The West Block Transcript: Season 6, Episode 34

THE WEST BLOCK

Episode 34, Season 6

Sunday, April 30, 2017

Host: Vassy Kapelos

Guest Interviews: Tom Vilsack, Minister Jim Carr, Patrick Brown, Quito Maggi

Location: Ottawa

On this Sunday, NAFTA is off the chopping block for now, as President Trump promises again, to renegotiate the deal. In the meantime, the Canadian dairy and lumber industries are hit hard. What can we expect next in the brewing trade war between Canada and the U.S.?

Then, the Ontario government tables its first balanced budget in nearly a decade. We’ll ask the Opposition why they think the budget doesn’t go far enough.

Plus, O’Leary out, 13 other candidates are still vying for the Conservative Party’s top job, though less than a month before the leader is chosen. Where does the race go from here?

It’s Sunday, April 30^th. I’m Vassy Kapelos, and this is The West Block.

The high stakes roller coaster ride on both sides of the border for the North American Free Trade Agreement (NAFTA) seems to have leveled out for now, as President Trump has agreed to again, renegotiate NAFTA. But that sigh of relief comes on the heels of the administration hitting Canada with a new tariff on lumber imports and a pushback against our dairy industry. Take a listen to what President Trump had to say on that:

President Donald Trump: “I will hold on the termination, let’s see if we can make it a fair deal because NAFTA’s been a horrible deal for the United States. It’s been very good for Canada. It’s been very good for Mexico because Canada’s been very rough on the United States. Everyone thinks of Canada as being wonderful and so do I. I love Canada, but they’ve outsmarted our politicians for many years. We’re going to take care of our dairy farmers in Wisconsin and upstate New York.”

Joining me now from Washington is Tom Vilsack, former agricultural secretary under President Obama, and now the president and CEO of the U.S. Dairy Export Council. Nice to see you, Mr. Vilsack, thanks for being with us.

Tom Vilsack: Happy to be with you.

Vassy Kapelos: Sir, I wanted to start off by asking you, we just heard what Donald Trump had to say, but what specifically do you want your president to do for dairy farmers in the U.S. when it comes to Canada?

Tom Vilsack: Well I think we just basically want a more open market. We want to take a look at tariff lines. We want to take a look at ways in which the Canadian government in the past has in our view manipulated the market a little bit to make it more difficult for imports from the U.S. to come in to that market to provide Canadian consumers choice and options. We think this is an appropriate time to renegotiate, to modernize, to basically take a look at NAFTA that’s been in effect for a little over 20 years. It’s time to address some of these concerns that we’ve had for several years actually.

Vassy Kapelos: Do you fundamentally believe that the Canadian government’s supply management system for dairy needs to go or is wrong?

Tom Vilsack: It’s not a question of us making a decision about whether or not it should go or not. That’s obviously the Canadian government’s decision. We want it to function in a way that allows our market-based system to have a fair and more open opportunity to compete in Canada access to markets. We don’t want the rules of the game to be changed in the middle of the game. We’ve seen a number of incidences over the years where the rules have changed and made it more difficult for U.S. imports to get into Canada in a fair way. That’s all we want. We’re not asking that the entire system be dismantled. We just want more fairness and more transparency.

Vassy Kapelos: Lately, we’ve heard from President Trump of course specifically around ultrafiltered milk products. I wanted to point out a few statistics. Of course last year, Canada imported about 17 per cent more dairy products from the U.S. than the year before. The U.S. actually has a net dairy trade surplus with Canada that trade and balance, I believe favours the U.S. 5:1, and there’s a supply glut internationally of dairy products. Is it really all Canada’s fault?

Tom Vilsack: Well here’s the problem with using some of the statistics. It’s very difficult to look at the export numbers from the U.S. because a lot of what is exported into Canada is exported out of Canada immediately. There’s obviously reciprocity there. So it’s very difficult to look at those numbers. The bottom line is this, with ultrafiltered milk, in a market-based system, the market would decide. What happened here was that the Canadian government decided to lower the costs and the price, providing an incentive for processors in Canada to use Canadian products and making it more difficult, in fact, if not impossible for U.S. imports. That we think is contrary to the spirt and the letter of trade agreements and we hope that as this is being discussed and renegotiated that this problem is corrected.

Vassy Kapelos: Beyond dairy, the North American Free Trade Agreement (NAFTA) of course has been front and centre this week. President Trump at one point indicated that he would pull out of NAFTA. Then your successor in agriculture, Sonny Perdue helped convince him not to do that. How disastrous would be for American farmers if the president actually were to pull out of NAFTA?

Tom Vilsack: Well I think the U.S. agriculture is united in its belief that there are good things about NAFTA as it relates to agriculture that need to be preserved and there are some areas that need to be strengthened. When we talk about dairy, for example, obviously we have a good market in Mexico. We don’t want to interfere with that. We just want more openness with the Canadian market. So, on balance I think secretary Perdue’s advice to the president was sound. This is not the time to pull out of NAFTA. This is the time to modernize it, to take some of the issues that have been irritants for a considerable period of time and try to resolve them, get them in a better place. This is an important relationship between the U.S. and Canada and Mexico. It’s an important economic relationship. We obviously want to preserve it, we want to strengthen it.

Vassy Kapelos: The rhetoric over the last week though has been incredibly heated. Understandably I think you’d understand that Canadians are kind of at the edge of their seat wondering what President Trump will say next. Given your time as secretary of agriculture, do you think any permanent damage has been done to the relationship between our two countries?

Tom Vilsack: Well I hope not. I sincerely hope not because I think it’s an important relationship. Certainly understand the concerns and frustrations that Canadians and others may feel about some of the comments coming out of Washington. But as we say down here, ‘actions speak louder than words’. And I think right now, what we’re looking at is an opportunity to renegotiate, an opportunity to have the parties come to the table with a list of grievances, a list of concerns, get them aired out, get them worked out so that we have a stronger, more viable NAFTA relationship that is beneficial to all three countries, and the consumers and producers and farmers and job seekers in all three countries.

Vassy Kapelos: Okay, thanks so much for your time, Mr. Vilsack.

Tom Vilsack: Thank you.

Vassy Kapelos: And what is the Canadian government’s response to all of this? Jim Carr is the Minister of Natural Resources and joins me from Winnipeg now. Minister, we’ve just heard from Tom Vilsack talking about the U.S.-Canada relationship on NAFTA and dairy. But of course, then there’s lumber. Since your government came to power in 2015, there were ongoing negotiations to reach an agreement but instead this past week we saw a 24 per cent tariff slapped on Canadian lumber. Why couldn’t you get a deal?

Minister Jim Carr: Well, we’ve been talking about these possibilities now for many, many months. We’ve been talking about it within the Government of Canada and across the country to all of our provincial counterparts. We tried to make a deal with the Obama administration, but it didn’t happen. We’re not prepared to sign any deal. We’ll sign the right deal for Canada. And we hope that we’ll be able to do that now. But meanwhile, we have countervailing duties and it’s our job to defend those who might well lose their jobs, producers and communities who will be affected by it.

Vassy Kapelos: Is there a plan to deal with the U.S. on lumber beyond litigation?

Minister Jim Carr: Well the plan is to negotiate, and I know that Minister Freeland is in frequent touch with Secretary Wilbur Ross, that they have been talking about the elements of a deal. I don’t believe they are there yet, but there is goodwill between them. They are talking. I hope they will be negotiating. And the sooner the better because the longer it takes, the greater the impact will be on producers, on communities and on workers.

Vassy Kapelos: Let me ask you about that goodwill because this past week we’ve kind of sat by and watched Donald Trump talk about NAFTA and in some pretty flared up rhetoric. He also mentioned specifically when he was talking about what wasn’t fair to the U.S., energy, and that would be included as part of the renegotiation of NAFTA. What does that mean? Could we see an import on oil, for example, import tariff—I’m sorry.

Minister Jim Carr: Well I don’t know anybody who wants it. We’ve been in Washington talking to business leaders, talking to union leaders, legislators, both in Congress and in the Senate and there seems to be very little appetite for a border adjustment tax because they understand, particularly in the energy world, that this is an integrated continental market. And what’s in the interest of Canada is also in the interest of the United States, and in particular, the workers of the United States. So we will continue to make those arguments, and not only on our own behalf, which is our primary obligation, but also I think many of our American friends will be making the same argument because they realize that this integrated market is good for both our countries.

Vassy Kapelos: So if you’re hearing that there’s very little appetite for it in the U.S., why is Donald Trump saying it?

Minister Jim Carr: Well I can’t give you an interpretation. And you know that we have been disciplined about not commenting on what is said, but on what it done. So when there was the imposition or the announcement of the imposition of countervail against softwood lumber producers in Canada, we responded. And I’m very happy to say that we will respond, not only through the Government of Canada, but with our provincial counterparts as well. We know what our obligation is, it’s to protect the workers, and that we also hope that we will be able to negotiate a settlement and we hope sooner rather than later. You know the first lumber dispute between Canada and the United States was in 1839 when New Brunswick and American states, particularly Maine were at each other. We’ve’ been now doing this routinely since 1982. We think it’s time to stop to negotiate a long-term deal, and that’s our objective and that’s what we’ll work very hard to accomplish.

Vassy Kapelos: There hasn’t been the same level of dispute over energy though. So do you understand I guess how a lot of Canadians who work in the oil patch who have jobs depending on the oil patch are worried when they hear Donald Trump include energy in that rhetoric.

Minister Jim Carr: Well but we don’t have any detail about what they mean. We don’t have any detail about what kind of taxes they might be considering. So we will respond to action. We also will continue to make the arguments with people at every level of the U.S. administration and beyond that. We talk about mayor to mayor, governor to premier, legislator to legislator, union to union, CEO to CEO, to make the argument that I’m making with you now and that is that we are in this energy market together and what’s good for Canada is good for the United States.

Vassy Kapelos: Just quickly before we leave. Given the events of the past week is there any thought in your government to a bit of a course correction? I know that I’ve heard the Prime Minister and Minister Freeland describe the approach to all this as polite but firm. Does your government need to be a bit less polite perhaps given who you’re up against?

Minister Jim Carr: Well, are you talking about the tone of the discussion, which I think should always be respectful or are you talking about how vigorous our arguments are? Well yeah, we are making these arguments vigorously because we have a Canadian interest to protect. Our job is to make sure that we do that. We do that effectively. But there is no reason to be disrespectful. This is the most important trading relationship in the world and we will act respectfully, but vigorously defending the Canadian interest.

Vassy Kapelos: Okay, thanks a lot for your time, Minister Carr.

Minister Jim Carr: It’s my pleasure.

Vassy Kapelos: Still to come, the Ontario government introduces its pre-election balanced budget offering free drug prescriptions for everyone under 25. We’ll get reaction from the Opposition next.

Vassy Kapelos: Welcome back. Late last week, Ontario tabled its first balanced budget in nearly a decade with health care scoring the big headline. The government will provide free pharmaceuticals for everyone under 25. Seniors will get a break for public transit and young parents will get some help for childcare. What does the Opposition think of this budget? Patrick Brown is the Progressive Conservative Leader of Ontario and joins me now from Toronto. Mr. Brown, nice to see you, thanks for being with us.

Patrick Brown: Well thanks for having me on the show. And I have to say this government, the games they’re playing, the charades, the sham, we don’t call Charles Sousa the finance minister anymore, we call him ‘Chef Sousa’ because this budget is not a balanced budget. They may say that, but the facts speak differently. This is a $5 billion operational deficit. And when it comes to the numbers not adding up, we’ve been warned by the Auditor General, the financial accountability officer that the government was playing games with the numbers and they really, really have. They have hid debt left, right and centre. And unfortunately we’re still in a pretty ugly financial picture in the province of Ontario.

Vassy Kapelos: So let me ask you then about what they are presenting as a balanced budget. I think a lot of Ontarians are maybe consuming it as that. At this point, they’re seeing more money for hospitals, free drug prescriptions, more money for seniors using public transit. Is that all really such a bad thing?

Patrick Brown: No, obviously helping more on hospitals and education and drug access is a good thing, but I think the people of Ontario deserve to know the truth. And once you look at the fine details it’s something different. So when you look at the financial details you realize that the debt’s still going to skyrocket over the next year. When you look at education, you know they brag about 94 new schools that are going to be opened. You read the find details, 300 schools are on the chopping block. When you look at health care, there is a pledge for new funding, but seems to be going into administration. They’re going to hire 84 new executive vice presidents of LHINs rather than actually put money into the front lines. They actually fired 1,500 nurses last year. So it’s all in the fine print, and unfortunately this is a government that has wasted and mismanaged the provinces finances and unfortunately everyone else is paying for it. The headline out of the budget should be ‘more deficit—more debt.’ Here in Ontario we owe more than any province or state in the world.

Vassy Kapelos: I want to ask you about that debt load because I think you do have a point, the numbers are pretty staggering. So how would you reduce the debt load?

Patrick Brown: I want a value for money audit of every single ministry. What we look at is the more we look into this government spending, the more waste we find. And it’s not just about the hydro execs making 10 times they do in Ontario than they do in Quebec. It’s not just about this bloated administration executive VPs in health care. The reality is I’m not sure we’re getting value even on the contracts we’re giving out. The Auditor General did an assessment of our infrastructure spending. We’re going to spend $190 billion over 13 years. Yes, Kathleen Wynne’s making promises for 2030. Please help us that she’s not still in power then. But on that infrastructure promise, on that money that’s being spent that is quite a significant amount, the Auditor General’s report suggested we could see cost overruns in 35 per cent. That’s tens of billions. We have roads on the 403 near Toronto that are being repaved every two years instead of every 15 years. We have a bridge near Pickering where the truss was put in upside down. We don’t measure performance. We don’t measure whether we’re actually getting value for the contracts we give out and because of that, we’re seeing huge cost overruns. I want to look at every single ministry, have a value for money audit and make sure that we finally start spending taxpayer dollars appropriately in the province of Ontario.

Vassy Kapelos: Would you cut program spending though or would you have to raise taxes?

Patrick Brown: Well I would make sure we get value for money. And one of the challenges we had for the government is that—

Vassy Kapelos: But with all due respect, sir—

Patrick Brown: You know you’re—

Vassy Kapelos: With all due respect, I don’t want to interrupt you. But I asked you specifically are you prepared to raise taxes if you have to decrease the debt load or would you cut program spending?

Patrick Brown: I’m not looking at raising taxes. I’m going to make sure that we stop wasting. I’m going to make sure we stop the wasteful conduct that this government has had. And you know I could give you a hundred examples of how they’re wasting. I’m not looking at taking services out of the front line. What I’m saying is, to make sure that government programs that are actually spent appropriately. And I would accept all the Auditor General’s recommendations on infrastructure to make sure we spend money more appropriately. I’d accept the Auditor General’s recommendations on health care. We spent 39 per cent of our home care budget on administration. So, we’re not getting good value. I think if we focus on good value for taxpayers, we can definitely run this program in a more competent manner.

Vassy Kapelos: Before we go, we don’t have much time. But do you think the issue of government finances, government spending perhaps overspending as you characterize it or misspending will be the ballot box issue next year?

Patrick Brown: I think the ballot box question is this is a tired government that’s been in power for 14 years that frankly has made Ontario more unaffordable. And it’s not just on debt and deficits. It’s everything’s going up, whether it’s hydro or housing. Everything in Ontario is more unaffordable. You pay more, you get less. And I also think ethics is going to be a ballot question in the next provincial election. Don’t forget the fact we have five OPP investigations into this current government and we have two major criminal cases proceeding this fall.

Vassy Kapelos: Okay, thanks very much, sir.

Patrick Brown: Thanks for having me on.

Vassy Kapelos: Up next, Kevin O’Leary is out of the federal Conservative leadership race, but 13 candidates remain so who stands to gain?

Vassy Kapelos: Welcome back. ‘Mr. Wonderful’ announced last week his chances of winning in Quebec were not so wonderful, so he was stepping out of the Conservative leadership race. Now that Kevin O’Leary is out, who of the 13 candidates remaining stands to benefit?

Joining me now is Quito Maggi, President and CEO of Mainstreet Research, which has been regularly polling Conservatives on their leadership preferences. Thanks for being here.

Quito Maggi: Thanks for having me

Vassy Kapelos: Great to see you.

Quito Maggi: Yeah, great to see you too.

Vassy Kapelos: So how does this change the race?

Quito Maggi: It changes it a lot. Obviously number one for Maxime Bernier, he’s now the leader pretty overwhelmingly. Andrew Scheer who had jumped into second last week for the first time, remains in second place. But the second big winner now, what we’re seeing is Kellie Leitch. When we redistribute all the votes from our previous polling, she actually jumps up because a lot of people who were going to vote for Kevin O’Leary, number one were voting for her, number two. That means she jumps up back into a strong third. And there’s two or three other candidates there, Lisa Raitt, Erin O’Toole. That’s your top five.

Quito Maggi: Yeah, I think ideologically they don’t align. But certainly from a high profile standpoint they’ve both been in the media a lot for the last year, so I think some of that correlation. It’s going to be a really much more interesting race now actually. For a long time it was just a two horse race. Now, a lot of people think okay, well this seals the deal for Maxime Bernier and he’s going to run away with it. But that’s actually not the case at least—

Vassy Kapelos: Why is that?

Quito Maggi: Because of the way the balloting actually works, he still can’t win on first. It’s not a one plus one type of math. It’s not we’re going to take all of the support that Maxime Bernier had, add on top of it all of Kevin O’Leary’s votes and say that that—because that would have put him over 40 per cent. That would be an overwhelming lead and no one could catch him at that point. But he needs 50 per cent plus one to win where he stands is actually mid-20s, not in the 40s where the one plus one is. That could certainly change next week as we see this unfold. But there’s still room for people to catch him. In fact, in the simulations that we’re running, out of the thousand simulations now, based on the current votes, Andrew Scheer actually wins 5 per cent of the time. So still overwhelming for Maxime Bernier, it’s his to lose now. It goes from a referendum on Kevin O’Leary now to a referendum on Maxime Bernier. Is he going to survive that referendum? I don’t know, too early to tell.

Vassy Kapelos: And I know you’ve been consistently polling Conservative members. Is it different than polling for a general election? Is it difficult to know for certain that they are members or that what they’re saying is not behind some campaign or–?

Quito Maggi: Well it was difficult at first and now we have the Conservative Party membership and we’ve been polling that for the last three weeks. We just got our hands on the final list yesterday, so starting today we’re polling the full list, 259,010 members to see where the voter intentions are. It is a little bit different in that because it’s not one single race, it’s 338 races in individual ridings. So it’s important to get samples from every riding. And so it is more challenging to do that, but we have been getting samples from every single riding at this point substantially in some ridings, over 100 samples, on average about 40 samples per riding. So we’re very confident that the results are going to be pretty close to what actually happens.

Vassy Kapelos: And finally, we only have about a minute left. But I wanted to ask you how big a factor you think 2019 will be at the ballot box in this race given that Mr. O’Leary dropped out saying that Maxime Bernier could essentially beat Justin Trudeau more than he could because he can win Quebec. Do you agree that Bernier has a shot against Trudeau? Do any of these candidates?

Quito Maggi: No, I don’t—I really don’t believe so. That’s my opinion, but we haven’t tested that fact. But I think that as I’ve said before, the ballot questions are Conservatives going to choose someone who they think can win the 2019 election or someone who is a true Conservative? That’s really what it comes down to in this leadership race. Personally, I don’t think any of them can win against Mr. Trudeau in 2019. The polls numbers right now are just too strong. But that’s for Conservative Party members to decide.

Vassy Kapelos: Well about a month to go, it’ll be interesting to watch.

Quito Maggi: Yes.

Vassy Kapelos: Thanks for your time.

Quito Maggi: Thank you.

Vassy Kapelos: And that’s our show for today. Thanks for joining us. I’m Vassy Kapelos. See you back here, next week.