CANADA ECONOMICS

BOMBARDIER

BANK OF CANADA. October 3, 2017. Seeking Gazelles in Polar Bear Country. Remarks. Sylvain Leduc - Deputy Governor. Sherbrooke Chamber of Commerce. Sherbrooke, Quebec

Introduction

You are probably all familiar with the inventor of the snowmobile, Joseph‑Armand Bombardier. He was from the Eastern Townships of Quebec and he merits a place in our history books just as much as Maurice Richard and Félix Leclerc.

You may be less familiar with Montréaler Arthur Sicard, who also had an idea that had a profound impact on the Quebec and Canadian economies. Born in 1876, Sicard spent his childhood working on the family farm. He was often prevented from delivering milk in the winter because of the snow blocking the roads. Observing combine harvesters at work in the fields in summer gave him an idea for a snowblower. Sicard’s invention was launched in 1925, and the City of Outremont bought the first model two years later. The snowblower not only improved the lives of city dwellers by making car travel easier in winter, it also had a major and unexpected impact on Canadian economic activity, facilitating winter road transport between Montréal, New York and Toronto.

When we think of innovation, we think of people like Sicard and Bombardier, who start from scratch, invent new products or processes, and create companies that soon become drivers of the economy. These innovators help increase our productivity.

In recent decades, advanced economies have experienced a sharp decline in productivity growth. This trend is worrisome because, in the long run, productivity growth determines the evolution of our standard of living. To give you an idea of how much it matters, last year Canadians would have earned an additional $13,000 if our productivity had increased at the same pace as seen in the late 1990s.1

And since productivity determines the level at which the economy can operate without creating inflationary pressures, understanding its evolution in an inflation-targeting regime like ours is vital to us at the Bank of Canada.

Economists who are studying this trend are naturally asking whether there are fewer innovators like Bombardier and Sicard today than in the past. They are also trying to explain why productivity is weak in all advanced economies.

To answer this question, we have to look beyond the usual macroeconomic indicators and examine the innovation process at the firm level.

Today, I would like to highlight some of the major trends in firm behaviour that have given rise to vigorous debate among economists. First, I will describe how the data point to declining dynamism in the Canadian economy. I will then offer some possible explanations for this trend and will review how dynamism and other factors affect economic growth. I will conclude by briefly discussing the implications for monetary policy and achieving our inflation target.

Declining Dynamism

Let’s start with a simple intuition: in a dynamic economy, innovative companies are expected to emerge and replace companies with older business models. Think of Sicard, whose invention clearly brought huge long-term benefits but also led to job losses, especially the jobs of workers who cleared roads using horse-drawn snowplows.

As such, a strong and dynamic economy should be driven, in part, by the entry of new firms and the exit of less-viable firms.2 This renewal involves a needed reallocation of labour toward growing industries.3 This dynamic process of innovation was called “creative destruction” by the economist Joseph Schumpeter in the 1930s.

Data collected by Statistics Canada show that there has been a surprising and sustained decline in the entry rate of new firms since the early 1980s. Relative to total active firms, the entry rate of new firms was 24 per cent in 1984. It has decreased by half since then, which is a considerable drop (Chart 1). The firm exit rate has also declined—but by less—from almost 17 per cent in 1984 to about 11 per cent, according to the most recent data.

The decline in entry and exit rates is also reflected in the weaker rate of labour reallocation.4 For the past 10 years, new firms have created fewer jobs than before. Simply put, the data seem to point to a loss of dynamism in the Canadian economy.

This decline in dynamism is especially striking because it is broad-based. It can be seen in almost all industries and across the country, showing up, for example, in rates of entrepreneurship (Chart 2). This trend has also appeared in most OECD countries.

The main concern about a loss of dynamism is that it will lead to less innovation and diminishing long-term growth. The estimated potential growth rate of the economy is about 1.5 per cent, adjusted for inflation. Compared with previous decades, when potential output sometimes rose to more than 3 per cent per year, this is a significant drop.5 And this is the context in which the loss of dynamism must be considered.

Back to the Source

To better understand the possible effects of a loss of dynamism, we need to understand its causes—a more difficult task than it sounds. Some leads are more promising than others. The fact that we see this loss of dynamism not only in Canada but also in most OECD countries suggests that its causes are not unique to Canada and that there may be common factors.6

A first factor to consider is population aging. The younger you are, the more likely you are to become an entrepreneur and start your own company.7 The appetite for risk is perhaps more intense when you have less to lose and the expected benefits are spread out over a greater number of years. However, our data show that the rate of entrepreneurship has dropped for all age groups. Indeed, we even see that the decrease in entrepreneurship is greater among people aged 25 to 44.8 So population aging can explain only part of the decline in entrepreneurial activity.

On the other hand, this decline may be because emerging entrepreneurs face greater opportunity costs than before; that is, the shortfall in income they would suffer if they quit their job to launch their company is now higher. In fact, since the 1980s, the most significant decrease in entrepreneurship rates that we’ve seen has been among those whose wages have increased the most; namely, university graduates.8 New technologies, which often benefit those with more technical skills, have likely contributed to this trend.

In many cases, these new technologies also generate significant economies of scale and network effects that lead to greater industrial concentration, in turn leading to a loss of economic dynamism. On the one hand, the expectation of positive benefits is what encourages business innovation. On the other hand, if the largest companies constantly increase their share of the market, it is increasingly difficult to compete with them.9

In fact, industrial concentration figures are quite astonishing. In the United States, industrial concentration since the early 1970s has increased in 75 per cent of its industry sectors. There are now fewer US firms listed on the stock exchange than there were 40 years ago, while US GDP is three times higher.10 In line with this trend, markups in several industries have been steadily increasing over the past three decades.11 Here in Canada, the rate of industrial concentration is historically high. Estimates from economists at Innovation, Science and Economic Development Canada tell us that the median concentration of Canadian industries in the early 2000s was about 75 per cent higher than in the United States.12

The economies of scale and network effects in several sectors put new firms that produce at higher costs at a disadvantage. You must be very optimistic and have a great deal of confidence in your business model to launch a retail business these days, when giants like Walmart and Amazon are making life difficult for established companies. For example, with its diverse network of producers, Walmart can change its source of supply to minimize operating costs a lot more easily than a newly launched company can.13

However, the effects of concentration and declining entry rates on innovation and productivity are not unequivocal. Many large companies use leading-edge technology and are pushing boundaries as never before—such as the firms developing self-driving cars. Today, large companies know that they must continually invent new products or services to stay one step ahead of their competitors. A good example of this is Apple, with the introduction of its iPhone in 2007 and the different versions the company has introduced since then.

Dynamism and Potential Growth

Competition is therefore essential to innovation and can certainly come from established companies. But the possibility of new companies revolutionizing an industry encourages established firms to innovate. Viewed in this light, the loss of dynamism could be symptomatic of a decline in innovation and long-term productivity, paradoxically during a period when technological advances seem to be increasing exponentially. Indeed, this question may warrant further investigation so that we better understand which new firms are most likely to contribute to growth.

Statistics show that the shelf-life of new companies ranges between two extremes. About half of firms close their doors within five years of their creation. But younger companies that do make a name for themselves tend to grow very rapidly. It is this propensity to grow by leaps and bounds that inspired the term “gazelle.”

These young, transformative companies that are growing at dizzying speeds have a good chance of developing new technologies that increase productivity. However, the impact of innovation on productivity is difficult to assess. Breakthroughs in robotics, artificial intelligence or financial technologies are phenomenal, but are still not reflected in our productivity measures at the national level (Chart 3). And the impact of an innovation is very uncertain, which is why many new companies go bankrupt after only a few years. Predicting whether an innovative company will revolutionize markets is just as risky as guessing if a first-round choice in the hockey draft will become a new superstar goalie like Carey Price. Most of the time, you get another very ordinary player.

Nevertheless, among OECD countries, firm productivity is operating at two speeds. Firms at the cutting-edge of technology—big guns such as Google and Tesla—are three to four times more productive than other companies.14 Given the declining dynamism we are seeing, this gap is not being reversed by the exit of less-productive firms, which probably feel less need to adopt cutting-edge  technology. These firms therefore contribute to reducing national productivity. In this context, encouraging the adoption of new technologies is essential.

Given that about a quarter of productivity growth is driven by innovations from new firms, gazelles play an essential role, particularly in the high-tech sector.15 So it’s worrying that the share of gazelles in the Canadian economy has declined markedly since 1997 (Chart 4). Surprisingly, we see this decline in the information and technology sector.

That said, the entry and exit rates of new firms also follow the business cycle, and the Canadian economy has performed a lot better than expected over the past five quarters. For example, productivity has increased significantly since mid-2016, especially in the goods sector. It is also encouraging to note that the most recent data show that the rate of entry for new firms appears to have stabilized over the past few quarters (Chart 5).

The economy's growth rate is expected to decline over the next few quarters, but it should still exceed that of potential output. We therefore expect an increase in entry rates and a decline in business exits over the coming quarters.16 Moreover, the contribution of new firms to increasing the productive capacity of the economy could give rise to a virtuous circle of growth.

For the Bank, understanding how the productive capacity of the economy evolves is crucial. Indeed, our monetary policy is based on the fact that the rate of inflation tends to stabilize near our target of 2 per cent when the economy is running at capacity. When the economy operates at a level higher than potential output, inflation tends to accelerate and, conversely, decelerates when the economy operates below its potential output. An increase in productive capacity resulting from new firm creation would therefore allow the economy to grow faster without creating inflationary pressures. In concrete terms, higher potential output would lead to a long-term improvement in the standard of living of Canadians.

Conclusion

In recent quarters, Canada’s economic growth has been strong, exceeding that of all the other G7 economies. The sharp depreciation of the Canadian dollar following the drop in oil prices may have contributed to the growth of gazelles by facilitating access to external markets and increasing the benefits of greater economies of scale. What I find encouraging is that, despite the decline in dynamism, the sectoral adjustment required as a result of the fall in oil prices happened within the anticipated time frame. This episode shows that the Canadian economy is still flexible enough to absorb a major shock.

That said, significant challenges remain, as our productivity is still well below that observed south of the border.17 Productivity growth could certainly be increased by reducing the barriers that future gazelles may face, which would further stimulate the Canadian economy. A report from the World Bank notes that Canada is one of the easiest countries in which to start a business.18 On the other hand, it is nevertheless more difficult for businesses to grow beyond a certain point, possibly because of the size of our markets. The free trade agreement with Europe is an encouraging example, because it can help our gazelles grow. Here in Canada, the agreement signed earlier this year on reducing barriers to interprovincial trade is also a good sign, although several areas are still excluded. In addition, new gazelles are likely to have more difficulty financing intangible investments, which they increasingly need, than tangible investments, which, unlike the former, may be offered as collateral.

I would be remiss if I did not mention a Sherbrooke initiative that is addressing these challenges. I'm talking about Sherbrooke Innopole, an organization dedicated to accelerating business development in five new areas. In collaboration with the city, Innopole three years ago founded Espace-inc, a business incubator whose results have exceeded initial expectations. So far, it has helped launch 24 companies.19 Similar initiatives are under way elsewhere in Canada. We hope they will be successful and that they will help entrepreneurs of the calibre of Sicard and Bombardier to emerge.

In the meantime, the best contribution the Bank of Canada can make in this regard is to promote economic stability by keeping inflation at 2 per cent, thereby facilitating investment decisions.

I would like to thank Pierre St-Amant and Ben Tomlin for their help in preparing this speech.

1. C. A. Wilkins, “Blame It on the Machines?” (speech to the Toronto Board of Trade, Toronto, April 18, 2017). 
2. S. S. Poloz, “Reconstruction: Rebuilding Business Confidence in Canada” (speech to the Oakville Chamber of Commerce, Burlington, Ontario, June 19, 2013). 
3. Of course, this constant reorganization of economic activity can be facilitated by assistance programs such as employment insurance. 
4. D. Leung and S. Cao, “The Changing Pace of Labour Reallocation in Canada: Causes and Consequences,” Bank of Canada Review (Summer 2009): 31–41. 
5. A. Agopsowicz, B. Gueye, N. Kyui, Y. Park, M. Salameh and B. Tomlin, “Annual Reassessment of Potential Output Growth in Canada,”Bank of Canada Staff Analytical Note 2017-5 (April 2017). 
6. Organisation for Economic Co-operation and Development, “The Future of Productivity,” 2015. 
7. S. Cao, M. Salameh, M. Seki, P. St-Amant, “Trends in Firm Entry and New Entrepreneurship in Canada,” Bank of Canada Staff Discussion Paper No. 2015-11 (October 2015).
8. Ibid. 
9. D. Andrews, C. Criscuolo and P. N. Gal, “The Best versus the Rest: The Global Productivity Slowdown, Divergence across Firms and the Role of Public Policy,” OECD Productivity Working Papers 5, OECD Publishing, 2016. 
10. G. Grullon, Y. Larkin and R. Michaely, “ Are U.S. Industries Becoming More Concentrated?” 2016. 
11. J. De Loecker and J. Eeckhout, “The Rise of Market Power and the Macroeconomic Implications,” National Bureau Of Economic Research Working Paper No. 23687, 2017. 
12. M. Duhamel  and S. Crépeau, “Competition Intensity in Canada: A Critique of Recent OECD Findings,” Industry Canada Working Paper No. 2008-09. 
13. Research has shown, for example, that large importing firms have a higher elasticity of substitution across products in Canada. See M. B. Devereux, W. Dong and B. Tomlin, “Importers and Exporters in Exchange Rate Pass-through and Currency Invoicing,” Journal of International Economics 105: 187–204, March 2017. 
14. D. Andrews, C. Criscuolo and P.N. Gal, “The Best versus the Rest: The Global Productivity Slowdown, Divergence across Firms and the Role of Public Policy,” OECD Productivity Working Papers 5, OECD Publishing, 2016. 
15. See, for example,  D. Garcia-Macia, C. Hsieh and P. Klenow, “How Destructive Is Innovation?” National Bureau of Economic Research Working Paper No. 22953, 2016; U. Akcigit and W. R. Kerr, “Growth Through Heterogeneous Innovations,” National Bureau of Economic Research Working Paper No.16443, 2010; and L. Foster, J. C. Haltiwanger, and C. Syverson, “The Slow Growth of New Plants: Learning About Demand?” National Bureau of Economic Research Working Paper No. 17853, 2012. 
16. S. S. Poloz, “Reconstruction: Rebuilding Business Confidence in Canada” (speech to the Oakville Chamber of Commerce, Burlington, Ontario, June 19, 2013) and “Returning to Natural Economic Growth” (speech to the Vancouver Board of Trade, Vancouver, British Columbia, September 18, 2013). 
17. Centre for the Study of Living Standards, “Aggregate Income and Productivity Trends: Canada vs United States, 1961–2015.”
18. World Bank, “Doing Business: Measuring Business Regulations,” 2017. 
19. Espace-inc, “Bilan d’impact 2015-2016.” 

FULL DOCUMENT: http://www.bankofcanada.ca/wp-content/uploads/2017/10/remarks-031017.pdf

INTERNATIONAL TRADE

EDC. October 3, 2017. EDC and FITT Teaming up to Educate Canada’s Next Generation of Trade Leaders

OTTAWA - Export Development Canada (EDC) and the Forum for International Trade Training (FITT) today announced a formalized partnership to deliver enhanced trade education to Canadian companies and trade professionals.

At the core of the partnership is the creation of the EDC-FITT International Trade Learning Centre (Centre) – a digital platform from which EDC and FITT will offer information, learning modules, and other knowledge-based resources focused on helping small- to medium-sized enterprises (SMEs) go, grow and succeed internationally. The Centre is expected to be fully operational in early 2018.

“By partnering with FITT to educate more Canadians about international trade, we’re strengthening Canada’s trade ecosystem and helping to build this country’s next generation of trade leaders,” said Mairead Lavery, Senior Vice-President, Business Development, EDC.

“We hear from exporters all the time that knowledge is one of the most important tools for building international success, so this initiative is really about EDC adding value to the knowledge resources that FITT has already built, and making these more broadly accessible and relevant to the needs of Canadian companies engaged in trade.”

Since 1992, FITT has educated Canadians on trade and continuously improved the delivery and quality of their services. For more than 70 years, EDC has served as Canada’s export credit agency and accumulated considerable experience and expertise in the world of trade finance. The expanded partnership with FITT creates a new channel for EDC to share its real-time, practical experience of trading internationally with Canadian companies and the trade professionals who support them.

“The EDC-FITT Centre will expand the available sources of credible and relevant international trade knowledge to ensure businesses have the information needed to maximize opportunities in international trade,” said Caroline Tompkins, President and CEO of FITT. “This partnership with EDC is about boosting Canada’s proficiency in trade to a new level.”

The official announcement of the partnership was made at FITT’s international business conference, Your Future in Global Markets, which marked FITT’s 25-year anniversary.

To learn more about FITT or to sign up for trade training, please visit www.fittfortrade.com.

FITT

FITT is Canada’s National Standards, Certification and Training Body for international trade practitioners. A world-recognized not-for-profit leader in building international business competence, FITT sets the standards and designs the training programs for the Certified International Trade Professional (CITP) designation. Centered on international trade best practices and delivered by a broad network of educational partners, and online, FITT’s quality training programs impart knowledge and practical skills that trade practitioners can apply immediately – providing a competitive advantage and elevating their position in global markets.

NAFTA

PM. October 3, 2017. Prime Minister to travel to the United States and Mexico

Ottawa, Ontario - The Prime Minister, Justin Trudeau, today announced that he will travel to Washington, D.C., from October 10 to 11, and to Mexico City from October 12 to 13.

The Prime Minister will visit Washington, D.C. to take part in a keynote conversation with Pattie Sellers at the 2017 Fortune Most Powerful Women (MPW) Summit on October 10. The conversation will be an opportunity to discuss the importance of gender equality and the ways women’s economic empowerment helps create economic growth that works for everyone.

While in Washington, D.C., the Prime Minister will also meet with United States President Donald J. Trump to discuss issues of importance to both countries, including international security and our vital trade and economic relationship.

On October 12, Prime Minister Trudeau will travel to Mexico City for his first official visit to Mexico. There, he will meet with Mexican President Enrique Peña Nieto to discuss trade, regional cooperation and ways to further strengthen Canada-Mexico ties. While in Mexico, the Prime Minister will honour the victims of recent earthquakes and participate in events with civil society.

Quotes

“Gender equality is a priority for Canada, both at home and abroad. When women have an active voice at the table, we all benefit – communities, businesses and governments. At Fortune’s MPW Summit this year, I look forward to sharing how Canada is working to advance gender equality.”

— The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“The United States is Canada’s top economic partner, and it’s important that we continue to work together to strengthen trade, investment and economic opportunity for people on both sides of our border. I look forward to discussing with President Trump how to enhance our mutual prosperity and security.”

— The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“Canada and Mexico are important partners on many issues, including trade, culture, the environment and regional cooperation. I am excited to visit Mexico for the first time as Prime Minister to meet with President Peña Nieto and engage with civil society to deepen relations between our two countries.”

— The Rt. Hon. Justin Trudeau, Prime Minister of Canada

Quick Facts

• Canada and the United States share one of the largest trading relationships in the world. Bilateral trade between the two countries was valued at nearly $882 billion in 2016, and Canada is the largest secure supplier of energy to the U.S.
• The two countries share the longest, secure border in the world, over which 400,000 people and $2.4 billion worth of goods and services cross daily.
• Canada is the number one export destination for most American states, and cross-border trade and investment supports nearly nine millions jobs in the United States.
• Canada and Mexico are among each other’s largest two-way trading partners, and bilateral trade between the two countries, valued at over $40 billion in 2016, continues to grow annually.
• Canada offered assistance to Mexico in the wake of recent devastating earthquakes.

CANADA'S NEW GOVERNOR-GENERAL 

PM. October 2, 2017. Statement by the Prime Minister to welcome Canada’s new Governor General, the Right Honourable Julie Payette



Ottawa, Ontario - The Prime Minister, Justin Trudeau, today issued the following statement to welcome Canada’s new Governor General, the Right Honourable Julie Payette:

“It is my honour to welcome, on behalf of all Canadians, Canada’s 29th Governor General, Her Excellency the Right Honourable Julie Payette.

“In welcoming Her Excellency, we also honour Her Majesty Queen Elizabeth II, the Queen of Canada. This is the 12th Governor General whose appointment was made by Her Majesty during her 65 year reign. We honour her commitment to ensuring that this office is held by an individual who represents the best of our country.

“Many Canadians already know much of the story of Her Excellency’s life – a story that testifies to her talent and drive, and marks her as a truly exceptional Canadian. Her Excellency flew two missions to space, was Chief Astronaut for the Canadian Space Agency, and proudly carried the Olympic flag during the opening ceremonies of the Vancouver 2010 Winter Olympics. As the second Canadian woman in space and only the fourth woman Governor General, Her Excellency has been and continues to be a trailblazer and an inspiration for all of us.

“Her Excellency’s knowledge, determination, and curiosity about the world around her led her to achieve her dreams – and in doing so, she showed a whole country that their dreams were within reach, too. Her Excellency’s achievements are a testament to her hard work, discipline, and passion, and her work has been recognized with many distinctions and 27 honorary doctorates. As an astronaut, engineer, scientific broadcaster, and corporate director, Her Excellency has proven herself to be a tireless and respected leader, a team player, and a powerful agent of change.

“Above all, Her Excellency represents the very best of what it means to be Canadian. She embodies dedicated service and a commitment to integrity. In her new role, she will continue to do vital work to promote our unique Canadian identity. She will travel to communities across the country to discuss with Canadians the issues that matter to them and to honour those who demonstrate exceptional service to their communities and our world.

“As Commander-in-Chief, she will help highlight the importance of Canada’s military and the selfless sacrifices of its members and their families. Her Excellency will also represent Canada while visiting and hosting international dignitaries, to further strengthen our links with countries and people around the world.

“This has been an important year for Canada. The 150th anniversary of Confederation has given us an opportunity to reflect on our past and present, as well as on our dreams and aspirations for our future. Her Excellency will help us realize these shared hopes for tomorrow. Her life has already inspired so many to dream big, push boundaries, and explore what exists beyond the here and now. I have no doubt that she will excel at representing this wonderful country and continue to inspire countless Canadians in her new role.

“On behalf of the Government of Canada, I thank Her Excellency for accepting this call to service. We look forward to seeing her fulfill her mandate while engaging Canadians on our path forward and promoting the values that make this country strong.

“I also join all Canadians to again extend our sincere gratitude to the Right Honourable David Johnston and Mrs. Sharon Johnston for their service over the past seven years. Their grace, dedication, and humility will continue to inspire us.”

September 28, 2017. Statement by the Prime Minister to thank the outgoing Governor General of Canada, His Excellency the Right Honourable David Johnston

Ottawa, Ontario - The Prime Minister, Justin Trudeau, today issued the following statement to thank the outgoing Governor General of Canada, His Excellency the Right Honourable David Johnston:

“On October 2nd, 2017, His Excellency the Right Honourable David Johnston will return to private life after holding this country’s highest and oldest office. His Excellency served with the utmost dedication and dignity, remarkable intelligence, and exceptional character. He did so not for the customary term of five years, but for an extraordinary seven.

“As Canada’s 28th Governor General, His Excellency brought tenacity, drive, and deep compassion to the accomplishment of his duties as the representative of our Monarch, Her Majesty Queen Elizabeth II. He proudly served as the 11th Governor General of Canada under her reign.

“Together with Her Excellency Sharon Johnston, the Governor General focused his mandate on supporting learning, innovation, and civic engagement. He advocated staunchly for education and for the needs of families and young people, worked to promote diversity and inclusion, and exemplified his belief in Canadians’ ability to create a more caring country and a more just world.

“Throughout his term, His Excellency prioritized connecting with the people he served. He visited all corners of our country to do so, and represented Canadians and their values in his travels around the world. His service has left an indelible imprint on the Office of the Governor General, and shaped Canada for the better.

“In recognition of his contributions and as is customary in these instances, I am proud to announce a gift to the Governor General from the Government of Canada. In his honour, the Rideau Hall Foundation – which His Excellency helped found in 2012 – will receive a $3 million grant and up to $7 million in matching funds over a 10-year period. This funding will help the Rideau Hall Foundation continue its important work to connect people, ideas, and resources. It will support initiatives that strengthen our identity, amplify the reach of the Office of the Governor General, and help build a stronger Canada.

“Your Excellencies, Sophie and I thank you for all you have done in service to Canada and Canadians. Your dedication is an example for all of us. Our country is stronger because of you.”

The Globe and Mail. 3 Oct 2017. Payette begins tenure as Canada’s 29th Governor-General. Julie Payette focused on the importance of science, collegiality and Canada’s Indigenous people, as well as tackling complex global issues in her first speech as Governor-General. New Governor-General’s first speech focuses on importance of science, collegiality and First Nations, as well as complex global issues
LAURA STONE

BLAIR GABLE/THE GLOBE AND MAIL

Governor-General Julie Payette, with her son, Laurier, takes part in her swearing-in ceremony in Ottawa on Monday.

As she stood in the regal Red Chamber for the first time as Governor-General, Julie Payette addressed the dignitaries in the room in French and English. Then, she spoke in Algonquin. “I would like to salute members of Indigenous nations present here and all of those who are listening,” she said.
It was a symbol of Ms. Payette’s dedication to the cause of reconciliation, one of the top priorities for the 53-year-old former astronaut as she begins her tenure as the 29th GovernorGeneral of Canada.
“Reconciliation must succeed for the well-being of our communities and for the future of our children,” she said, as her 14-year-old son, Laurier Payette Flynn, looked on.
In a 20-minute speech delivered without notes, Ms. Payette focused on the importance of science, collegiality and First Nations as well as tackling complex global issues such as climate change, migration, nuclear proliferation and poverty. She drew on her own personal and professional experiences, describing how, as a young Montrealer, she once dreamed of being an astronaut, and later went on to fly two missions to space during a 21-year career.
“I’m a true believer in the strength of teamwork, in the power of dreams,” Ms. Payette said.
“This is exactly the backbone of this country, this is our fabric. I am convinced that anyone can accomplish anything.”
Ms. Payette also spoke about her own family’s connections to First Nations, including her ancestors, who were guided through the Canadian landscape generations ago. “They taught us to fight the cold and survive in it, how to appreciate the gifts of nature, and they taught us about community,” Ms. Payette said.
“It is a good thing that we finally decided to listen again to their wisdom.”
Prime Minister Justin Trudeau attended Ms. Payette’s installation with his wife, Sophie Grégoire Trudeau, and members of the Liberal cabinet sat at a redclothed table in the centre of the chamber.
In his speech, Mr. Trudeau praised Ms. Payette’s dedication to science and called her “a team player, a trailblazer and a pioneer who proved to boys and girls, men and women across this great country that the sky was, in fact, not the limit.”
“As an agent of change and a powerful voice for progress, Canada’s two-times extraterrestrial will bring a new perspective on Canada and its place in the world,” Mr. Trudeau said.
“I look forward to working alongside Her Excellency as she continues to go where few others have gone before.”
Perry Bellegarde, the National Chief of the Assembly of First Nations, praised Ms. Payette for inserting a few phrases in Algonquin into her speech. Ottawa is located on the traditional territory of the Algonquin people.
“I thought that was awesome. She spoke the language of the territory and talked about the importance of reconciliation,” Mr. Bellegarde, who attended the swearing-in ceremony, said during a telephone interview. “She speaks from the heart and that’s how a lot of First Nations have been trained. So she’s off on a good foot.”
Ms. Payette, a former scholar at the Woodrow Wilson International Center for Scholars in Washington, also spoke about the importance of scientific research.
“Trust science, believe that innovation and discoveries are good for us and make decisions based on data and evidence,” Ms. Payette told the room.
“We should continue all the time to look out for those who have less, to stand for those who can’t, to reach out across differences, to use our land intelligently, to open our borders and welcome those who seek harbour and never, ever cease to be curious, ask questions and to explore and search.”
Guests at the swearing-in included senators, MPs, Supreme Court judges and special guests, such as former prime minister Jean Chrétien; Roberta Bondar, Canada’s first female astronaut; and former governor-general Adrienne Clarkson.
After the ceremony, Ms. Clarkson said Ms. Payette, who is now the fourth woman to hold the position, is an “excellent choice.”
“We’ve never had anybody who’s a scientific person, and who’s an engineer and who has that kind of point of view. It’s very, very important,” Ms. Clarkson said.
“It’s terrific to see another woman in the role. We’ve got to catch up.” With a report from Gloria Galloway in Ottawa

The Globe and Mail. 3 Oct 2017. Canadians can give thanks for the separate heads of government and state
JOHN IBBITSON, Columnist

Julie Payette, we hope and expect, will serve her country well as Governor-General, celebrating the unity-in-diversity of our land, and never being called upon to make a difficult decision. But if difficulties do arise, events remind us of the wisdom in separating the role of head of government from head of state.
David Johnston ably fulfilled the ceremonial function of the office, travelling the country and the world to tell Canada’s story. Those who met him or heard him speak were struck by his unfeigned modesty and calm wisdom. Not, perhaps, since the days of Georges Vanier have people felt such affection for a governorgeneral. The ovation he received in the Senate, Monday morning, was long, loud and sincere.
But let’s remember: Stephen Harper asked Mr. Johnston to extend his tenure by two years because the then-prime minister feared a possible constitutional crisis if, as the polls at the time suggested, all three national parties did equally well in the election of 2015.
Mr. Harper himself generated a crisis in 2008 by asking Michaëlle Jean, when she was governorgeneral, to prorogue Parliament. (She agreed, but let him cool his heels at Rideau Hall for a couple of hours, which many interpreted as a sign of displeasure with her prime minister.)
More important, events south of the border remind us of the risks democracies run when the head of state is also the head of government.
Donald Trump’s words and deeds have been so controversial that some people now refuse to meet with him. This is disturbing. The office of president deserves the respect of every American. Mr. Trump, by his actions, has debased that office. The legitimacy of the state suffers because of the actions of a politician.
In Canada, the two roles are kept separate. At all times Canadian sovereignty resides, not on the front bench of the House of Commons, but in the Crown, represented in Canada by the governor-general.
“We know that the executive power in this country, the prime minister and cabinet, are temporary advisers of the Crown,” observes Eric Adams, a constitutional scholar at the University of Alberta. “Government is temporarily reposed in them, but it will be passed on to others, and the Crown remains above the partisan fray.”
That distinction can become crucial during the transition of power following an election, or if an administration loses the confidence of the House. In such moments, the governor-general exercises tremendous power: the power to dismiss a prime minister; the power to dissolve Parliament. “Those occasions might be rare, but when they matter they matter a lot,” Prof. Adams says, and they remind us of “the critical constitutional role that the position plays.”
One quiet, almost unnoticed, reform has strengthened the integrity of political life in Canada in recent years: Prime ministers no longer choose politicians from their own party for the role of governor-general.
In retrospect, Pierre Trudeau should not have nominated Jeanne Sauvé, who had served in his cabinet. Brian Mulroney should not have nominated Ray Hnatyshyn, who had served in his.
But since the appointment of broadcaster Adrienne Clarkson in 1999, we have had almost two decades of governors-general with no background in partisan politics. Let’s hope that precedent endures.
Ms. Payette will put her own unique stamp on the office. We saw a glimmer of that Monday morning, when she spoke at length and without notes in French, English and Algonquin, using her background as an astronaut to urge all peoples to unite in confronting global challenges.
Canada, she maintained, has a unique contribution to make in solving those challenges, “because we are rich in values, in openness, in tolerance, in compassion, and because we decided as a people to share our wealth as much as possible, because we believe in equality of opportunity for all.”
Canadians welcome our 29th Governor-General, heir of Champlain, Elizabeth’s viceroy, the Crown in Canada, embodiment of our democracy.

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LGCJ.: