Hon. Herb Gray (President of the Treasury Board):
Mr. Speaker, I am pleased to take part in the debate on Bill C-21, the Borrowing Authority Act, which follows the February 15 Budget introduced by my colleague the Minister of Finance (Mr. Lalonde) and which is supportive of the expenditure plan as well as the very important initiatives set out in that Budget.
The recent Budget presents a very clear and positive context for Bill C-21. It is a Budget which builds on the successes of several previous Budgets of the Government and it deals effectively with the problems created in large degree by international factors that have hindered the well-being of the economy.
Mr. Speaker, I would ask Hon. Members to think back to June 1982, when Canada was in the midst of a recession. At the time, double-digit inflation was hitting both industry and consumers, and interest rates were at a record high. Unsatisfactory productivity levels in this country, high salaries and increases in other costs were making it very difficult to maintain our position on international markets because our costs were not competitive. It was a combination of all these factors that caused our economy to decline.
In these circumstances the Government recognized that it had a prime responsibility to bring down inflation and, through this and other measures, to stimulate economic recovery. It took the decisive action required, beginning with the introduction of the six and five program in June, 1982. All sectors of the Canadian economy were encouraged to follow the federal Government's lead to restrain their demands on the economy so that our future economic well-being would be protected.
Generally speaking, Canadians met the 6 and 5 challenge very well and made the wage and price decisions that were necessary to make the plan a success.
Six and five has been a balanced program. It is a way of showing leadership and is a demonstration to other sectors. Wage rate increases of federal public sector employees have been held to 6 per cent and then 5 per cent for a two-year period. The prices of all goods and services provided by federal Government Departments, agencies, Crown corporations and the wholly-owned susidiaries, as well as prices set by federal regulatory bodies, were limited to increases of 6 per cent and 5 per cent respectively for a two-year period following June 28,
1982. The Government also initiated an active consultation process with other sectors of the economy. All these steps helped broaden the impact of the six and five program on costs and prices generally in the economy.
When the Government launched the six and five program in June, 1982, the inflation rate was in excess of 11 per cent. By the end of last year it had dropped dramatically to 4.5 per cent. For the whole of 1983 the rate of inflation and what it means in terms of prices was 5.8 per cent, almost half what it had been in 1982 and lower than it had been in over 10 years. With this came a most welcome reduction in interest rates.
In the quarter ending June, 1982 the average compounded annual increase in the base wage rates in major new settlements without COLA clauses in both the Canadian private sector and the federal public sector were close to 12 per cent, but for the most recently recorded quarter the corresponding figure for both those sectors is about 5 per cent. I see by today's newspaper that figures recently released by the Department of Labour suggest a 4.9 per cent average for all of
The six and five program has made an important contribution to the improvement of Canada's inflation performance. Consequently, it was a major factor in the economic turnaround that resulted in the achievement of about 3 per cent real growth last year and about 400,000 jobs being created. Expanded labour productivity together with improved wage performance have resulted in a very significant improvement in Canada's cost performance. These are very encouraging signs but still we must be vigilant in our efforts not only to maintain our level of improved performance but also to strive by all reasonable means to enhance it further.
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Borrowing Authority Act
All Canadians have a role to play in controlling and bringing down inflation, by keeping price increases for goods and services at levels that will help to reduce inflation even more. Moderate costs and improved productivity explain why we have been able to increase our share of world markets last year.
We must continue to limit our costs and be more productive. Every country in the industrialized world is endeavouring to become more competitive. Therefore, our continued prosperity depends enormously on our ability to keep pace with the rest of the world. The onus and obligation to keep Canadian costs competitive and improve productivity rests with each of us. This is true primarily in the private sector but also in the public sector. This means not only that we all have a responsibility for containing inflation and for not allowing the successes achieved in curbing inflation to be frittered away, but also that the public and private sectors must be unremitting in their efforts to improve productivity.
A more productive Canada, both in its public and private sectors, in the key to our economic vitality during the rest of the 20th century and on into the 21st century. For the public sector there are additional factors demanding continuing attention to the improvement of productivity in our own operations. The public sector is inevitably looked to for the demonstration it can provide and does provide in the effective and efficient management of human and Financial resources.
The Canadian public as well, quite rightly, insist on quality service and on achieving top value for their tax dollars. Canadians want their Government to offer at least as many services as they have become used to, but they want them performed at the least practical cost. The federal Government is providing more services today than ever before with a Public Service work force which is at about the same level as it was in the mid-1970s. The overall Public Service personnel strength has steadily decreased from 2.6 per cent of the labour force in 1976 to 2.1 per cent today.
Mr. Speaker, a few weeks ago I announced a four-point plan containing new measures aimed at improving productivity in the Public Service.
First, we are establishing pilot projects to improve operational effectiveness in departments and a number of Crown corporations with heavy operational responsibilities.
Second, we are reviewing central management policies and methods to determine how they can be made more effective without affecting standards of integrity and responsible management for the administration of public funds.
Third, we are reviewing our methods for applying federal legislation regulations, in order to cut administrative red tape, while continuing to protect public interest.
Fourth, we are considering various ways of changing the job environment in Government offices in order to improve productivity.
We expect that these initiatives will enhance the productivity, that is, the efficiency and effectiveness, of our government operations. These initiatives will be taken in conjunction with already existing measures like the IMPAC Program, a program which is aimed at improving management practices across the federal Government. It is already achieving savings estimated to be in the order of $122 million each year. This is the case even though it has been in place only in some Departments so far.
With the new Budget with which Bill C-21 is linked, the federal Government has renewed its commitment to provide economic leadership. In this context, the ongoing necessity to contain inflation is part of our over-all effort to foster sustained economic growth and job creation. We have, therefore, decided to continue the policy of limiting price increases for goods and services provided by federal Departments and agencies, Crown corporations and federally regulated industries for a further 12 months. For this purpose, we have set a new price guideline of 4 per cent. The administrative mechanisms of the six and five program for monitoring price increases will remain in place. As was the case with the six and five program, price increases above the new guideline will be permitted only with Cabinet approval and only when they are clearly warranted.
The new 4 per cent guideline and our new policy on collective bargaining demonstrate our belief that the federal Government and, indeed, all levels of government have a fundamental responsibility-to quote the Minister of Finance in his Budget Speech-"to continue to exercise discipline in their own wage and price decisions". As was said in the Budget, Mr. Speaker, the Government will resume collective bargaining in the federal public sector as the six and five program expires.
I welcome a return to collective bargaining. Collective bargaining provides employees in both the public and private sectors with the capacity to play a meaningful role in determining the terms and conditions of their employment. Each group of federal public sector employees will leave the mandatory restraint program two years from their date of entry at best. This means individual groups will begin to phase out of the six and five program this June; by July, 1985 all federal employees will have exited and thus collective bargaining activities will have resumed commencing in May or June of this year.
In its own collective bargaining, the federal Government will bargain hard, but responsibly and fairly. Four major principles will guide the Government as it carries out its side of the collective bargaining process. We will bargain for settlements that will contribute to reducing inflation and are fiscally responsible. We will bargain for settlements based on total compensation comparisons with the private sector; that is, taking into account the whole range of benefits and conditions
March 8, 1984
of employment. We will bargain for settlements that do not exceed the private sector in compensation for comparable jobs; and we will bargain for settlements that encourage increased productivity and improved performance and recognize relative job responsibilities.
Therefore, while there are no hidden numerical pay guidelines, we will apply these four principles which are not only fair but are, I believe, consistent with what the public expects of the Government in its settlements with its own employees. In this regard the Government has no intention of making catch-up payments to its public servants. This is because other sectors have indeed followed the federal wage restraint initiative, as the wage adjustment figures so clearly show. The guaranteed wage increases of 6 per cent and then 5 per cent for federal public sector employees mean that these public servants have not lost out relative generally to other wage earners in Canada. Now the Government will bargain compensation with its employees in a fiscally responsible manner. We will not agree to increased wages to the point where upward pressure is put on inflation or where revenues, in addition to those provided for in the fiscal plan, must be sought through increased borrowing or taxation or through the diversion of funds from other programs in order to meet higher public sector payroll costs.
The Government has indicated its willingness, Mr. Speaker, to ask Parliament to legislate wage settlements in those specific cases where there are excessive arbitral awards, or excessive settlements by federal Crown corporations, or where federal public sector strikes may be damaging to the public interest because of their lengthy or disruptive nature. This recognizes the Government's ongoing responsibility to protect that public interest. The Canadian people generally, and I hope the public sector unions and their members will understand this responsibility and necessity.
The principles for collective bargaining with the federal Public Service set out in the Budget are fair and reasonable, and 1 believe that federal public sector employees, their unions and the Government itself will act in such a manner that the intervention of Parliament in the process of determining compensation will seldom, perhaps never, be necessary.
The public expects the federal Government, in fact all governments, as well as public sector unions, to strive responsibly to meet the challenges inherent in the resumption of collective bargaining. The public has expectations about the level, quality and continued delivery of government services. It expects value for tax dollars and it expects the public sector, both federal and provincial, to play its part in the restoration of the country's economic health.
I should add that I will be undertaking consultations with labour and other interested groups on possible proposals to amend the Public Service Staff Relations Act. This Act governs collective bargaining in the federal Public Service and has not undergone substantive change, if any, since it was first proclaimed in 1967. We would obviously have some suggestions from a management and a government point of view and I am sure the bargaining agents would have theirs. My objec-
Borrowing Authority Act
tive is to have meaningful dialogue on the matter with unions and others who want to make their views known.
It would not be helpful to speculate at this time on what might or might not eventually be proposed to Parliament on this subject. I would like to have an approach which involves a collective bargaining system in the federal Public Service operating to the mutual benefit of public servants and Canadians generally.
Mr. Speaker, the substantial progress we have made as a nation, fighting together against inflation since 1982, is not entirely due to the 6 and 5 program. However, the program did make it possible to focus the efforts of all Canadians on working towards a more competitive and less inflationary economy. We must not lose what we have gained with considerable effort.
To conclude, Mr. Speaker, we must strive to make further headway in reducing inflation and increasing productivity, economic growth and jobs. For this purpose the Government has decided to build on the positive results of the six and Five program. Therefore we have introduced a new program with a 4 per cent price guideline and with four principles for achieving reasonable public sector wage settlements. I call upon all Canadians to continue to follow the leadership of the federal Government and to work together to achieve our shared goals for the well-being of the Canadian economy.
Subtopic: BORROWING AUTHORITY ACT, 1984-85 MEASURE TO ESTABLISH