to approve additional export contracts that will earn more than 3 billion dollars a year for Canada, help reduce our balance of payments deficit, and put new capital in the hands of those Canadian companies who want to get on with the job of finding and developing more energy for our country.
That future is there for Canada. But we cannot sit and wait for it. We have to go out and work for it. As John Crosbie said in Parliament yesterday, there is not gain without pain. I have spoken about the advantages to Ontario and Canada, of energy actions. But there are also high costs if we do nothing.
One cost is that we become more exposed in an unstable world.
A second is that we would continue to waste precious energy. Our prices are artificially low, so we waste energy more than any of our neighbours. So far this year, for example, gasoline consumption in this country actually is up almost 5%. By comparison, according to the latest figures, United States consumers are cutting their gasoline consumption by about 4%. We will not achieve energy self-sufficiency by 1990 if we continue to treat energy as a cheap product that we can afford to waste.
There is every reasons to believe that Canadians will respond to higher prices by practicing energy conservation where it counts -- in our daily lives. When the OPEC cartel pushed prices dramatically six years ago, Canadians did respond especially by switching to more energy-efficient automobiles. Over the next four years, the percentage of total auto sales claimed by small and compact cars rose from 44% to 55%. Studies by officials in our Energy Department indicate the increases of gasoline prices announced in the budget should reduce demand by about 3% next year. That would mean a gasoline saving of more than 200 million gallons during 1980.
A third cost is that low prices mean less production. The cheap oil is gone in Canada. Conventional oil wells in Alberta are running out. More and more of our new oil and gas supplies are going to have to come from non-conventional sources -- the tar sands, heavy oil deposits on the frontier -- and those supplies are both riskier to find and more expensive to produce. Either we pay a fair price for those risks and expenses, or we face the prospect that industry will turn its attention and its resources elsewhere, where it judges the return to be more advantageous. During the past five years, we have been consuming an average of 648 million barrels of oil each year, and adding barely 100 million barrels to our own proven reserves.
A fourth cost is in dollars. We maintain a one price system for oil in Canada. That means the federal government subsidizes the difference in cost between domestic and imported oil. This year, we are paying out more than 2 billion dollars in subsidies under this program. If no action is taken, that program will cost Canadian taxpayers more than 3.5 billion dollars in 1985.
One result of that subsidy program is to reduce the incentive to develop alternate energy sources, or to use fuel cheaper than oil. As oil becomes more expensive, other fuels become more attractive -- and there is suddenly an incentive to develop the other great energy potential of Canada, including many renewable resources. It makes no sense to so subsidize the use of a wasting resource that we frustrate the development of renewable resources.
As I said, I came to talk about the positive impact on Ontario of our program to make Canada self-sufficient in energy by 1990. Naturally, I have spoken of the particular advantages to your province. But, of all Canadians, the people of Ontario have always been the first to look for the Canadian national interest in a program or a problem. And I want to conclude today by indicating what this policy can mean to Canada as a nation.
Economically, we live in a world that becomes more competitive and more precarious. Many nations face the future in fear. We are one of the few who can face that future in confidence because, in addition to our present development, we have an abundance of energy resources, in a world where they are scarce. In an earlier age, some saw Britain's island location as a guarantee of weakness. She used that location to build a navy which dominated the world. We do not seek world dominance, but we should be quick to build on the special strengths an Energy Nation enjoys in the 1980s and the 1990s.
Geographically, energy is a strength which is spread across this country, from the Hibernia well, to the Donkin Mine, to the solar experiments and windmills of Prince Edward Island, through Churchill Falls and James Bay, Pickering and Kincardine, the Lower Nelson and Lloydminster, to the oil and gas fields of Saskatchewan, Alberta, British Columbia and the immense North. It is a resource of all our people, found in all our places, and can help the nation grow together.
For some nations, energy is a problem. For Canada, it is an opportunity. My government was elected to build on the potential of Canada. That is what we are doing.
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Source: Clark, Charles Joseph. Notes for a speech by the Rt. Hon. Joe Clark, Prime Minister of Canada, to a luncheon meeting of the Burlington Chamber of Commerce held at the Burlington Golf and Country Club Burlington, Ontario. Ottawa: Office of the Prime Minister, 1979. 12 p.