Transcript
Transcript: Deputy Minister Leadership Reflections Series: David Dodge
[00:00:00 Video opens with a montage of views of the CSPS building, the Deputy Minister's Office, and the crew setting up their equipment for the interview. David Dodge takes a seat in an historic room. Text on screen: Deputy Minister Leadership Reflections Series, with David Dodge. Inspiring music plays while the questions are being asked.]
[00:00:21 Overlaid text on screen: Dr. Dodge held senior roles at the Central Mortgage and Housing Corporation, the Anti-Inflation Board, and the Department of Employment and Immigration. He later became Deputy Minister of Finance in 1992.]
[00:00:31 Overlaid text on screen: In 1998, Mr. Dodge was appointed Deputy Minister of Health, a position he held until his appointment as Governor of the Bank of Canada in 2001. He served in this capacity until his retirement in 2008.]
[00:00:45 David Dodge appears full screen. Overlaid text on screen: Where were you born?]
David Dodge: Toronto.
[00:00:51 Overlaid text on screen: What was it like growing up in Toronto?]
David Dodge: My father was a businessman. I grew up in that side of things in Toronto if you will. We lived in Toronto, but on the edge of Forest Hill, so we had quite a good mix of Jewish and Protestant kids, I mean, to put it that way. That was before the wave of immigration really hit. Italian greengrocers were definitely there as well, but it was old Toronto.
[00:01:29 Overlaid text on screen: What did you want to be when you grew up?]
David Dodge: I had no idea. I always thought I would be either an engineer or a businessman.
[00:01:41 Overlaid text on screen: Where did you go to university?]
David Dodge: So, growing up in Toronto, I was damn sure I wasn't going to go to university in Toronto and live at home. So [I] went to Queens.
[00:01:56 Overlaid exterior image of Queen's University. Text on screen: Mr. Dodge received a bachelor's degree with honours in economics from Queen's University in 1965.]
David Dodge: I had a great undergraduate experience at Queen's. And one of my professors was a Princeton graduate. He got me interested rather than going and working for Shell Oil or something like that. That seemed like a very sensible thing to do. And we were lucky at that point. This was 1965. There were lots of fellowships available, and I did the arithmetic, and I could go to Princeton,
[00:02:30 Overlaid exterior image of Princeton University. Text on screen: He received his PhD in economics from Princeton University in 1972.]
David Dodge: and the fellowships were enough to pay all the costs, so I was just as well off to do that as to go and work for $4,000 a year for Shell Oil.
[00:02:43 Overlaid text on screen: What led you to join the Government of Canada?]
David Dodge: I was really interested in public policy. I was more interested in public policy than in the fine academic points of being an economist, but I was really interested in public policy. That was my professors at Queens. That's what they were interested in. That was the time of the fight between the conservative government and the Governor of the Bank of Canada, which was a big issue. But I was very interested in the human side of it, not just the financial side.
And so, that was after the '61 census, so I wrote a paper which used the '61 census data. This was in '64. I got very interested. I worked with Jenny Podoluk, [who] was at the Dominion Bureau of Statistics at the time, so I worked for that. Then I came back. After I finished my undergraduate degree, I came back and worked in what was started off as the old Department of Labour, which transitioned at that time to the Department of Employment and Immigration.
[00:04:12 Overlaid text on screen: After starting your career in public policy, what led you to transition to the Department of Finance?]
David Dodge: In the end, budgets rule. If you are interested in playing over a range of issues, then that is absolutely the place to be. But I was working very hard, when I was back teaching at Queen's at the end of the '60s and beginning of the '70s, I was working very hard on labour market issues, unemployment insurance, and so my first job was then in the Social Policy Division, the brand new Social Policy Division, which was created – I think Simon created that division basically to make sure there was an antidote to what was going on at the Department of Health and Welfare at the time, which I think both the Minister of Finance and his Deputy were worried that it was going to spend us crazy.
[00:05:15 Overlaid text on screen: What were some of the pivotal experiences that shaped your path in the Government of Canada?]
David Dodge: So, just let me go through the steps because, yes, I started, as I say, working on the social side, but the big issue at the time was, just as it is today, was housing. Back then, you went where your deputy told you to go. Mr. Eastman said,
[00:05:44 Overlaid text on screen: During a distinguished career in the federal public service, Mr. Dodge held senior positions in the Central Mortgage and Housing Corporation, the Anti-Inflation Board, and the Department of Employment and Immigration.]
David Dodge: I think you better go over to Central Mortgage and Housing because there's a lot of action here, and we'd really like somebody to be there as their economist that understands that from a broader perspective and not just from the housing perspective. So, I went there, and those were the days of AHOP and ARP and various new programs that we had to build housing that's cheap enough for folks.
It's interesting that we're doing it quite differently today, but we're up against, in a sense, the government's up against the same issue. Back then, they had created the Ministry of Urban Affairs, and so it was being approached differently. But then at Thanksgiving, in 1975,
[00:06:51 Overlaid image of Pierre Elliott Trudeau. Text on screen: Pierre Elliott Trudeau served as the 15th prime minister of Canada from 1968 to 1979 and from 1980 to 1984.]
David Dodge: Mr. Trudeau said, Zap, you're frozen. And Simon called me and said, you better get back downtown. We've got a bigger problem on our hands. And so, I was at the Anti-Inflation Board then for two years. And then I left government. I went back to teaching.
[00:07:15 Overlaid exterior image of Johns Hopkins University. Text on screen: During his academic career, he served as Associate Professor of Canadian Studies and International Economics at the School of Advanced International Studies, Johns Hopkins University.]
David Dodge: I went to the School of International Studies at Johns Hopkins, and actually did quite a bit of work for the Congressional Budget Office during those couple of years, because those were the years where inflation was going crazy. It was the time of whip inflation now and various crazy programs
[00:07:34 Overlaid images of Richard Nixon and Gerald Ford. Text on screen: Richard Nixon served as the 37th president of the United States from 1969 to 1974, succeeded by Gerald Ford, the 38th president, who served from 1974 to 1977.]
David Dodge: of the Nixon/Ford Administration at the time.
[00:07:40 Overlaid image of Jimmy Carter. Text on screen: Jimmy Carter served as the 39th president of the United States from 1977 to 1981.]
David Dodge: And then Mr. Carter became President. So, I was there for two and a half years, I guess. And then Mr. Trudeau returned to power, and Lloyd Axworthy became Minister of Employment and Immigration. And Lloyd and I had been at Princeton together, although we didn't really know each other that well at Princeton, but we had both been there and knew the folks and had that background. Princeton was, at that time, quite democratic in its outlook, whereas Hopkins was decidedly Republican, and they were quite different institutions.
But at any rate, it was quite clear they had to do something. And so, they asked me to come and head up a task force on labour market development, which I did. Then I was about to go back to Hopkins, but at that point, Republicans had come back to power, and I discovered that most of our friends in Washington were Democrats and were gone, were leaving. And so, in the end, I didn't go back, and I stayed. And then they asked me to be ADM at that point.
[00:09:13 Overlaid text on screen: How did you become a deputy minister?]
David Dodge: Well, so I had done a number of things. I had run the Budget Office at Finance. I then did the tax reform before the election. Mike Wilson was my minister. At that point, he was spending and very interested in what was going on at the IMF and the international institutions. And so, he asked me if I would leave the tax side and go and work on that. I became the G-7 Deputy at that point in time, just before the wall came down. And so, I spent two years working very closely with External Affairs in the Prime Minister's Office as we in the West were trying to figure out how to cope with this sea change, which spelt the end of the USSR.
Even though Mike Wilson was Minister of Finance at that time, he still was the one who was designated to be the person who's going to play in this issue of how we actually cope with this sea change that had taken place in the USSR and in Eastern Europe. When Mike and I did a tour of the Baltics, obvious reason why we were doing that. And then in September – what would that have been, '91? – to Moscow. We met with Mr. Gorbatchev
[00:11:18 Overlaid image of Mikhaïl Gorbatchev. Text on screen: Mikhaïl Gorbatchev was a Russian politician and statesman who served as the last leader of the Soviet Union from 1985 to the country's dissolution in 1991.]
David Dodge: the very day he kicked the members of the last meeting of the Soviet... and I remember that instance very clearly, spending two and a half hours with him as he was sitting, basically ruminating on what was going on. That was an historic moment. And then the next day, we went to the White House in Moscow and visited the new Prime Minister of Russia. And then we spent a lot of time at the G-7 meetings with the Prime Minister, and so got to know the Prime Minister quite well in that context.
And when Fred Gorbet, my predecessor, decided that he wanted to go and do things in the private sector, Mr. Mulroney simply called and said, would you take that on? Take on Deputy Minister, having known him in the context of dealing with the G-7.
[00:12:46 Overlaid text on screen: Can you talk to us about the introduction of the GST?]
David Dodge: When Mr. Mulroney came to office,
[00:12:54 Overlaid image of Brian Mulroney. Text on screen: Brian Mulroney served as the 18th prime minister of Canada from 1984 to 1993.]
David Dodge: the first issue, in a sense – the first economic issue, I'm sorry – that occupied him
[00:13:04 Overlaid image of an article by Claude Picher, dated September 10, 2007. Text on screen: Trudeau, the economic disaster.
For anyone with the slightest interest in politics, Brian Mulroney has managed to steal the show this season with his memoirs.
Despite these reservations, it is clear that the balance sheet is appalling heavy. In 1984, when Brian Mulroney ousted the Liberals, the debt inherited from the Trudeau regime was already approaching $250 billion, and the first concern of the new finance minister, Michael Wilson, was to find $30 billion to pay the interest.]
David Dodge: was the deficit that had built up during the last years of the Trudeau government. And so, we did two budgets trying to deal with that. But it was quite clear that if he was going to deal with that, and use his political capital to deal with that, that he wouldn't be able to do some of the things that he really wanted to do, the structural changes in the economy. Because his background was business, and he had a sense that we could do things better.
Basically, the middle of his first mandate, I would say, he said, well, we'll continue to try to deal with the deficit, but it's much more important that we deal with some of the other issues that I think we need to deal with. I mean, there were a lot of structural things that he really wanted to do, and one of them was to try to get the top rates of income tax down. And so, that was the shift. I moved from doing the budget with him to doing the tax reform.
We argued that if he's going to get the income tax rates down, and that we all agreed that they were being very harmful to the entrepreneurship and investment that we needed to grow, that then we had to have a replacement source of revenue. We spent quite a bit of time, both working on the income tax side, which he was always on board with, but then saying, Okay, how are we going to deal with the revenue side? Because the existing manufacturer sales tax was falling apart. We spent a lot of time with him, and he agreed that, yes, we've got to do it. It fitted with the objective of economic growth and so on. But then prior to the election, he decided, and understandably said,
[00:15:22 Overlaid image of an article by Michael Adams and Andrew Parkin, dated March 22, 2024. Text on screen: Free Trade wasn't just Mulroney's key achievement – it is one of the most dramatic public opinion turnarounds in Canada's history.]
David Dodge: I can't deal with the Free Trade and the tax at the same time, so I'm going to deal with the Free Trade, and I'll come back, and we will institute the sales tax in my next mandate.
And that's exactly what happened.
[00:15:35 Overlaid text on screen: What were the key fiscal challenges between Budget 1994 and Budget 1995?]
David Dodge: The place to start was, we had a government that came to power on the basis of a Red Book.
[00:15:50 Overlaid image of the "Red Book" titled: Creating Opportunity: The Liberal Plan for Canada.]
David Dodge: A fairly clearly articulated set of plans that were no reference to the fiscal realities of the time.
[00:16:01 Overlaid image of Paul Martin. Text on screen: Paul Martin served as the 21st prime minister of Canada and the leader of the Liberal Party of Canada from 2003 to 2006.]
David Dodge: Mr. Martin had been instrumental in writing the Red Book, and he arrives; has to somehow come to grips with this. And there we were, trying to explain the numbers that he faced. And that what he wanted to do in the Red Book was just not going to be possible. And that was the exercise until he tabled the budget the following February, which moved, actually, a long way if you look at the hard numbers, but not as far as, certainly the financial sector, but I would say also the public felt that they needed to go.
I would say it was very difficult because, as a deputy minister, you were sitting there telling the incoming government that they couldn't do what they had just promised they were going to do. And that is a very difficult position. We took a lot of steps in the first budget, but it was not seen by the financial community to be enough, number one. Number two, Mexico was in deep trouble. And so, by the spring, within six weeks of having done the budget, it was quite clear we have to go further, and that the public was ready for it. And I think that is the most important point, that the public was a long way ahead of where the incoming liberal government was, even the business guys in that government,
[00:18:13 Overlaid image of Jean Chrétien. Text on screen: Jean Chrétien served as the 20th prime minister of Canada from 1993 to 2003.]
David Dodge: and Mr. Chrétien understood it fully that this had to be done. Not because they were black-hearted accountants, as the Mulroney ministers were painted as being, but because if government was going to be a force for good in society, they had to have the fiscal room to do it.
[00:18:39 Overlaid text on screen: What drove your decision to leave after achieving a balanced budget?]
David Dodge: I left it after we knew that we were going to have a balanced budget, and I had observed that the arguments that were being made on the health side to preserve the budget were not really very well thought through. So, I went to UBC and worked with folks out there. I was in the business school, but I spent a lot of time working on the health structure issues with an amazing group of people that associated with the Canadian Institute for Advanced Research.
And we published the book, Why Are Some Nations Healthy and Others Not? That was the group that we worked with, which was a change in the mindset of what had to be done on the health [INAUDUIBLE].
So, I had done that, and I was really interested in that. It turned out that I thought I might actually go and work with a commercial bank, but that wasn't going to come through very quickly and I wasn't sure that I wanted to stay forever as an academic in the business school. And so, Mr. Chrétien called and said, why don't you come back? You've been working on this stuff, why don't you come back and go to the Ministry of Health?
[00:20:22 Overlaid text on screen: In 1998, Mr. Dodge was appointed Deputy Minister of Health.]
In many ways, the health problems originate not at the federal level, they originate at the provincial level. There are some things that we can do at the federal level. We started to try get the change in health records keeping and health info way and so on, number one. Number two, we really changed the emphasis in the department to look at the population health issues, which is what I was interested in, much in the same way dealing with the issues that I dealt with much earlier at the Department of Employment and Immigration.
In order for economic growth to actually benefit society, then you had to learn; find ways to deliver programs that were socially helpful but supported economic growth at the same time.
[00:21:20 Overlaid text on screen: What does leadership mean to you?]
David Dodge: Let me start from a slightly different angle. If you're going to have a successful organization, whether that be in business, or government, or indeed, in academia, you have to have a leader that encourages internal discussion and debate. If you will, the decision table in the organization has to be one in which those at the table bring to bear their expertise, and so on, in the best possible way. And the leader has to be able to accept or listen to what they're saying, number one. Secondly, also have a degree of – I don't know what the right word is, humility? – to not put themselves front and centre, and hence, choke off the discussion that takes place.
What I think of as being a strong leader is that you are sufficiently open; you listen well enough; you don't always put yourself in the play too early, if you will. The leader is going to have to make a decision at the end, but you want the decision to be made that – two things – that you avoid mistakes. But secondly, that you bring your troops along with you. And I would say that's no different in the public sector than it is in the private sector.
[00:23:24 Overlaid text on screen: What challenges did you face transitioning between governments with differing ideologies?]
David Dodge: So, the more difficult one, quite frankly, was the transitioning from Trudeau 1 to Mulroney. And that was more difficult because Mr. Mulroney came in with quite a different approach, and he came in with a bunch of ministers, some of whom had had a bit of government experience, but many of whom who did not, and some of whom were from the Prairie Populist wing of that party. And so, he was always trying to hold the party together throughout. So, it was very, very different.
But I was at the Department of Finance at the time, so my experience that I'm speaking here from is one of the Department of Finance because we got a government that came in that was bound and determined to do the sorts of things that we had been advocating, or working very hard on, to try to convince the last Trudeau government that had to be done. We were so ready, in a sense, for that change. So, that was a transition for us at Finance, which was very easy. It was a transition for many ministries that was awful because they had new ministers that didn't really understand what was going on.
The transition to Mr. Chrétien was – it looked more difficult because the Red Book stood in such contrast to where the Mulroney government...where the image of the Mulroney government was. I would say more the image of the Mulroney government than the actuality – but that contrast was very, very sharp.
But Mr. Chrétien was an experienced person. He had people that were experienced. Mr. Chrétien basically understood that if he could do what he wanted to do, he couldn't do it from the position that he started with, and so he had to move. And so, the first mandate was a mandate of opening the door to the second and third mandate, doing what had to be done so that that door was open. And so, the transition, again, from my perspective, was not really very difficult once it was understood what had to be done. So, there wasn't great difficulty.
[00:26:33 Overlaid text on screen: What is the role of the Deputy Minister of Finance?]
David Dodge: You are Dr. No, right? You also have one of the most important tools in your toolkit, namely the tax system. And, as we have discovered, we can spend just as easily through the tax system as we can through the expenditure side of the budget.
You have to approach each issue from an analytical standpoint as to what the impact would have financially on the government and would have on the likely impact on economic growth and hence future revenues of the government. In this part, you're Dr. No around the deputy table, you are also there encouraging folks to work on stuff to bring it forward in a way that will fit, not just in the fiscal framework, but will fit in terms of generating economic growth going forward.
[00:27:47 Overlaid text on screen: What does public service mean to you, and how do you think it has changed over the years?]
David Dodge: It doesn't matter whether you decide on a business career, or a public service career, or an academic career. In all those areas, you're always striving to make a mark that will leave the country, your institution, your company stronger and make the world better, in some sense. I think that I was very lucky, and I think my counterparts today are not so lucky.
I was lucky in a regard – first of all, it was before the era of social media. And so, A, you had time. It was before the era of the 24-hour news cycle, so you had time to think about things. And that is important. And your minister or the prime minister could quite easily say, Look, that's an interesting question. I'll get back to you on that. Much more difficult today. Much, much more difficult, which means that the pressure is on all the time to respond, rather than to think about what it is you're doing. So, I think the job today is just much, much tougher.
I think the second thing I would say is that the relationship between the minister and the deputy, or between the minister and the public servant, then was very direct. A, they were very small. There was two people in the minister's office, so it was a different working relationship. And I guess the last thing I would say is things were much more personal. In part because when I joined, everything was so much smaller. And so, you had personal relationships with the key ministers. You had very personal relationships with your deputy colleagues.
I just think, given social media, given the expansion of the size of government, I would say given the current Prime Minister has tried to do so much that when you try to do more than you actually have the capacity in an operational sense to deal with, you then really do run into trouble.
So, I guess I just think it is more difficult for folks today, certainly than I had it. Maybe I was overly lucky, but more difficult than I had.
[00:31:16 Video closes with the crew packing up their equipment from the interview.]
[00:31:22 The CSPS animated logo appears onscreen. Text on screen: canada.ca/school.]
[00:31:28 The Government of Canada wordmark appears.]
