At the time this
article was published James Gillies was a professor in the Faculty of
Administrative Studies at York University. This is a revised version of his
presentation to the Special Committee on Reform of the House of Commons on
April 17, 1985.
I do not believe
we will resolve most of the major issues facing Canada today, particularly the
economic issues, unless there is reform of our institutions of government particularly
Parliament. This belief is based upon several facts: first, the capacity of the
legislature to fulfill its historic role of monitoring policy initiatives has
been overtaken by the sheer increase in the size of government; second, no
changes have been made in the operation of the legislature to complement the
changes which have occurred in the executive branch of government; and third,
changes which have taken place in the world economy require a totally new
approach to economic policymaking. The creation of a new consensus about
national goals must begin in a reformed Parliament.
The Changing Role
The role of
government in our society has changed markedly since the end of World War II.
In 1950 it is estimated that about 2 per cent of the goods and services
produced in the nation were produced by governments today the comparable figure
is estimated to be 20 percent. In 1950 governments employed less than 10 per
cent of the labour force; currently it is estimated they employ 25 percent.
This extensive expansion of activity has led to a great increase in the number
of government departments and an incredible expansion of Crown agencies.
Indeed, in 1985 it is estimated that there were more than 800 Crown
corporation. in the nation and that together they spent more than the rest of
the government. In short, the government of Canada has become an incredibly
complex institution so complex that there are those who argue that it is really
out of control and that we no longer have any effective management of the
The growth in the
responsibilities of government have led to major changes in the way the
executive side of government operates. In the early days of Mackenzie King's
administration before World War II, when the cabinet met there was no agenda,
no minutes, no records of decision simply discussion of the things which I
suppose Mr. King thought were important. The country in those less complex
times was run by strong Ministers with strong departments. Mr. C. D. Howe, held
a portfolio associated with economics for twenty-two years and Mr. Gardiner was
Minister of Agriculture for a similar period. In the latter part of his time in
office, when he was Minister of Trade and Commerce, Mr. Howe started his
working day by telephoning ten of the leading chief executive officers of
Canadian firms, who were all his friends, to gain their views on the
significant issues of the time. Ministers knew everyone who was related to
their sphere of activity and everyone knew the ministers. It was an age of
point is, however, not that ministers knew everyone, but rather that they had
immense power. If Mr. Howe wanted to do something he simply did it. The Cabinet
was truly, in most instances, a ratifying body which gained its solidarity
because of mutual support of ministers for each other, not because of any joint
decision making processes.
were very much like their ministers. They stayed in one department for
considerable periods of time. They became acquainted with the leaders in the
various sectors of the economy which their departments served and, of course,
they, too all knew each other. Co-ordination among government activities, if
necessary, took place when the deputies met for lunch at the Canadian Club in
the Chateau Laurier or on the weekend at the Gatineau Fishing Club.
expanded its responsibilities and the issues became more complex the informal,
"elite accommodation" approach began to break down. By the time Mr.
Diefenbaker became Prime Minister the task of co-ordinating government
activities strained tile existing approach to almost the breaking point and in
the Pearson administration it was clear that reform was imperative.
approach to the problem was to create ad hoc Cabinet committees to deal with
issues which crossed departmental lines and about which agreement at the deputy
or ministerial level was unattainable. As time went by the Committees were
transformed from their ad hoc form to permanent status. By the end of Mr.
Pearson's time as Prime Minister there were 10 standing committees of cabinet,
including one for Planning and Priorities which had as its major responsibility
the setting of the direction of the government something which, heretofore had
always been a responsibility of the full cabinet.
When Mr. Trudeau
became Prime Minister he further developed the system. Under Mr. Trudeau,
except in more or less emergency situations, nothing could come to Cabinet
before it was vetted through a cabinet committee. Under such circumstances the
days of the strong, independent ministers and departments was over. Mr. Howe
could not have operated in a Trudeau cabinet. indeed, many other people who had
their first experiences in government in the St. Laurent-Pearson period found
it very difficult to adjust to [lie new system which saw literally, a massive
transfer of influence from the departments to the central agencies of the
government. All the cabinet committees, of course, had to be staffed and that
staffing was done by the Privy Council Office. The Clerk of the Privy Council
and his associates set the agendas (in consultation with the appropriate
chairperson), wrote the minutes, and briefed the Prime Minister about committee
discussions. Moreover, every memorandum to cabinet was vetted through the PCO.
Since in Ottawa, as everywhere, power and influence come from two things
access and information the power of the PCO increased dramatically.
The transfer of
influence and power from the ministers and departments to the central agencies
not absolutely but relatively resulted in the loss of one of the most
important conditions for effective government in a democracy. Democratic
governments function under the consent doctrine government governs with the consent
of the governed and the governed have the right and the responsibility of
having an input into the formation of the laws under which they live. In
Canada, this latter condition was always fulfilled through the ministers and
the departments. However, once power and influence was transferred to the
central agencies that route for input was effectively closed. The officials in
the central agencies took the position that their job was to run the machinery
of government not to make policy and so they had little or no contact with
anyone outside of government.
since the early 1970s because the traditional way through which citizens had an
input into the formation of public policy was lost and not replaced with any
other system, people became increasingly alienated from their government.
In the area of
business the extent of this decline in the relationship between the public and
private sectors is well illustrated by the analysis of Prime Minister Trudeau
who stated that if you want to understand the interaction between business and
government in Canada you have to think of it as "the new Canadian two
In short, by 1981
the traditional close relationship which had characterized various sectors of
the economy had broken down. It had done so because members of the private
sector no longer had adequate impact on the formulation of the laws under which
they were governed. Moreover, there was a general realization among people that
this unfortunate situation had developed because of the movement of power to
the central agencies. And the discouragement with the situation was reinforced
by cynicism every poll showed that most Canadians believed something could be
done about the situation by reforming parliament, but they also believed that
there was little likelihood that parliamentary reform would take place.
Economy and Parliamentary Reform
The world is
changing dramatically. It always does. Indeed, one need only recall that in
1897, at the time of Queen Victoria's Diamond Jubilee, Great Britain was
unquestionably one of the richest, most powerful, nations in the world and that
today, she is one of the poorer members of the European Common Market to
realize how rapid and how dramatic change can be. Nations must accept the reality
of change, and understand that the way in which they accommodate to it,
determines to a very large degree the probabilities for prosperity in the years
Last year I was in
Pusan, South Korea. Thirty years ago Pusan was a fishing community now its
major suburb, Ulsan, is the site of the largest shipbuilding companies in the
world and also a major producer of automobiles. In 1960 South Korea produced
little or no steel today it is a force in the world steel market. In 1981
Japan produced more cars than any country in the world. There are now 85
countries with automobile assembly lines. Nigeria, Saudi Arabia and Mexico all
have their own chemical industries bases on their own feed-stocks. In 1975 at
their meeting in Nairobi, all the UNCTAD countries (that is nations who are
members of the United Nations but not the OECD) took as their goal to have 20
per cent of the world's manufacturing within their boundaries by the year 2000.
At the time they had about 7 per cent they now have almost 18 and will easily
exceed their goal. In short, it is a new world.
The reason for the
change is easy to explain. Today technology and modern management can be
utilized anywhere. The plants in South Korea are as modern as any in the United
States and Canada. The high technology combined with lower wage rates means
that production costs are less. So that is where manufacturing is taking place.
Assembly line operations are being transferred from the old industrial nations
to the new. And the transfer will not be reversed, not only because of cost
differentials (which might in time be overcome) but also because many of the
older industrialized nations simply no longer have the type of manpower
necessary for mass-production, assembly type activities.
The nation most
affected by these changes is the United States. However, adjustment in that
country has been rapid and it is experiencing substantial prosperity a
prosperity built on a new base, the base of knowledge rather than the
traditional one of industrial and service. Growth in the United States is in
the high-technology industries in the sunbelt states; adjustment and decline is
in the old assembly line based "rust belt" states in middle America.
What does all this have to do with Canada? The answer is, a great deal. Canada
is a trading nation. About 25% or more of the gross national product is
produced through international trade (more than any other industrial nation in
the world) and almost 80 per cent of that trade is with the United States. And
so a changing U.S. economy had grave implications (and opportunities) for
Canadians. Indeed, to understand the importance of the U.S. market to Canada
one need only to reflect on what would happen to the Ontario economy if there
was no Auto Pact. It has to be alarming to Canadians that in 1984 the United
States ran a trade deficit of $120 billion the largest deficit in history and
yet the Canadian economy was not operating at full capacity. Traditionally when
the U.S. economy has boomed so has the Canadian; but currently this is not the
case, which suggests that the current economic problems in Canada are not of a
cyclical, but rather a structural nature.
The reality, is
that Canada's share of world trade is declining from 5.0 percent in 1970 to
3.75 percent in 1980. Commodity prices are low and we are losing market share
in those markets where we are major exporters. Third world countries are highly
competitive in the production of most of the things which Canada exports.
Nickel is being produced at low prices in New Caledonia, copper in Zaire, oil
and gas in Mexico, Venezuela and the Middle East ,it far lower costs than
Canadian. Australia is dominating the Pacific Rim market for coal and Chile is
exporting newsprint to the United States.
The Japanese have
a brilliant strategy with respect to resources. They are financing their
development in all parts of the world with the simple goal of always having
supply greater than demand, thereby, keeping prices low and supply guaranteed.
It is difficult, baring a war or other catastrophe, to foresee the terms (if
trade turning in Canada's favour in the near future.
policy has always been based on selling resources, whether they be fish, furs,
gold, paper, hydroelectricity or gas, to earn the foreign exchange to buy the
goods we wanted and service the debt on borrowings. However, even in the most
prosperous trading years seldom have Canadians been able to sell enough to earn
sufficient foreign exchange to pay for all imports and service all debt. In
fact, in every year but four between 1952 and 1982 there was a deficit in the
current account of the balance of payments. But why should this be? Why, one
must ask, has Canada never developed as a mature industrial nation? Why after
importing capital for over 120 years have we not developed an economy which can
support itself? Are the premises oil which economic policy has been based for
so long inappropriate?
are problems with Canadian domestic economic policy. For nearly fifty years
Canadian policies have been based on the macroeconomic theories of Lord Keynes.
And they worked reasonably well. During most of the post-World War II period
there has been reasonably full employment and price stability. There was always
a trade-off between the two. Excessive inflation was dampened by lowering.
consumer disposable income through tax and government spending policies.
Excessive unemployment was attacked by the reverse (if the same policies.
However, by the mid1970's the tradeoffs between tile two no longer seemed to exist.
All of sudden there was both inflation and unemployment Keynesian policies were
no longer effective.
No government, of
course, can avoid attempting to resolve economic problems. To do so would
ensure defeat; moreover, it would be an abdication of responsibility.
Consequently, with tile failure of Keynesian measures there was an effort to
find new solutions to the unemployment and inflation problems, Since
macro-policies did not work it was natural that policy makers should attempt to
find solutions through using micro-measures, that is measures designed to
change activities in individual markets and sectors. Bailouts of failing firms
became common place, restructuring of industries became part of governments'
responsibility. Economic policy making became basically ad hoc policies were
put in place to handle each individual situation as it developed. Such an
approach leads, of course, to a proliferation of policies, many of which work
against each other with the ultimate consequence that they all fail. Without
some integrating overall strategy such an approach cannot work.
If the Canadian
economy is to perform at anywhere near its potential in the years ahead the
premises oil which both national and international economic policies are based
must be re-examined. However, this cannot be done in a vacuum. There has to be
consensus about the goals of the nation before policies can be put in place.
What do we want to do? Is our focus to be on wealth distribution or wealth
creation? As social policy are we going to maintain, through subsidies,
inefficient organizations in operation? Is Canada's future with more free trade
or with higher tariffs? In short, what ire our goals?
But how do you
decide about national goals? And how do you develop the policies essential for
the goals to be carried out? It is not in easy thing to do. During the 1970s
the government attempted to do so through a consultative process with labour
and business without success. Efforts have been made to reach a consensus about
goals at Federal-Provincial conferences with the same result. In spite of
protestations from then Premiers Lougheed and Davis that something should be
done, and truly eloquent proposals from Premier Bennett and federal
representatives no consensus about economic goals has ever emerged from such
meetings. So where can a consensus be formulated? And most importantly, where
can it be arrived at with everyone effected by it having some input involved in
its formulation as must be the case in a democratic, pluralistic society.
The Role of
system, of course, is based on the fusion principle, not one of check,, and
balances. But is this fusion between the executive and legislature appropriate
in an era when problems are so complex and when government does so much? Is it
not essential to have checks and balances in such a large system? Is it not
essential to have inputs from as many sources as possible when policy is made
in such difficult times? And most importantly when the traditional process by which
people have always had an input into the formation of the policies under which
they live has been closed (because of the change in the operations of the
executive side of government) is it not absolutely essential to develop new
procedures so that this imperative part of the consent doctrine is maintained?
The answers to
these questions is yes. The only way, however, that they can be answered
positively is through reordering the parliamentary system so that the
legislature has some input in the formation of policy. As the nation approaches
the twenty-first century there is only one place where strategies can be
developed for dealing with the economic problems which Canada is facing and
that place is a reformed parliament. Only a reformed House of Commons and
committee system has, all the credentials essential for creating a consensus
about the economic goals of the nation and the policies necessary to fulfill
What reforms are
necessary in order that committees can play their proper role? Some of the
changes are obvious committees must have appropriate staff support so that
they can effectively examine witnesses. They must be able to call whom they
wish, and most importantly, on many issues they must operate without the
"rules of party unity" the Whips must be off. Members, on broad
economic issues, must be able to sit as individual members attempting to arrive
at a consensus about what must be clone in the national interest.
Committees must have
calendars. If they are to play a role in analyzing and creating economic policy
positions there must be a regular system whereby the Minister of Finance
presents an economic statement in the fall committee. The committee in turn
must call the most expert witnesses available to analyse the statement and make
recommendations as to its value. The Committee must then make a report to the
House where it must be debated and a free vote taken on its contents. The
Minister of Finance would, of course, not be bound by the results of such a
debate be he would certainly ignore it at his political peril.
When I was a
Member of Parliament economic debate in committees was useless. The Governor of
the Bank of Canada and other officials would appear but it was all cosmetic
nothing ever resulted from it because the Committee had no power and little
However, if the
Governor of the Bank of Canada's testimony was examined by the most expert
witnesses available from throughout the country and he was asked to answer
questions prepared by the staff economists of the Committee, and if a report
went to the House, then a debate about policy in this country would be joined.
Moreover, if the debate were televised it would become one of the most
important elements of parliamentary activity.
At the present
time there is no place in Canada where the economic issues of the nation are
fully and thoroughly debated. The times are too perilous to permit the luxury
of economic policy being made simply by the executive branch of the government.
The legislature must also become involved. And indeed it is admirably suited to
do so. Committees are permanent, representative and can have influence and
power. No other institution in the nation has these characteristics only
Committees of Parliament can provide the essential forum for the hammering out
of a consensus on the economic goals of the nation.
The reality is
that there must be a re-examination of both international and domestic economic
policy in Canada. If Canada is to be a competitive force in world markets
difficult decisions must be made about the way in which the nation should
develop. In short there must be a new consensus created about where the nation
is going and the policies that must be enacted to fulfill those goals. A
reformed parliament is the only place where this essential condition for the
creation of appropriate economic policies for the nation can be fulfilled.
In order for
committees to operate effectively there must be reform not only of rules and
regulations but also of attitudes. The chairman of a parliamentary committee
must begin to have the same degree of prestige as a 'minister of the Crown.
They should be paid the same and it should become accepted that a person can
make as successful career in parliament as a legislator as a member of the
change would mean a larger role for Parliament. It would mean some diminution
of the "fusion principle". It would bring some checks and balances
into the system. Would that make the parliamentary system somewhat more like
the congressional? Perhaps but does it matter? Clearly not. What one is
searching for is an institutional arrangement that serves the Canadian people
best that permits the formation of better economic policy for Canada. It clearly
makes no sense to elect 282 people to Ottawa, appoint 40 as members of the
Cabinet, another 40 as parliamentary secretaries and leave the rest with little
else to do other than ratify what the executive has done. Prime Minister
Trudeau was 100 per cent incorrect when he stated several years ago that ten
minutes from Parliament Hill MPs are nobodies; on Parliament Hill MPs are
nobodies back in their constituencies they might be somebodies.
Parliament have never been able to represent directly the interests of their
constituents. The best they can do is to try influence their parties position
with respect to an issue within the confines of the caucus. As long as citizens
felt that they could have an impact on policy through cabinet ministers and
departments the fact that there was no other manner in which they could have
some input into the formation of policy did not matter. But with the decline in
power of the ministers and departments the traditional method of influencing
policy has gone. It must be replaced and the only way of doing so is through
giving influence and power to MPs and this is possible only through giving
power to committees to help formulate policy. Not only is it the only way to
bring back "the consent doctrine" but it is tile only way to get
effective economic policy developed in Canada.
they are to be viable, must change. If they do not they die. In 1965, for
example, when the Economic Council of Canada was organized it played an
important role in the nation as a place for the development of medium term
policies. There was no other institution in the nation quite like it at the
time and it undertook some interesting studies. However, the impact of the
studies was at the very best marginal because tile Council had no power base
and it has no power base today so its influence is still marginal. What has
changed, however, is that there has been a host of organizations similar to the
Council the C.D. Howe Research Institute, the Niagara Institute, the Conference
Board in Canada, et al. established that do studies similar to those of the
Council and therefore there is really no function for the Council to perform.
Indeed, the Council should be disbanded and the staff transferred (or at least
part of it) to the jurisdiction of the Standing Committee on Finance, Trade and
Commerce to assist the Committee in preparing for hearings and writing reports.
By changing the nature of the functions of the institution its viability could
And what is true
of an institution such as the Economic Council of Canada is equally true of our
greatest institution Parliament. Only through change and reform can it retain
its rightful position as the most significant institution in the country;
without reform its prestige, power and position will continue to decline and
true parliamentary democracy in Canada will be lost.
There is a
widespread feeling among the people of Canada that the institutions of
government particularly Parliament are incapable of dealing with the issues
before the nation in an effective fashion and as usual the people are correct.
People are not calling for reform for the sake of reform they really are not
sufficiently versed in the way in which the institutions operate to know precisely
what changes should be made but they do know that something should be done.
They know that the economic policies of the past few years have not worked
well; they know that the world is changing dramatically and that Canada must
change with it; they know that the status quo is not a viable option. And they
want institutions that can deal effectively with developing issues, and they
want to have their input into proposed policies.
What are the goals
of the country? How can they be established? Who should establish them? For
example, how, in a pluralistic democratic society such as Canada should the
question of whether we want free trade with the United States be decided?
Surely riot by officials in government departments. This great question should
be debated before the elected representatives of the people of Canada by all
interested parties premiers, bankers, union leaders, consumers, businessmen,
economists, farmers, et al. in televised hearings so that all Canadians are
informed of the issues in an effective manner. But the only way that this can
happen is by reform of Parliament.
I was a Member of
Parliament for seven years. Many people ask me if I enjoyed it. I answer, yes,
because I found it an interesting experience and I admire people who serve in Parliament.
But then, I also say no, because Parliament as it is now organized is so
ineffective. It is all show and little substance. How wasteful of resources and
talents. And how sad when it could be, appropriate reforms, the most dynamic,
effective institution in the country. As we approach the end of the twentieth
century it is clear that Laurier's prediction all-out the twentieth century
belonging to Canada was wrong. But we do not need to fail him in the
twenty-first. We must and can reform our institutions of government so that
effective policies can be made to assure economic prosperity in the future
prosperity that depends on effective new policies built around a new consensus
on economic goals that can only, be formed in a democracy in an effectively