THE WEST BLOCK

Episode 24, Season 3

Sunday, February 16, 2014

Host: Tom Clark

Guest Interviews: Tony Clement, Robyn Benson, Pierre Poilievre, Harley Finkelstein, Tobi Lutke

Location: Ottawa

Tom Clark:

On this Sunday morning, Ottawa prepares for battle. The government and the public servants are about to go head to head in a fight over benefits. Could this be the defining issue leading up to the next election? The debate starts here.

Another battle front, the reshaping of our democracy. Why did this become a partisan issue? Democratic reform minister Pierre Poilievre is here.

And, the second installment in our Big Idea series, from the founders of Shopify, Canada’s first billion dollar tech start-up; a Big Idea for Canada.

It is Sunday, February the 16th. I’m Tom Clark, from the nation’s capital, and you are in The West Block.

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Well Tuesday’s budget contained a curious entry, a savings of $7.4 billion dollars that comes from getting retired public servants to pay more for their retirement health benefits. Now it’s curious because it hasn’t been negotiated with the public servants yet. There is a battle a brewing that could break wide open within weeks. So, what is the issue? Here it is, your weekly West Block Primer:

Mary and Deb started their working lives at the same time. Mary went to work for a small company; Deb went to work for the federal government. Like 80 per cent of private sector workers, Mary does not have a pension. Deb does, as do the vast majority of federal government workers. In retirement, Mary will have to buy her own health plan. Deb has one for life and most of it will be paid for by the government. In retirement, for every dollar that Deb pays for her health plan, the taxpayer kicks in $3 dollars. The government wants that to change so that each side pays $2 dollars, and that’s not all. Currently, people only have to work for two years to qualify for this health benefit. The government wants to change that to six. The government says the changes are all about making things fair and reasonable for employees and taxpayers. Then union disagrees.

Joining me now to talk more about this from Toronto is Treasury Board president, Tony Clement. Minister thanks very much for being here. Can we just start off with sort of an overview? In your view, do you think that civil servants have it better than private sector workers?

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Tony Clement:

I think when you look at some of the indicators, that is the case there have been studies that have been done that indicate over time this has occurred that when you add salaries plus benefits and pensions that it is over and above what the norms are in the private sector and as importantly, what the norms are in other public sectors across the country. So what we’ve said is, we want to fair and reasonable to our employees of course, but at the same time, we do believe that there has to be some reimagining of some of these things for the taxpayers interest.

Tom Clark:

You know, I said earlier in the show minister, that maybe,you can correct me if I’m wrong, but maybe you were a little bit presumptuous because you booked the savings that are going to come out of your negotiations with the public service union you booked it into the budget as if it’s a done deal already. Was that a bit presumptuous of you?

Tony Clement:

No we’ve had discussions and negotiations with the main bargainers on behalf of the union for several months now on many of these issues so we feel that we have tried to get some accommodations, some kind of negotiated settlement. In the absence of that, we feel that it is prudent to book these things in the budget. Having said that Tom, negotiations are still possible, to some extent they still continue and I am still looking for an accommodation that can mean the taxpayer is looked after but at the same time there will be the right sized programs for federal public servants and retirees in the future.

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Tom Clark:

Are you going to stop just at the question of health benefits and sick days or is there more that you want to change in the relationship between the government and the public service?

Tony Clement:

Well I think that these are major items. We’ve already had success on other major items, discontinuing for instance, a voluntary severance was a big thing; changing the pension scheme for federal public servants so that they pay 50 per cent of the value of the benefits. That saved the taxpayer $900 million dollars a year in and of itself. So that was from the previous round of bargaining. What I’ve said going forward is, and I’ve been very open about this to the unions as well as to the public, we have to tackle absenteeism. To have a rate of absenteeism whether you look at paid or unpaid, or paid plus unpaid; it doesn’t matter. It’s higher than the norm. It’s higher than other public sectors as well as the private sector and we think that there’s a better way to deliver sick benefits and disability benefits to public servants, to make sure that they get the services they need, but at the same time looking after the taxpayer.

Tom Clark:

I just want to ask you one last question in the minute that remains to us here and it’s about veterans. You know the head of the Royal Canadian Legion has criticized your move in terms of how much retirees are going to have to pay for their health benefits. You’ve had a rough relationship with veterans between your government and yourself for the past couple of weeks. Why wouldn’t you just exempt veterans out of this? People who have carried the colours of this country, why should they have to pay more?

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Tony Clement:

In fact, what we’ve done of course, all of the programs that are available under Veteran’s Affairs Canada are still available Tom. I want to assure your viewers of that. So when it comes to whether it’s home care or dietary care, or shoveling their driveway, or cutting their grass, all of that is still going to be available.

Tom Clark:

But they have to pay more….if it’s a 50/50…

Tony Clement:

Yes, but if you’re below a certain income, if you’ve got a low fixed income as a retiree, you’d be exempted from paying more. So I’m very serious about that. I want to do good for people who are on low fixed incomes but also have a more balanced system on a voluntary supplemental plan than we have presently.

Tom Clark:

Tony Clement, president of the Treasury Board. Thanks very much for joining us Mr. Clement, I appreciate your time.

Tony Clement:

Thank you.

Tom Clark:

Well Robyn Benson is the Public Service Alliance of Canada’s National president. She’s been listening into our interview with Minister Clement. Thank you very much for being here Ms. Benson. What did you think of what the minister just said?

Robyn Benson:

Well first, thank you very much for having me here. And once again, Mr. Clement misleads Canadians. When he talks about sick leave and he indicates that we use more, there is a report out now from the PBO and it clearly…

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Tom Clark:

Parliamentary Budget Officer.

Robyn Benson:

Yes, thank you. And it clearly indicates that we use, on average, the same as what’s in the private sector. We also believe that it’s actually lower because he had difficulty in getting the figures from the government as well in order to do his analysis. And so, we believe that it is much lower. So Mr. Clement misleads people.

Tom Clark:

I want to ask you about the health benefits and about how it’s going from a 75/25 split to a 50/50 split. That’s what the government wants. Why isn’t that a good idea?

Robyn Benson:

Well first of all, the government wants to do that to individuals who are already on pension. So when you’re already on a fixed income and then the government comes and claws more money from your cheque, and if you’re living pay cheque to pay cheque, that’s very, very difficult. Mr. Clement is right, we’ve had some discussions and we’ve clearly articulated that we’re not going there. It’s not a rich plan to begin with. We’re not out of the norm in terms of a 75/25 split so why does he need to go to the 50/50? And why do it to individuals who are living pension cheque to pension cheque now?

Tom Clark:

You’ve got to believe though they’re pretty serious about it because they’ve already accounted for it in the budget that they’re going to get back.

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Robyn Benson:

Well yes, I suppose they’re pretty serious about it, but I think that retirees will also speak up. They have been. My members that are retiredhave been e-mailing me. You know certainly they’re looking at what their next steps are.

Tom Clark:

Has the government in your view declared war on your members?

Robyn Benson:

I think the government has been disrespectful to our members. Our members are really proud to provide services for Canadians. They work hard day in and day out. And when they have a president of treasury board indicating that they don’t, during Public Service Week last year, I think it’s really difficult. I think that they’re being disrespectful to our members and the morale is at an all-time low.

Tom Clark:

This is sounding like it’s going to be a very big fight. What can Canadians expect out of this? I mean are you drawing the line in the sand and saying no way, we’re not budging, that’s it?

Robyn Benson:

Sick leave is in our collective agreement right now and what the government wants to do is contract that out; when you look at a short-term disability plan that means contracting out the work. We accumulate sick leave. If we use it, it’s used. If we don’t we lose it. It’s an insurance policy. This is the government not wanting to manage. So then, I have to ask the question, if managers aren’t going to be managing, why are they going to get their bonuses? Because it’s going to be a company now who phones you for example to say, oh I understand you have the flu, when will you be coming back work? Instead of your supervisor wanting to ensure that you are healthy.

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Tom Clark:

I want to ask you this; we’ve got a minute left here. You know, the vast majority of Canadians don’t have a pension. The vast majority of Canadians don’t have health benefits in retirement. This is going to be a public fight. How on earth are you going to get the Canadian public on your side for benefits that most Canadians don’t have?

Robyn Benson:

I think it’s a matter of talking to Canadians. They’re our friends. They’re our family. They’re our neighbours. They’re in our communities. We live and we work, and we shop within our communities. So it’s about talking to them so that they understand what the benefits are because in fact, we do pay for these benefits. We pay every pay cheque for our pension. Pensioners of course pay for the 25 per cent for the health care. So quite frankly, I think it’s disrespectful to mislead Canadians to say that we don’t.

Tom Clark:

Is this going to get ugly?

Robyn Benson:

We are pretty strong in our resolve that I will represent my members to the best of my ability and my members are proud public service workers, and they will continue to serve Canadians but we will do what we need to do.

Tom Clark:

Robyn Benson of the Public Service Alliance of Canada, thank you very much for being here, part of this discussion. I appreciate it.

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Robyn Benson:

Thank you.

Tom Clark:

Well coming up, why the Elections Reform Act is creating an all-out war with Opposition parties, and Elections Canada. Did the government get it all wrong?

And, you might not know the name, Shopify but you’ve most likely used its services. What we can learn from two very bright minds behind the billion dollar tech company, in The Big Idea.

Break

Tom Clark:

Welcome back. Well it’s called The Fair Elections Act but it has a lot of people yelling unfair, including the chief electoral officer of Canada. The government says that this bill is aimed at making voting easier, more open and more secure. The Opposition says it achieves none of the above. Joining me now is the author of the bill, democratic reform minister, Pierre Poilievre. Good to have you here minister. Thanks very much for dropping by.

You know, I said at the beginning of the show, I was curious as to why this had become a partisan issue. I mean after all, we’re talking about democracy. Hard to see that there would be a huge division between the NDP vision of democracy and yours. Did you consult the Opposition parties when you wrote this bill and if not, why not?

Pierre Poilievre:

Yes, in fact, and with both Opposition critics. I also read carefully the studies that came out of the Procedure and House Affairs Committee of the House of Commons, which carefully studied all of these matters, and we tried to incorporate as many of their recommendations as possible.

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Tom Clark:

But did you sit down with the Opposition and say, here’s the bill. Let’s do this collaboratively so that when it comes onto the floor of the House, we’re all in agreement?

Pierre Poilievre:

No, we presented the bill to all parliamentarians at the same time, which is the standard procedure and it does incorporate not only the views of Opposition members but of other groups with whom we met, and the Chief Electoral Officer of whom we accepted 38 recommendations.

Tom Clark:

Fair enough but you know, I mean other ministers have done the collaborative way: Jason Kenney for example when he had some contentious immigration reforms, met with the Opposition parties and worked out a collaborative approach. Why did you not do that?

Pierre Poilievre:

There are a lot of things in the bill that I think everyone can agree on. For example, the creation of a new registry, that all those who make mass calls will have to sign up with, so that we can track robocalls and prevent rogue actors from impersonating election officials. There are tougher penalties for deceiving people out of their votes. We are also closing the loopholes that have allowed some to use unpaid debts to evade donation limits. These kinds of things have formed a broad consensus. I know that attention will always focus on where there is debate but by enlarge; we have a lot in this bill that most people can support.

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Tom Clark:

Well, most people except for the Chief Electoral Officer and the two Opposition parties in Parliament who don’t. But you know, I’m wondering about the optics of this, when you go in and do not collaborate in advance with the Opposition on something, quite frankly that should not be a partisan issue. I mean it’s about our democracy in this country. Doesn’t it raise suspicions in minds when they say, well wait a minute now, so you didn’t consult with anybody. You’ve brought in limits on debate to get it through the House as fast as you can, can you blame somebody from looking at you and saying, what are you up to? What are you trying to pull over on us?

Pierre Poilievre:

Well if someone said that to me, I’d say, read the bill. The Fair Elections Act is filled with measures that I can defend. Look, we are preventing voter fraud by eliminating unsecure methods of voter identification for which there were thousands of irregularities in the last election. One example is vouching. The Elections Canada own report found that there were 50 thousand irregularities with vouching. We’re going to eliminate that practice.

Tom Clark:

But the Chief Electoral Officer doesn’t like what he’s seen and is quite angry about it, and as are the Opposition. Listen, I just want to ask you one other thing, you had a chance when you were overhauling democratic reform, in this bill, to get a handle on pre-election advertising by political parties. Now that we’ve got fixed election dates, why did you not put some restrictions on advertising leading up to the beginning of an election campaign? You could have done that.

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Pierre Poilievre:

But I didn’t think we should.

Tom Clark:

Why?

Pierre Poilievre:

Because we live in a free country. The big risk with large money is not in how much you spend. That’s a decision by parties who legitimately raise that money but how it is raised. If it comes in small donations from a vast number of people, then power is dispersed. If it comes in large donations from a very small group of people, then power is concentrated, and is that problem that we have avoided by eliminating big money from politics and keeping donations under $1,500 dollars which is the maximum limit set by the Fair Elections Act. So in other words, we want to allow small contributors to give a little bit more to democracy through the front door and block illegal big money from sneaking in the back door.

Tom Clark:

Pierre Poilievre, there’s a lot to talk about here but I appreciate you coming in and starting the conversation.

Pierre Poilievre:

Thank you Tom.

Tom Clark:

Thank you so much, I appreciate it.

Well still to come, The Big Idea from a billion dollar Canadian success story. Stay with us.

Break

Tom Clark:

Welcome back. Well for the second installment of our Big Idea series, we went just down the street from here to a place called Shopify. Now, you may not have heard of them but chances are you’ve used it. Almost every time you make an online purchase, it’s the program that works in the background. And it is worth a billion dollars; one of the very few tech companies in the world to reach that mark.

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We met with the founders, and in the spirit of the tech world, we decided to workshop a Big Idea for Canada.

My name is Harley Finkelstein. I’m 30 years old and the Chief Platform Officer at Shopify. Shopify allows makers, creators and curators to sell anything, anywhere and at anytime. Shopify currently has 350 employees. We have three offices; Montreal, Ottawa and Toronto, and culture for us is very important as you can see from our lounge behind us. We do catered lunches every single day. We have a lot of education as part of the program here at Shopify and we give everyone maid service twice a month which is pretty neat.

My name is Tobi Lutke. I’m 33 years old and I’m the Founder and CEO of Shopify. What I’m most proud of at Shopify is that they manage to assemble an absolutely world class group of people right here in Ottawa, Canada. We get to solve problems that are real global problems, every single day. We make changes to the system that 80,000 store owners use and spend a lot of time with, and it’s exhilarating.

Tom Clark:

So what we’re going to try and do is get to The Big Idea, but let’s start the other way around. Let’s start with some of your concerns, some of your thoughts. I would assume that where we begin is that you would say what Canada needs is more Shopify. Is that a safe bet?

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Harley Finkelstein:

I think Canada needs great companies and Shopify has become that. I still think we have a long way to go. Certainly more great companies in Canada, is something that is always going to be great for the country.

Tom Clark:

Okay, so to get more of that then, what do we need?

Tobi Lutke:

Specifically talking about technology companies, one of the great things about technology companies is that they aren’t relying on a whole lot of external factors, right? They don’t rely on government contracts in most cases and these kinds of things.

Tom Clark:

Is part of The Big Idea then that governments should get out of the way as opposed to participating in this?

Harley Finkelstein:

Getting out of the way maybe seems a little bit strong but it’s certainly giving us the freedom to raise money and raise capital from other countries for great investors. Allow us the opportunity and freedom to kind of do our thing; I think that’s really advantageous.

Tom Clark:

See a lot of tech companies might say look the Mecca for this is Silicon Valley. What do you guys doing sitting up in this cold small town of Ottawa running a billion dollar company?

Harley Finkelstein:

I don’t think there’s a need to go south. We are a proud Canadian company. We’re a proud Ottawa-based company. We think that Ottawa and Canada has been a competitive advantage for us. We are very focused here. We think access to talent here is incredible. There’s amazing universities. There are amazing programmers, engineers and designers. We think Canada is a great place to build a company.

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Tom Clark:

Okay well let’s deal with that for a second. So if it’s a matter of sort of showing more pride, matter of sort of more self-confidence, what are we missing now that we need in order to get there?

Tobi Lutke:

There very clearly has been about four or five years nuclear winter of no companies truly getting to the size that Canada can really celebrate them. If you look at the TSX now there’s barely any tech left. And the reason is because the dot-com crash happened and then the tax code was such that Canadian companies ended up only being financed by Canadian VC’s and there wasn’t a whole lot of money around. So out of necessity, the exit strategy for all companies was essentially try to build to 100 million if possible or somewhere around there 50 million plus and then sell to Americans because that was really the only option that existed.

Tom Clark:

What do we need culturally because when you guys started were you sort of handed by other Canadian entrepreneurs’ sort of the playbook and you know did they say to you, I’m passing the torch to you? Did that happen?

Harley Finkelstein:

I think any Canadian entrepreneur that has had some success owes it to future Canadian entrepreneurs to pay it forward, to help them. To give them…maybe there’s no playbook and actually there is no playbook but at least introduce them to the right people. To give them contacts, people that can help them to kind of use them as a soundboard.

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Tobi Lutke:

But this sort of chain of paying it forward needs to not be broken. One large ingredient in this is just having some role models. Sometimes when you’re building a company out of necessity there’s just a gazillion things you have to learn and figure out, and if there isn’t one other company which happens to be in the same city or something like this which actually kind of accomplished the thing you would like to accomplish recently, then that’s going to be one of those kind of pieces of doubt that you’re going to carry around with you.

Tom Clark:

We’ve dealt with government, the role of government. We’ve dealt with corporate culture about paying it forward and the necessity to do it but you’ve brought up an interesting point and that is a question of more Shopify’s, the future Shopify’s have to exist in cities where there is talent, where this is an understanding of what the business is. Are we getting closer in The Big Idea to talking about education?

Tobi Lutke:

We are now in a super interesting time of the world. You might have heard the term, “software is eating the world.” Software is… like almost every company that exists out there is currently in the process of being replaced with a software company. It’s actually utterly terrifying honestly but it’s an effect which is very pronounced and if you go look for it you can see it everywhere. There’s no Blockbuster anymore, there’s only Netflix. Apple is the largest music seller in the world and so on, and so on, and so on. So in our world you need a lot more programmer…you need a lot more designers. We need a lot more technically literate people. And I think frankly, that’s going to be essentially the check for every single country about how competitive it’s going to be in the future; how much groundwork they are laying right now to increase the technical literacy of everyone.

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Tom Clark:

I think we’re almost there in terms of The Big Idea. And let me propose, and I’m just drawing this from what you guys are telling me, in the next 10 years, Canada has the goal of becoming the most tech savvy country in the world.

Harley Finkelstein:

That’s The Big Idea. The Big Idea is we as Canadians need to build great companies here. We can stay here. It’s an amazing place to build great companies. There is an incredible support system. We do have to get a little bit louder about doing things and telling people what we’re doing here but I think that’s The Big Idea.

Tobi Lutke:

I agree, 33 per cent of the TSX should be tech companies.

Tom Clark:

Another part of The Big Idea: two big ideas. Terrific guys, I think we’re there. Thank you very much.

You can learn more about The Big Idea at http://www.thewestblock.ca. And tell us what you think; e-mail us at The West Block at http://www.globalnews.ca.

Well that is our show for this week. Thanks very much for being here. I’m Tom Clark. Tune in next week as we take The West Block on the road to the Liberal Convention in Montreal.

Until then, have a great week.

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