CANADA

STORM WARNINGS

The Liberals gird for battle over social reforms

WARREN CARAGATA October 3 1994
CANADA

STORM WARNINGS

The Liberals gird for battle over social reforms

WARREN CARAGATA October 3 1994

STORM WARNINGS

CANADA

The Liberals gird for battle over social reforms

WARREN CARAGATA

Lloyd Axworthy does not look like a man under pressure as he sprawls back on the small sofa in his cramped and narrow Parliament Hill office that is, by Ottawa standards for senior ministers, almost monk-like. Relaxed he may be, feet up and comfortable, but the minister of human resources, who presides over a department that accounts for slightly more than half of every dollar that Ottawa spends, is in the eye of a building storm. His plan to remake unemployment insurance, federal welfare funding and other social programs—to be tabled next week in the House of Commons—is shaping up as the centrepiece of the rest of the Liberal government’s mandate. The forces that will be arrayed against him, including many provinces, are formidable. Still, Axworthy downplays the risks of failure. “I don’t treat it as Armageddon,” he says.

Maybe not, but many Liberals are counting on the veteran Manitoba MP to deliver. Chief among them is Finance Minister Paul Martin, who is expecting that a reform of social programs will help him to meet his target of reducing the federal deficit from its expected current level of $39.7 billion to $25 billion by 1996-1997. And with national unity again at risk, the Liberals desperately need to prove that reform is possible, that broken programs can be fixed. In fact, government insiders say the stakes are much higher than Axworthy lets on, and that a government with not a lot to show for its first 11 months in office needs a visible accomplishment.

That is what Axworthy will be aiming for when he stands up in the Commons to unveil what his officials are calling an “options paper” on social program reform. It will set out an array of alternatives for reform of $40 billion worth of government programs: unemployment insurance, skills training, federal cost-shared funding of welfare through the Canada Assistance Plan, federal funding for colleges and universities, the child tax benefit and the working income supplement. The proposals will include:

• Returning to the roots of UI, when it was a program to help people temporarily between jobs. Claimants would get more counselling and more opportunities for training. There would be tighter rules for fre-

quent UI claimants—perhaps a requirement to do community work or undergo training. There could also be an incomes test tied to family income that might limit claims, for example, by people who lose their jobs but whose spouses still earn substantial salaries.

• Directing welfare payments to children,

so that parents would not lose benefits if they take a job.

• Increasing the child tax credit, but targeting it more directly to the poor.

• Ending federal cost-sharing of welfare, with Ottawa instead making outright grants. Provinces would be allowed to administer the funds as they saw fit, leaving open the question of whether Ottawa

could continue to set national standards.

• Eliminating direct federal grants to the provinces for postsecondary education, with the money instead going directly to college and university students in the form of loans. Repayment of loans could be tied to future earnings.

The basic thrust of what Axworthy will tell the Commons is that social programs must do a better job of getting people into the labor force and ending a culture of welfare dependency. But even after hearing what the minister has to say, Canadians will have no real t idea which options, from a sometimes con¡ flicting list, Axworthy and the government are j leaning towards. Should Ottawa set national \ standards for welfare? Should people who = repeatedly claim UI—such as those in seac sonal industries like fishing and forestry—be eligible for benefits, and what constitutes a repeated claim? Should part-time workers be eligible for UI? The only sure thing is that the government will stress its dislike for the status quo. “We have programs of assistance that have huge administrative costs, which have enormous disincentives, which don’t put the money in the right places,” Axworthy reflected last week. “They were designed in the ’40s or ’50s or ’60s with very different purposes, and now you’re trying to put a square plug in a round hole.”

A discussion paper was not what Axworthy had in mind back in January, when the government was in the first blush of power and anything seemed possible. Then, he intended to table an action plan, instead of a mere list of options, and he intended to do it in April rather than October. By late fall, Axworthy had hoped to draft legislation that would be implemented next year. How that timetable went badly awry illustrates the challenges that confront the government as it overhauls Canada’s social safety net. The provinces complained that they were not being consulted. Quebec, then under the strongly federalist Liberals, complained that Ottawa was bent on a power grab. Next, came the Quebec election campaign. Finally, Axworthy’s cabinet colleagues looked at what he was proposing and got cold feet about approving any firm proposals. Axworthy insists that his plan is still on course, but he admits: “Once we launched

the process, I think there were a lot of new variables and factors that came into play.”

Bernard Valcourt knows a lot about new variables. Now a lawyer in Edmundston, N.B., he was Axworthy’s Tory predecessor as human resources minister and wanted the Tories to announce their plans for social program reform before last fall’s federal election. But then Kim Campbell’s government backed off when they weighed the risks. “Poor Lloyd, he’s got a full plate in front of him,” says Valcourt. The problem, he believes, is that Canadians know that change is required but are nervous about exactly what change they will get, “in part because they may need these programs for themselves.”

But Axworthy maintains that Canadians are on his side. He points to a poll, commissioned by the government and conducted by the Angus Reid Group in June, which indicated that 72 per cent of Canadians think that reforming social programs is a good idea. The poll suggested that Canadians believe social programs are inefficient and too expensive—but at the same time, they see such programs as compassionate and essential measures. “There is very broad public interest, demand and support for some serious changes,” Axworthy said. “If we can tap into that will that’s out there, I think it will work.”

Bob Pringle, social services minister in Saskatchewan’s NDP government and a for-

mer social worker, agrees that reform is badly needed, and says he is prepared to work with Axworthy. For his part, Axworthy says he wants to sit down with the provinces to “do the reforms together.” It is not clear, though, whether he will get all 10 provinces to the table. In Quebec, the Parti Québécois had indicated before it won the Sept. 12 election that it would not participate, and since then Bloc Québécois Leader Lucien Bouchard has called social reform “a shameless offensive against Quebec’s constitutional position.” But even among provinces inclined to be more supportive, the mood could change quickly if it seemed that Axworthy was acting only as Martin’s handmaiden in slashing the deficit. “If this is just a budget-reduction exercise,” says Pringle, “then we’re not going along with it.” Axworthy explicitly denies that charge: “I am not doing this as a stand-in for the minister of finance.”

Still, there remains a suspicion among critics that Axworthy, long identified with the left wing of the Liberal party, is fronting for Martin. A finance department paper released in advance of last February’s federal budget noted in capital letters that Canada spends more on social assistance than its major trading partners, and that its UI system is far more generous than those in other major industrialized countries. The budget announced cuts of $2.4 billion a year in UI and noted that

“reform will lead to further significant reductions in unemployment insurance expenditures” that would allow “significant reductions” in premiums. That promise will restrain Axworthy’s ability to shift savings from UI into job training.

Martin also set a budget expectation for Axworthy to trim annual federal spending on welfare and postsecondary education by at least $1.5 billion in 1996-1997. “The objectives for social security reform are clear; the savings parameters are firm,” the budget said. Francine Lalonde, social affairs critic for the Bloc Québécois, says there is no doubt about Axworthy’s true intentions. “Their main aim is to make cuts,” she says. “That is what Mr. Axworthy is being asked to do.”

Axworthy recognizes the need to assuage such concerns. He does not intend to repeat the failure of Liberal predecessor Marc Lalonde, who introduced a discussion paper on social security reform in 1973 that was as ambitious as what Axworthy is trying to accomplish today, but which died after opposition from the provinces. “We’ll work very hard to make it work,” he says. But, he adds, “the government can only act as much as a consensus that you feel in the public will allow you.” In the end, whether the social safety net is remade in Lloyd Axworthy’s image will depend very much on Canadians themselves.

WARREN CARAGATA with LUKE FISHER in Ottawa