BUSINESS WATCH

The gospel according to Paul Martin Jr.

Peter C. Newman March 29 1993
BUSINESS WATCH

The gospel according to Paul Martin Jr.

Peter C. Newman March 29 1993

The gospel according to Paul Martin Jr.

BUSINESS WATCH

PETER C. NEWMAN

While the ears and eyes of the nation are glued to Kim Campbell’s every pronouncement and gesture, Paul Martin Jr., the putative heir to Jean Chretien’s tarnished crown, is touring the country, selling the Liberal party’s vision of a new Canada.

Whether or not Martin’s ideas are ever translated into action is as important as their source and substance. His concepts boast the double advantage of being both practical and stimulating. Along with party research director Chaviva Hosek, a former Ontario cabinet minister, Martin has homed in on two or three of the country’s most agonizing dilemmas and come up with sensible options. “Any new government,” he told me during a recent interview, “will be facing two constraints: that this country is bankrupt and that the nationstate we have known and loved has evolved into a new kind of entity which has suffered a substantial loss of traditional sovereignty.” Explained Martin, who was once a senior executive with Paul Desmarais’s Power Corp. in Montreal and later took over the presidency and majority ownership of Canada Steamship Lines Inc. before entering politics in 1988: “Central governments such as Canada’s have become too small to deal with the big, global problems, yet they remain too large and distant to deal with problems of local concern. So the challenge is to redefine the role of the central government as an institution that can do a limited number of things well, instead of continuing to pretend it can do everything for everybody.”

For Martin, the most urgent priority in actualizing the cultural shift required to modernize Canada is to defrost the mind-set in which this country has been caught for a couple of decades. ‘The real problem started in 1973 during the OPEC crisis, when Pierre Trudeau tried to isolate us by claiming we could withdraw into ourselves and operate on oil prices lower than the rest of the world,” Martin claims. “From then on, we stopped evolving.

The challenge is to redefine the role of the central government as an institution that can do a limited number of things well’

When Brian Mulroney took over, he had a tremendous mandate at just the right time, but didn’t understand what he was supposed to do. By the time he did, during his second term, he had lost four crucial years and it was too late. You can’t thrust change onto a country without leading the cultural shift that would make it acceptable.”

Martin sees that cultural shift being triggered by the creation of an innovative economy which, in turn, would require much more funding and facilities for industrial research and development. “But even if we doubled the research budget tomorrow,” he says, “it would go down a sinkhole, because we can’t absorb it. We don’t know how to gather it, diffuse it or market it.” Instead, he advocates that Ottawa get out of regional equalization programs and stop handing out grants to industry. He wants to use the savings to increase federal research expenditures, but with an important proviso. “We would focus R and D funds only in areas where Canada has a competitive advantage, because there just isn’t any use trying to do something that’s not world class,” he contends. “I believe that a quarter of federal funds should go into environmental technologies flowing out of all

those areas that have to do with natural resources, because we’ve got a comparative edge there. Another 25 per cent should go into medical research and the other 50 per cent into whatever areas current markets dictate, whether it’s cold water engineering or some of the remarkable submarine research being carried out in British Columbia.”

Martin can visualize doubling Ottawa’s current research budget, which he says totals between $2 billion and $3 billion annually, over the next decade. University labs and other re search institutions would compete for these funds, and private sector companies would only have access to the results if they had invested matching amounts at the beginning of the re search project. Martin concedes that Canadian industry might have trouble financing such initiatives, but he believes that it could undertake joint ventures with foreign multinationals.

On the key issue of debt reduction, Martin’s formula is a lot less imaginative. He supports Chrétiens semantic advocacy of doing away with the GST—only to have it replaced by another tax producing precisely the same painful consequences. Martin is convinced that huge amounts of public sector expenditures could be saved by rationalizing the three levels of government to eliminate duplication. That’s true enough, but no one has yet devised a way of forcing any level of Canadian government to give up a sliver of jurisdiction without the sort of quid pro quo constitutional negotiations involved in the ill-fated Meech Lake and Charlottetown accords. And only a transparently certifiable politician bent on selfannihilation would dare revive that process.

One of Martin’s most intriguing policy pledges is that if the Liberals form the government, they will take on the banks. “They’ve been granted tremendous benefits from their monopoly position,” he says, “and they are not living up to their responsibilities.” Declared Martin: “I would tell them, ‘If you don’t begin to exercise your mandates in a responsible way, we’ll remove the restrictions on foreign banks operating here and make the market totally competitive.’ The Big Six Canadian banks must start financing innovation, putting out some risk capital into smalland medium-sized businesses, instead of pouring most of their credit into real estate boondoggles.” Martin also insists that once the banks have helped business clients develop products or services, they should stick with them in export markets, instead of leaving them gasping for credit lines at the Canadian border.

Martin is ostensibly touring the country to drum up support for his party and his leader. But he must know that the policy options he advocates will help make him Chretien’s natural successor, should an opening be created. That will be the moment his father’s prediction could come true. Just before he died in September, 1992, Paul Martin Sr., who had graced Liberal cabinets for most of three decades, told his son at a private family gathering, “I was the father of Canada’s social revolution; you will create the country’s economic revolution.”

It could still happen.