THE ECONOMY/GOVERNMENT

Of money and politics

Carol Goar January 7 1985
THE ECONOMY/GOVERNMENT

Of money and politics

Carol Goar January 7 1985

Of money and politics

THE ECONOMY/GOVERNMENT

‘How do you feel about the fob lowing statements? We should :i: rely more on individual initia-

_) tives and ability and not so

_ much on government1

STRONGLY AGREE...........................................(24%)

AGREE............................................................(60%)

DISAGREE...................... (14%)

STRONGLY DISAGREE......................................( 2%)

NO OPINION (VOLUNTEERED)..........................( 1%)

‘The federal deficit is an unfair burden that we are passing on to our children; it has to be cut ’

STRONGLY AGREE................. (24%)

AGREE................................................ (62%)

DISAGREE......................... (12%)

STRONGLY DISAGREE......................................( 1%)

NO OPINION (VOLUNTEERED)...................... ( 2%)

Carol Goar

The dilemma facing any popular new government is that eventually it is unlikely to fulfil the expectations it has created. The elements for Prime Minister Brian Mulroney’s day of reckoning already seem to have fallen into place. His first major collision with the electorate could take place within months. And the cause will almost certainly be Ottawa’s endlessly discussed deficit. The Maclean’s/Decima Poll reveals that Canadians entertain a fundamental contradiction in their approach to government. Most of them appear to have accepted Mulroney’s verdict that the $35-billion federal deficit must be cut and they are waiting for the new government to begin its task. But they are unwilling to give up any of the services that Ottawa currently provides. Said Allan Gregg, president of Decima: “The government is between a fiscal rock and a public-opinion hard place.” That basic paradox emerged as one of the highlights of The Maclean ’s/Decima survey. A convincing 86 per cent of respondents agreed with the statement “The federal deficit is an unfair burden that we are passing on to our children— it has to be cut.” But when Decima asked

Canadians whether they were willing to see any of the existing economic or social programs eliminated, 67 per cent said no. That apparent determination to maintain the country’s $40-billion social security system represents more than a simple roadblock to Mulroney’s deficitcutting plans. It demonstrates the conflicting demands on a range of issues that Canadians have conferred on the new government.

Overall, the poll respondents indicated that they want an administration that is leaner and cheaper, but they still view the government as their chief defender in the marketplace. When Decima asked respondents, “Whom do you look to most to look after your best economic interests ... government, business, or unions?” a solid 50 per cent chose the government, 30 per cent selected business, and 10 per cent picked the unions.

Concern: Groups tending to look to government included those likely to have the most trouble fending for themselves: nonworking women (62 per cent), the young between 18 and 24 years of age (51 per cent) and the unemployed (58 per cent). Those looking to business included professionals (51 per cent), those with a college or university education (41 per cent) and those earning $40,000

or more a year (42 per cent). Those more likely to look to unions included union members (21 per cent) and lower-paid, less-skilled workers (16 per cent).

Canadians also delivered a contradictory message in their replies to two other vital questions. When asked to react to the statement “We should rely more on individual initiatives and ability and not so much on government,” the majority of Canadians (84 per cent) agreed. But Canadians also expressed a strong level of concern about all-out competition with foreign investors. The Maclean ’s/Decima Poll asked: “Some people say that if we are going to get our economy growing we are going to have to invite much more foreign investment into Canada. Others have been saying that Canadians need protection from foreign ownership and that the cost of more foreign investment is just too great. Which one of these two views best represents your own?” The respondents were almost evenly split when the margin for error is taken into account—51 per cent wanted more foreign investment and 46 per cent feared it. Those statistics defy the popular notion that Canadians are shifting radically to the right. Clearly, a more subtle blend of prudence and pragmatism prevails.

Crucial: Despite the fact that the Mulroney government has made cutting the deficit an important part of its economic strategy, when asked the openended question “In your opinion, what is the most important issue facing Canada today—the one about which you, yourself, are most concerned?” only three per cent of the 1,500 people interviewed listed the government debt as their main economic concern. By contrast, an overwhelming 53 per cent chose unemployment, with about a third singling out youth unemployment. The only other significant economic concerns were inflation, selected by five per cent of Decima’s sample, and interest rates, chosen by two per cent. That apparent conflict—between Canadians’ stated desire to see the deficit cut and their insistence that unemployment is the truly crucial issue—underlines the difficulties facing Conservative policymakers.

The final contradiction seemed to be that in spite of their anxiety about jobs Canadians were riding a wave of optimism. An overwhelming 80 per cent of Decima’s respondents professed a sense of well-being about their economic future. That national mood—hopefulness,

combined with an undercurrent of apprehension—represents both Mulroney’s greatest advantage and his biggest challenge.

As the Prime Minister lays the groundwork for his government’s spring budget, he will have to take into account the differing demands being made by Canadians. The nation appears to be looking to him to launch a major jobcreation drive at the same time that he pares down the $190-billion debt that successive governments have accumulated over the past decade. So far, Canadians seem to be leaving it to Mulroney himself to decide where to cut. But there are very real strictures on what expenditures the government can eliminate. Out of every dollar that Ottawa spends: • 22 cents is used to pay interest on the public debt;

•19 cents goes directly to Canadians in the form of old-age pensions, family

allowance payments, the government’s share of unemployment insurance and other support programs;

• 20 cents goes to the provinces and municipalities to finance their health care, postsecondary education and welfare systems, and to provide equalization payments for the poorer provinces;

•15 cents is transferred to Crown corporations, scientists, cultural agencies, business, underdeveloped countries and other smaller groups.

That leaves only 24 cents at Ottawa’s disposal to finance its own operations. There are potential savings to be made by improving the efficiency of the public service, but the total impact is unlikely to be large. Finance Minister Michael Wilson made that point in the discussion paper accompanying his Nov. 8 economic statement. “This will make only a small dent in the problem,” he said, referring to the government’s attempts

to cut its own expenditures. Still, the message MPs are getting from Canadians is that deficit-cutting can be a relatively painless, Ottawa-based exercise.

Illiteracy: One explanation for that approach is self-interest. As Decima’s Bruce Anderson noted, “Everyone is reluctant to see cuts take place in services which affect them, but that reluctance is in large part due to the fact that many people do not believe serious cuts are necessary to bring down the deficit.” Said Gregg: “When you come right down to it, it is a problem of economic illiteracy. People want the government to reduce the deficit but they have not given the government a mandate for the means to meet that goal.”

That could mean that Canadians are destined to receive an unexpectedly harsh awakening as the government begins to make budget cuts. It could also mean that the Mulroney government is

about to suffer the consequences of having created expectations it cannot fulfil. Said longtime Conservative strategist Hugh Segal: “When the public has high expectations that you have helped to stir up and you do not moderate them, they may appear in a year’s time to club you over the head.”

For his part, Wilson says that the issue is one of public education. In a recent speech, he told a group of business and financial leaders, “The deficit danger is a relatively new notion in this country, and I am concerned that Canadians may not fully grasp its conse-

‘ Whom do you look to most to look after your best economic interests — government, business, or unions?’

‘How satisfied are you with your own personal economic situation right now? Would you say you are ..

quences or share my concern about it.” The MacleanWDecima Poll appears to support that hypothesis. When the polling firm asked respondents to rank their economic concerns other than unemployment, a distinct pattern emerged. The deficit tended to be a high priority for the well-educated (33 per cent compared to a national average of 21 per cent), for those earning at least $30,000 a year (30 per cent), for professionals (30 per cent) and for those in their prime earning years, aged 35 to 64 (26 per cent). Those are the very constituencies that Mulroney is hoping to hold onto and enlarge as he puts his conservative program into motion.

By contrast, Decima found that those with the least economic clout were the least enthusiastic about deficit-cutting. Almost one in every five students (19 per cent) disagreed with the statement “The deficit has to be cut,” compared with a national average of 13 per cent. Similar resistance was evident among the unemployed (16 per cent) and among those with incomes of less than $10,000 a year (15 per cent).

Nationalist: But even among those who cite the deficit as a serious economic concern, there appears to be no consensus about how to reduce it. Citizens

and politicians offered Maclean ’s a variety of suggestions. Poll participant Harold Locke, a 36-year-old high-school teacher living in Shelburne, N.S., said that those with high incomes should be taxed more heavily. In Calgary another respondent, 37-year-old Blaine Marler, a student and part-time consultant, said that family allowance payments should be taken away from the rich. “Somebody making $50,000 to $60,000 does not need an extra few dollars a month,” he said. But most agreed that medicare should be maintained intact.

The deficit dilemma is representative of what Decima’s Anderson calls the “blend of opportunities and constraints

that Canadians have conferred upon their new government.” On the one hand, voters seem to endorse Mulroney’s determination to strengthen the private sector and cut federal spending. But on the other, they expect the government to provide safety nets for the poor, sick, elderly and unemployed. Said Gregg: “The interesting thing is that there is still this strong reliance on the government when we are supposed to be seeing a swing to the right.” That same underlying reliance on government was evident in the sharp split on the question of letting in more foreign investment. Said Gregg: “There are still strong nationalist tendencies in this country.”

Gregg, for one, argued that Canadians are looking for a new style of government, not a radically different set of values. Added Segal: “The Conservative party was elected on a populist mandate. What Canadians voted for on Sept. 4 was not less government in the sense of small-c conservatism, but less conflict, less government domination of the front pages and less of a sense that the government is burdensome.”

Such attitudes, Segal said, help to explain Mulroney’s early preoccupation with selling off Crown corporations and ending the federal-provincial disputes that characterized the Trudeau years. But for Mulroney to bring about an economic renewal he will have to reinvigorate the private sector.

Suffered: So far, there is little evidence of impatience or disenchantment among Canadians. Indeed, Decima found that 76 per cent of Canadians were content with their personal economic situation. Eighty per cent of those surveyed by Decima professed optimism about their economic prospects. But Gregg said that his research over the past five years has shown Canadians to be “undauntingly optimistic.” Even at the height of the 1981-82 recession, the worst economic downturn the country has suffered in 50 years, Decima found optimism to be increasing. “But now,” said Gregg, “it is as high as it has ever been.”

Clearly, Mulroney’s honeymoon with the Canadian electorate is continuing. But the Prime Minister has not had to deal with the contradictions inherent in the massive mandate that the country gave him four months ago. Mulroney now has to try to cut the deficit without sacrificing any of the existing social programs, encourage foreign investment without endangering Canadian sovereignty and create thousands of new jobs while setting off a flood of new investment. If he cannot do that, he will have to rely on his Irish charm and the goodwill of the country.