COVER

DISILLUSIONMENT IN THE REGION

MARY JANIGAN February 2 1987
COVER

DISILLUSIONMENT IN THE REGION

MARY JANIGAN February 2 1987

DISILLUSIONMENT IN THE REGION

COVER

The signals of discontent flared across Canada last week. In Manitoba, Conservative MLA James Ernst declared that the federal Tory party faced “a long road back” in its bid to regain Western trust. On a trip to Toronto, B.C. Premier William Vander Zalm complained that his province received only 5.3 per cent of major federal contracts last year—even though it has 11 per cent of the population. And Ontario’s Liberal Premier David Peterson pledged to oppose Ottawa’s plans to designate Vancouver and Montreal—but not Toronto—as international banking centres. Said Peterson: “It could be very

messy.”

The aggressive talk underscored the steady deterioration in federal-provincial relations since Prime Minister Bri-

an Mulroney took office in September, 1984. Elected partly on a promise to end disputes between Ottawa and the regions, Mulroney initially placated competing provincial interests. But a series of scandals and controversial policy decisions has weakened Ottawa’s influence—and dissipated much of its hard-won goodwill. Many local Tory officials say that the party will eventually recover—because of its positive record on economic and social issues.

Image: But some senior Conservatives last week acknowledged that the decline in federal-provincial relations is a serious problem that will be difficult to resolve. They say that they believe some regional problems are simply the result of the provinces taking advantage of a weakened federal gov-

ernment. But Ottawa, they conceded, has deepened regional anger with policies perceived as favoring one province over another. And they say that the Mulroney government has been unable to create a favorable image for such controversial decisions as the 15-percent export tax on lumber, imposed on Jan. 8 in response to American complaints about the low price of Canadian softwood being sold in the U.S. market. “I never thought I would say this,” declared one Tory fund raiser in Alberta last week. “The federal Conservatives are doing a terrible job here.” Added a senior Ontario Conservative, who said that he was disgusted by scandals and what he described as inept policy promotion: “The federal government is a lame-duck government: it is over.”

Insensitive: Throughout the hardpressed Atlantic region, resentment runs high. The most bitter protester: Newfoundland’s Conservative Premier Brian Peckford, who has dismissed the Mulroney government as insensitive to his province’s 21-per-cent unemployment rate. Peckford denounced last month’s federally commissioned Forget report on unemployment insurance, which recommended cutting $3 billion from the $12-billion-a-year system. Newfoundland has also accused Ottawa of dragging its feet on a concessionary tax package to persuade

Mobil Oil Canada Ltd. to develop the Hibernia oilfields. Said Peckford: “We have tried with this government, hoping they would see regional sensitivities. It is not working.”

In New Brunswick, federal Conservatives face charges of failing to protect local interests. Although several large lumber producers, including J.D. Irving Ltd., won an exemption from the 15-per-cent lumber tax after arguing that lumber costs in the province are already equivalent to those confronting American companies, 130 smaller Maritime companies, largely in New Brunswick, were hit with the tax. Meanwhile, Conservative Premier Richard Hatfield said last month that a proposal to establish an 18-cent-apound floor price for sugar—now before the national tariff board—could raise sugar prices, threatening 1,100 Maritime jobs, including those at a New Brunswick sugar refinery.

In Nova Scotia, employment at the Hawker Siddeley Canada Ltd. plant in Trenton has dropped to less than 60 from a high of 2,000 during the 1970s. In Cape Breton, the federal government has created fewer than 40 new jobs since last May —less than five per cent of the number pledged at that time by Deputy Prime Minister Don Mazankowski. And at Sydney’s provincially owned Sysco steel plant, employment has plummeted to 1,300 from more than 4,000 in the early 1970s. So far, Conservative Premier John Buchanan has remained conciliatory, partly because he is still seeking federal approval for a $157-million plan to modernize Sysco.

‘Promise’: The only Atlantic province without a list of major irritants is Prince Edward Island. Indeed, Liberal Premier Joseph Ghiz has hailed Ottawa’s plan to create an Atlantic Canada opportunity agency as a project “holding promise for the people of the region.”

In Quebec, where the Conservatives won 58 of the 75 seats in 1984, party prospects have also dimmed. Membership has dropped to about 20,000 from a pre-election high of more than 100,000. And the federal party has been running third behind the Liberals and the New Democratic Party in province-wide public opinion polls for almost a year. Tory problems may be

partly a result of the fact that Quebec has few high-profile cabinet ministers. And Mulroney advisers say that they are now concerned that Quebec Premier Robert Bourassa may form a common front with Ontario Premier David Peterson against the free trade initiative—although Quebec is generally satisfied with federal expenditures in the province. Said Conservative Senator Michel Cogger, a close friend of Mulroney’s: “Things are not pretty. But I keep telling myself that things can only get better from here.”

Assaults: But perhaps the strongest source of opposition to the federal Tories is Ontario. In the past month Peterson has condemned Ottawa’s lumber tax as “ineptly handled.” And he has criticized calls from Washington to put the U.S.-Canada Auto Pact on the table during free trade talks. Many

Conservatives privately concede that Ottawa’s performance—and Peterson’s partisan assaults—have damaged party fortunes. But Glen Wright, national vice-president for Ontario, contends that the loyalists have not panicked. “Conservatives feel the government’s performance is better than it appears,” Wright said. “The ever-present hunt for bad things preoccupies many in the media.”

In the West, discontent is running highest in Manitoba and Alberta. Conservative problems in Manitoba began last fall when Ottawa awarded the $1.4-billion contract to service Canada’s CF-18 fighter jets to Canadair Ltd. of Montreal. Premier Howard Pawley noted that Winnipeg’s Bristol Aerospace Ltd. had underbid Canadair—

and that federal officials had rated the Bristol bid as technologically superior. Last week, in an apparent peace offering, federal Health Minister Jake Epp, who represents the southern Manitoba riding of Provencher, announced that Bristol had won a $200-million contract to maintain an aged fleet of CF-5 fighters.

In Saskatchewan, Tories are less critical, largely because of Ottawa’s decision in December to help grain farmers with a $l-billion special Canada grains program. Said Conservative Ken Waschuk, president of Tanka Research, a Regina polling company: “There is a feeling that this part of the country is being recognized—and both Mulroney and [Tory Premier Grant] Devine get accolades for cooperation.”

In Alberta, the sinking fortunes of the oil industry have deepened provincial discontent. On Jan. 2, federal Energy Minister Marcel Masse refused Alberta’s request that Ottawa pick up half of a $200-million loan to Syncrude, a synthetic oil producer in Fort McMurray, to help with a $750-million expansion. But Aida Rawlins, Tory president in the Calgary South constituency, said that the refusal irritated some Conservatives. Said Rawlins: “The feeling

here is that the government favors central Canada.”

Scandals: In British £ Columbia, many Tories I say that Ottawa is too § distracted by scandals 1 to pay attention to the West. Vander Zalm said last week that he is concerned that Ottawa may abandon its plan to turn Vancouver into an international banking centre—because of Ontario’s opposition. However, he also expressed unreserved support for Ottawa’s handling of the lumber tax, although the softwood industry in British Columbia is the country’s largest. Provincial Conservative Leader James McNeil said that the Mulroney government is increasing the West’s alienation—and that Vander Zalm is exploiting that alienation for political purposes. “There are some dangerous feelings wafting through the West,” he added. Clearly, those feelings are equally dangerous to the Tory government’s political future.

— MARY JANIGAN with correspondents’ reports