Q & A: Perrin Beatty

The president and CEO of the Canadian Chamber of Commerce on how complacency and economic short-sightedness are pushing the country toward irrelevance.

He has been a cabinet minister (1979-1993), the head of the CBC (1995-1999), a teacher, a journalist and, more recently, president of Canadian Manufacturers and Exporters (1999-2007). This summer, the 57-year-old became president and CEO of the Canadian Chamber of Commerce, which represents its 170,000 members from Ottawa, where he spoke with editor Joe Chidley.

Why did you move from CME to the CoC?

I'd been at CME for eight years, and I loved it. At the time I left the CBC, I wanted to stay involved in public policy, I wanted to be involved with the private sector and I wanted to stay in Ottawa, and I wanted to be in the public and making a contribution. And CME met all of those criteria.

It was a great opportunity to be involved in things that were tangible in terms of making a contribution to the Canadian economy. But I feel it's important both for institutions and for people periodically to refresh themselves. I was able to move to an organization with a bigger platform, but dealing with many of the same issues that interested me when I was at CME. So competitiveness, the border, China, skills ? all of those issues that affected the manufacturing and exporting sector are also critical at the Canadian Chamber. Our base is all of Canadian business. And it also I thought would give both CME and me the opportunity to refresh ourselves, to take on fresh issues and challenges.

What sort of shape is the Chamber in now?

It's in good shape, and I'm struck by the amount of brand equity in the Chamber. Everybody has a good idea of what its function is in terms of representing all of business. It's a good team. There's a very good engagement from the board of directors. And I was impressed with the number of calls and e-mails I've been receiving saying, 'You're joining a good group.'

So it's a good place to come into. But I think that with any organization, it's good to have fresh eyes. One of the proposals to our board is to undertake a whole process of strategic renewal, and go back to first principles and ask ourselves, 'If we didn't exist today, would we be created and if so to serve what purpose? Is that our primary function today, how well are we doing it, are our established structures and practices that we're following the most useful in achieving that or is there room for improvement?

I'm going to look at our communications-are we doing it in a way that we're providing products that are useful to members? What about our policy process, both in the way that we form it and the priorities that we have? Are we developing policies most efficiently and effectively for identifying the key issues, and are the issues the right ones?

One of the things I've been asking the members is, would it be useful to undertake a massive exercise in terms of looking five or 10 years down the road for prospects for the Canadian business community and what could be done to ensure the strengthening of Canadian business?

That's internally the priority. Externally it comes down to how to make sure Canadian business can compete and succeed in a rapidly changing global economy where competition is increasing every day.

How can you help your members deal with these issues?

By far the primary function of the chamber is policy advocacy. So it's about going to government with well-thought-out policy prescriptions for the country, but I don't think we can stop at that.

I think there's a temptation too often for business in Canada to say I have a problem, why doesn't government fix it? Well, many of these things aren't amenable to being solved by government. In many instances we have to look to ourselves.

Also, as a former minister, I can tell you that my reaction, when people would come to me to call upon the government to do something, would be to say, 'OK, you've identified the problem ? what are you doing about it? Are you simply suggesting that we in government should fix it or are you doing your part?'

And what would they tell you when you asked them that?

Far too often, business associations engage in complain-ins. That's not constructive. Government is looking for solutions, first of all. Not complaints. They're looking for policy prescriptions that are workable and realistic.

What are the hot-button policy issues going to be for you?

Many of the same ones I was dealing with at CME. Much of my time since 9/11 has been consumed with the border.

Is it getting better or worse?

Worse. Now, having said that, there are a lot of areas in which improvements have been made. Governments have put resources into the issue. But we're seeing the border become thicker, costlier and stickier. And we're seeing in the US how the old political reward and punishment system drives politicians to put layer upon layer of security along the 49th parallel. What gets lost in the process is that you play into the hands of the terrorists if you damage yourselves. And yet if we undermine the North American industrial base, if we make it difficult for our citizens to know one another, we damage ourselves.

I don't see economic and physical security as antithetical. I see them as different sides of the same coin. The Coalition for Secure and Trade-Efficient Borders, which I chaired, made a very rough calculation about the cost to a North American automobile ? the impact of compliance and delays as it crosses the border seven or eight times, in various stages of production ? and it was in the neighbourhood of $700 or $800 per vehicle. A car rolling in from offshore incurs these costs once.

What we are doing is we are damaging the North American industrial base to the advantage of our competitors. It's foolish and it's unnecessary.

There's a host of other issues at the border, too, though.

You got it. Issues related to regulatory harmonization, and that includes everything from regulations at the provincial, state and municipal level on truckloads to product certification. The argument I make to Americans is if you come to Canada and eat in a Canadian restaurant, do you feel your health is jeopardized? They say, of course not. And I say, well, nor do we feel our health is threatened when we go to Florida and do the same thing. The end result of our regulatory system is the same, the goal is the same, but the methodology is often duplicative, costly and wasteful. We need to find ways to do this more intelligently so that we increase consumer choice and reduce unnecessary overhead. The system that we have today works against Canada's interests because we're a smaller, poorer market. The relative cost for entering the Canadian market is greater. It discourages business from making the investment here and decreases the consumer choice we have.

What other issues on your plate?

Skills ? we have a skills problem on its way to becoming a skills crisis in Canada. Issues related to the commercialization of research and development. Trade ? the WTO is a major concern. All of these are key areas for us.

Any thoughts on commercialization of innovation? Is that one of those business-cultural issues that goes beyond government policy?

Absolutely. I work with government in terms of designing its policies and strategies, but I've always wanted to leap across the table and seize somebody by the throat when they talk about the 'lack of receptor capacity' in industry, which is code for saying 'We put public funds into something or we've done this brilliant piece of research but you people in industry are too stupid to figure out how to take advantage of it.' The response to that is, Why didn't you ask us what sort of research is needed? What is the marketplace telling us about where investments need to be made?

And on trade, I think last time we talked we were talking about how the Doha round at the WTO would be dead by this summer if no agreement was reached. So is it dead now?

The mirror is up to its nose to see if there's any sign of respiration, and it's not evident. Clearly, the first priority of governments has to be the multilateral system, but it's important for us to be looking beyond that at this point and say, ok, what needs to be done? I think we're going to see a series of bilateral and multilateral agreements being signed.

I went down to Chile in May, as part of recognition of 10th anniversary of the Chile-Canada free trade agreement, [which] was the first of Chile's FTAs. Chile has signed 40 of them since then. The Americans even have signed more than we have. And increasingly Canada is being left out and losing the advantage that we once had of being a leader in developing these kinds of agreements.

And then there's the perennial need to lower interprovincial trade barriers. You know, our magazine started as a house organ for the Chamber.

I didn't know that until I came here.

It strikes me that our first issue included a mission statement about the need to get rid of interprovincial trade barriers. This was 1928. Any progress since then?

Well, I just had a meeting with my guys saying, this is an area that must be a priority for us during my tenure here. I'm proud the Chamber has provided leadership on it, but it's like the old saying, &#147When all is said than done, more is said than done.?

Everyone pays lip service to doing something about this but precious little has happened, with the exception of the agreement between B.C. and Alberta, which is really a dramatic breakthrough. It's bizarre. I was part of the government that brought in free trade with the United States. We believed 20 years ago that you couldn't have free trade with the U.S. without having free trade within Canada. We were evidently wrong.

We balkanize the country and put impediments to the movement of people and goods in Canada that would be illegal in Europe, and that has to stop.

Well, good luck. It's only been at least 80 years.

When I was an MP, I visited the north end of my constituency, the Georgian Bay area up around Collingwood, It was an area of apple production. I went to one of the packing houses and asked, What are the issues that affect you? And the chap said that, well, we sold Georgian Bay apples to a Quebec supermarket chain so we packaged them and labelled them according to what was required in Quebec, sent them to a warehouse in Quebec, and the supermarket chain had some stores in Ontario. The apples came back into Ontario but couldn't be sold in Ontario ? these Georgian Bay apples ? because they didn't meet Ontario's packaging and labelling regulations.

This is bizarre stuff. You know, does your barbecue tank become dangerous when you take it across the river to Hull from Ottawa? Why do we need every single jurisdiction in Canada to certify pressure vessels? Why should it be so hard to drive a truck across Canada because of differing transport requirements? Why should there be such difficulty with the mobility of labour? At a time of skill shortages, we're banning people from being able to practice their professions in another province.

I guess the thing is that in and of themselves, all of these issues are relatively minor.

And there's always some great justification for them. But we've got to decide whether we're one country or 12 or 13. To me, it's an issue of fundamental common sense.

Many of these issues, if anything, are painfully familiar. Any number of smart organizations would agree on them. And while the answers seem to be there, the problems seem to have remained forever. So, why worry about them? Canada's doing pretty well, the economy is sturdy, governments are running surpluses all over the place ? why undertake reforms at all, when they're so difficult?

If you'd asked me differently and said to me, What is the greatest threat to Canada's economic security for the future? I would answer: Complacency. The belief that we're doing pretty well, thank you very much ? why change?

Well, the answer to that is that while we've been making improvements every year, others have been improving faster. To use the hoary old analogy, you are the frog in the pot of water on the top of the stove, with the water warming up around you and you just don't notice it. If you go to China ? and take a look at the infrastructure being built over there, their ability to turn on a dime in terms of policy, their strategic choices, including making sure that every young Chinese learns English ? you realize that water is heating up very rapidly.

We can take nothing for granted. And we, in my view, are falling far short of our potential as a country. And we, in my view, are falling far short of our potential as a country. I honestly believe we're the most fortunate people on earth in terms of our inheritance, whether it's our natural inheritance or social inheritance that we have, with a peaceful country, good education, where people are free to live their own lives to the fullest. But we're really breaking faith with the people who created that for us and breaking faith with our kids, unless we do much much better than we have done.

The change that we need in Canada isn't incremental; it's transformational. And you won't do that unless you set your sights high.

It's really an economic vision for Canada that you're talking about.

Which I don't see. Dating back certainly to the time when Jean Chrétien entered his lame-duck phase, the political debate in Ottawa has shifted to short-term issues. It's 'Where are we gonna be four weeks from now?' as opposed to 'Where are we gonna be 10 years from now?' The issues that we have to deal with are far more fundamental than that.

I am not a politician, and I have my papers to prove it. But if the political parties were to ask me for my political advice ? which they haven't ? I would say that Canadians are looking for leadership. I think they are looking for somebody who isn't practising politics as usual, and who will take a longer view. I think business has a key role to play in terms of setting out a coherent vision and in terms of creating the conditions in which politicians are prepared to show leadership. And if they're not prepared to lead, why do they run for office?

This is what it should be all about. It should be about competing visions. Instead, you see parliament spending time debating who's worthy to be on the Team Canada hockey team.

If you want something done, who do you talk to on the Hill?

This is one of the big changes that occurs when you have a minority government. Power shifts from the public service to the political level, and often away from the minister to Parliament itself. Suddenly the parliamentary committee, which has the ability to set its own agenda, can be critical for whether or not a particular initiative will succeed, and itâ??s often the members of the opposition who can set that agenda.

The striking thing about this current government is that it's entirely possible this could run into '09, and you have a government that for political reasons is undefeatable in the House and couldnâ??t dissolve the House themselves, but couldn't control the agenda of Parliament. I can't recall an instance of that happening before. And usually a majority in Parliament, if you're talking to the deputy minister or the ADM, they're very careful to stay within the confines of policy, and if you have agreement there it usually extends through the minister to the cabinet to the government and then to Parliament. Now, suddenly you have a situation where an opposition backbencher strongly promoting the issue in committee can set the agenda. It means you have to spend a great deal of time with Parliament as opposed to the public service.

So it makes your job a little harder.

It's more complex. It's good and bad. It's bad in that you create this short-term thinking. The good part is that there are things the government doesn't want to do that it's possible for you to initiate. It's certainly possible for a minority Parliament to do worthwhile, important things ? often things that wouldn't get done in a majority. But the downside is the focus on the short term.

The vision suffers.

Yup. If you went up with a microphone to members of Parliament and said, 'Can you describe for me what North America should look like 10 years from now?', how many of them do you think could answer coherently?

If we can't describe what our vision is for North America, how can we say what Canada's role is in a world that's rapidly being transformed? A real concern I have as I look towards the international stage is that Canada is drifting towards irrelevancy. We're not the players to the extent to which we used to be in international affairs, and the rest of the world will not wait for us to get our act together.