Published on May 11, 2016

Last week, I attended the Manning Networking Conference in Ottawa. I had the pleasure to meet one of the greatest defenders of freedom and small government in the world, former Congressman Ron Paul, who gave the keynote speech. I also made a presentation on how to attract new supporters to the Conservative Party at one of the panels with my colleague Jason Kenney (photo: Jake Wright). The text of my speech is reproduced below.

Manning Networking Conference 2013

8 March 2013, Ottawa

We are discussing today on this panel if the federal Conservative Party has reached a high water mark. I hope not. Because if that’s the case, there won’t be any Conservative left in Quebec when we hit the low water mark! I mean, outside of my riding of Beauce, of course! 

So, to answer the question, how can we continue to attract new supporters?

In conventional politics, the way to get more supporters is usually to reach for the center. If you are on the right for example, all voters who share right-wing beliefs and ideas are assumed to support you already. So if you want to get more support, you make proposals that are a bit more to the left. You do the opposite if you are a left-wing party.

That may be a winning strategy to some extent, in some circumstances. If we’re talking about social or moral issues, or foreign policy for example. It’s obvious that we need to be sensitive to the majority’s opinion and to reach for a broader consensus on such issues.

But when it comes to economic issues, I don’t buy that. I think being more conservative on economic issues is the way to make our economy more dynamic, our country more prosperous, and ultimately to increase our support among voters.
There are only two directions we can take on this issue. Either we create new programs, increase spending and increase taxes – in short, increase the size of government. Or we do the opposite and reduce the size of government.

The evolution of government size

All over the world during the 20th century, the scope, size and powers of government have grown tremendously.

Take for example public spending as a proportion of gross domestic product, that is, the portion of the overall economy controlled by governments. In the principal countries of the western world, it has gone from around 10% a century ago to beyond 40% today.

In Canada, public spending peaked at 53% of GDP in the early 1990s, which put us in the same league as socialist countries like France and the Scandinavian countries. Fortunately, we reversed this trend in the past two decades. Public spending had gone down to 40% of GDP by 2008.

This is the main reason, I think, why Canada has been one of the top performers among industrialized countries since that time. And why we got through the recent crisis better than the others.

During the crisis however, government started growing again. If we take only federal program spending as a proportion of GDP, it went from 13% in 2006 to 16% in 2009. Since then, it has slowly been going down. If everything goes according to plan, we should be back at 13% in 2016.

Note that this is not because spending is going down. Our government has made spending cuts, but overall, total program spending is actually going to increase in the coming years. It is simply increasing less rapidly than the economy, which is why it is going down relative to the economy.

I believe we should be bolder. We should be more conservative. We should stop growing the size of government in real terms. Government is big enough already.

The benefits of smaller government

If we look at the available data, the evidence is quite clear that there are only benefits to having smaller government.

Most of you have probably heard about the Fraser Institute’s Economic Freedom of the World annual report. It looks at more than 20 components of economic freedom. Not only the size of government but also other components such as enforcement of property rights and freedom to trade.

Countries in the top quartile of economic freedom had an average per-capita GDP of $38,000 in 2010, compared to $5,000 for bottom quartile countries.

The poorest 10% of people in the most economically free countries are twice as rich as the people in the least free countries. The poor also benefit from smaller government and economic freedom.

Life expectancy is 80 years in the top quartile compared to 62 years in the bottom quartile. And political and civil liberties are considerably higher in economically free nations than in unfree nations.

The logic underlying the benefits of small government is the following. Governments can only spend what they have taken out of the real economy. A government has nothing to give anybody except what it first takes from somebody. A government cannot inject resources into the economy unless it has first extracted them from taxpayers through taxes or put us further into debt by borrowing the money.

Government spending always competes with private sector spending for scarce resources. Moreover, bureaucracies use resources less efficiently than private businesses, which have to remain competitive to be profitable and survive. When you divert resources from the more productive uses that they can find in the private sector to less productive uses in the public sector, you will see less growth.

A proposal from Beauce

What should we, as conservatives, do to reverse this trend? One way to change the terms of the debate would be to announce that the government is not going to grow anymore.

In January, the convention of the Quebec wing of the Conservative Party of Canada was held in Victoriaville. It adopted resolutions from local associations in preparation for the national convention next June in Calgary.

Among the resolutions adopted was one put forward by the association of my riding of Beauce. The resolution proposes to freeze government spending at 300 billion dollars from the moment when the budget is balanced in 2015-2016 and for the four subsequent years.

Of course, I gave my support to this resolution from the members of my riding and I hope it will become official party policy at the national convention next June. It is similar to a Zero Budget Growth proposal I made in a speech three years ago.

The idea is that given economic growth and inflation, a freeze in current dollar spending would have the effect of reducing both the spending to GDP ratio and real spending in constant dollar amounts.

The meaning of Zero Budget Growth

Think about what a frozen budget would mean. From that moment on, any government decision has to be taken within this budgetary constraint. Every new government program, or increase in an existing program, has to be balanced by a decrease somewhere else.

It means that we no longer have debates about how much more generous the government can be with this or that group, as if the money belonged to the government instead of taxpayers.

The focus of the debate is shifting to a determination of priorities: what are the most important tasks for government to achieve with the money we have? Is this government function really important and should we have more of it? Then what should we do less or stop doing and leave in the hands of the free market, voluntary organisations and individual citizens?

That would be quite a change, don’t you think? A commitment to Zero Budget Growth could become a powerful symbol of fiscal conservatism. But the consequences would be much deeper.

It would mean that every year, the relative size of government would be smaller. It would mean more prosperity through less government. It would force politicians, bureaucrats, lobbyists and everybody else to stop thinking that your salaries are just there to grab for their own benefit. And because of the budgetary constraints, Canadians would have a lot more confidence that we’re not wasting their money.

There is a large constituency for these small-government principles. Many people who don’t necessarily consider themselves conservative and who don’t vote for us are fed up with government overspending. They want to pay fewer taxes and they want their children to be debt free.

I believe that would be popular in Quebec too. There is a large proportion of Quebecers who believe that the federal government is too big and intervenes too much in too many areas. It may be for fiscal conservative reasons or for nationalist reasons but they want a small government in Ottawa.

We have to convince people that we’re not simply aiming to be better managers of a bigger government; we are aiming to be better managers of a smaller government. Being more fiscally conservative and defending the principles of individual freedom, personal responsibility and smaller government is the way to get their support.

Because Canadians want lower taxes to keep their money in their pockets. Because Canadians want to be able to go as far as their talents, ambitions, creativity and industry can take them. Because ultimately, Canadians support economic freedom and a free society. In other words, limiting government is a lofty endeavor. It is a powerful message that will give us more supporters.

If we do this, and if we ensure that Canada becomes an even more prosperous country, I can tell you that the Conservative Party will reach an even higher water mark! Thank you.

Published on May 11, 2016

Speech at Conservative Party of Quebec convention: Let’s end business subsidies

Maxime Bernier

Quebec City, November 14, 2015

Dear Quebec Conservative friends,

It gives me great pleasure to be with other Conservatives here in Quebec City, in the most Conservative region in all of Quebec!

As a Member of Parliament, I of course do not get involved in provincial politics. I also know that there are people who share our principles in other provincial parties.

But all those who want to get involved in a true Conservative party, a party that does not defend conservative principles only half of the time or a quarter of the time, but all of the time, are here today, with the Conservative Party of Quebec.

I know your leader very well. Adrien and I were both involved with the Montreal Economic Institute. Adrien is someone who truly understands conservative principles, someone who is not afraid to defend them openly.

After half a century during which the Quebec government experienced continual growth, half a century during which Quebec was the Canadian champion of economic intervention, the champion of debt accumulation, the champion of costly and overly bureaucratic programmes, the champion of high taxes, it is now more crucial than ever to have another voice. A consistent, confident, full-time conservative voice.

What do we mean exactly when we talk about conservative principles, the principles that differentiate us from our political opponents? We are speaking first and foremost of freedom. Freedom is the fundamental value that brings us together here today. Freedom is nothing less than the foundation of our civilization. It is our duty to explain to everyone how freedom is important, so that we can live in a society that is even freer and more prosperous. A society that is tolerant and open to the world.

For our political opponents, the solution to the challenges faced by society is always about increasing government intervention, and never about increasing individual freedom.

Former US president Ronald Reagan explained it best when he said that these people tend to see the government’s role in three steps: if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it!

For us conservatives, on the contrary, government should ideally set up and enforce the basic rules of life in society. And then, leave individuals free to cooperate among themselves to provide for their wants. Government should not intervene to solve each and every problem on the road to a utopian and unrealistic vision of society.

To paraphrase John F. Kennedy, from a conservative perspective, don’t ask what your government can do for you; ask your government to get out of the way, so that you can be free to take responsibility for yourself, for your family, and for everyone else that you care about.

Unfortunately, over the past hundred years, government has grown to gigantic proportions. And not only in Quebec, but everywhere in the Western world. It intervenes in almost every aspect of our lives. It makes us dependent and irresponsible by taking care of us from the cradle to the grave. And it tries to plan economic development.

To fund all these interventions and costly government programmes, we got to a situation where every child that is born is already burdened with tens of thousands of dollars in debt. And if you take all levels of government into account, about half the wages of working people in this country goes to fund all this.

How did this happen? Economists and political scientists of the so-called “School of Public Choice” have tried to explain this dynamic. Their research shows how particular groups have a strong interest in getting organized to put pressure on politicians. These special interest groups want subsidies, trade protection, more generous social programs, a fiscal or legal privilege, regulation that favours them and keeps out competition. Any favour they get from the government can potentially bring them huge benefits.

It’s very hard for politicians to say no to these lobbies because they have the means to hijack debates, quickly mobilize support and fuel controversies in the media. On the other hand, nobody hears what the silent majority have to say, even if it is the one paying the bill.

So, there is a fundamental imbalance in political debates. On one side, you have concentrated benefits to special interest groups who have a strong incentive to do their lobbying; on the other side, you have dispersed costs that fall on society at large.

That’s how government grows and grows. That’s how we become less and less free. And more and more dependent on government.

We, Conservatives, have to give voice to this silent majority, the one paying the bill, as we defend our principles and values.

We’ve had a good example of this kind of detrimental intervention these past few days when the government of Quebec provided a single business, Bombardier, with 1.3 billion dollars in aid. Talk about a concentrated benefit!

You can be proud of your leader, Adrien, who has defended our principles and values with passion and with conviction and who was not afraid to go against the current by categorically opposing this government handout.

Among the many arguments we have heard in favour of this type of intervention, there is the argument that Bombardier is too big to let it fail. Meanwhile, there are thousands of small and medium-sized enterprises that declare bankruptcy every year, causing far more significant job losses. But those don’t have a strong enough voice to get the government’s attention.

Those who claim that this intervention saves jobs do not understand that the government is destroying as many, if not more jobs, elsewhere in the economy by transferring resources from other sectors to Bombardier. Moreover, there is no guarantee that CSeries aircraft jobs will be maintained in the long term.

By subsidizing Bombardier over and over again for decades, governments have created a company that takes too many risks, that gets involved in more projects than it is able to handle. Why not instead let the market operate as it is supposed to, let other investors and other businesses take control of Bombardier and manage it more carefully by generating wealth, instead of wasting resources?

There is also the argument that our aircraft manufacturer must be subsidized because the Americans, the Brazilians and the Europeans are doing so. But if we have to squander billions of dollars in sectors that our competitors subsidize, it will never end. They have ten times more resources than we do. Why not instead reduce taxes and provide a more favourable business environment? All businesses would benefit, not just the biggest ones or those with the best connections in government circles. They would, as a result, become more competitive, generate more wealth and long-term jobs, and our standard of living would increase.

Quebec’s minister of Economic Development, Jacques Daoust, has invited the new federal government to offer aid like it did to Bombardier. As a Quebec taxpayer, I don’t like to see my government in Quebec City waste my tax money. But it would be even more pernicious for Ottawa to follow suit.

Mr. Daoust justifies his request by saying that the federal government intervened in order to save Ontario’s auto industry. It’s always the same argument from those who see the federal government as a cash cow, wherever they may be in the country: Ontario received this investment, Newfoundland benefited from this programme, Quebec received this amount, that industry was favoured over another. So I deserve it too!

Everyone wants a portion of the big pot of government money. Since governments have spent money carelessly for decades, it is impossible to refute this argument. To give each region the impression of fairness and to buy peace, Ottawa gives in to the pressure and continues to distribute funds that it simply does not have.

This never-ending cycle of subsidies distribution has contributed to the rapid growth of the federal government. Our Conservative government did this as well during the past nine years, even if I would have preferred a different policy.

We must put an end to this dynamic. There is another, simple way for the federal government to show fairness to all regions of the country, to industries, to businesses, as well as to taxpayers: It is to completely stop subsidizing businesses and to reduce their taxes. This is not only a fair solution, but one that is economically efficient. It is a solution that emphasizes the rigorous management of public finances, the accountability of business players and the discipline of the free market. It is the only coherent conservative solution that respects our values of freedom and responsibility.

It is this solution that I will defend in Ottawa. And I hope that the next Conservative government will adopt it once elected in Ottawa or… in Quebec City!

Best success with your convention! Thank you.