Canada

Canada

LEARNING TO LIVE WITH CONTROLS

December 15 1975
Canada

Canada

LEARNING TO LIVE WITH CONTROLS

December 15 1975

Canada

LEARNING TO LIVE WITH CONTROLS

After almost two months of apparent confusion and hesitation, the government finally seems to be gaining the upper hand in its battle against inflation. A series of events in recent days indicate that the wage-price control program, despite its many critics, is now firmly set in motion. The most obvious development was the passage of the controls legislation by the House of Commons on December 3, almost seven weeks after it was introduced, by a vote of 111 to 96. The vote was kept surprisingly close by the absence of 30 Liberals, including former finance minister John Turner. Along with the Créditistes and the New Democrats, the Conservatives—except for George Hees— voted en masse against the legislation, thereby completing the turnabout since the last election, when the Conservatives supported controls and the Liberals opposed them. Other developments were:

• The first rulings by the Anti-Inflation Board, which were tougher than expected. Hamilton schoolteachers, w'ho had settled for a 25%,pay increase, w'ere told that was eight percentage points too much, and Toronto schoolteachers, who are striking for a 43.9% or 64.4% pay hike, depending on whom you believe, were told that even the school board’s last offer of 39.2% was excessive.

• The settlement of the government’s dispute with the inside postal workers after a 42-day strike, according to the terms laid down by the government when the strike began: a 38% increase over 30 months. Any further concessions on the pay increase would have seriously undermined the antiinflation program by showing that the government would not adhere to its own guidelines. As it was, the government managed to hold the line although at considerable cost to small businesses (see page 49) and at the risk of irreparable damage to labor relations in the post office.

• The release of polls showing general public support for the anti-inflation program, although with some reservations. A national poll by l’Institut Québécois d’Opinion Publique, released December 2, showed that 56% of the respondents approved of the program while 32% disapproved and 11 % had no opinion. But the same poll showed 59% believed the program would hurt some groups more than others, especially salary earners, with big businesses getting off lightly.

Perhaps it was inevitable that the controls program would meet with some early success because of the widespread public feeling that “something had to be done.” But at least part of the credit must go to Prime Minister Pierre Trudeau, who introduced the program in a Thanksgiving day television address and has been trying to sell it to the country ever since with an election campaign-style schedule of speeches, interviews and press conferences. In an interview with Maclean’s, he expressed satisfaction with the way the situation has developed: “My contacts—people I have been speaking to—have been positive from day one. Speaking out in Winnipeg, Saskatchewan, Ontario. Quebec and the Maritimes, I’ve felt that the audiences have always answered, responded, in a way that showed they believed in the need to do something like this. Still now, in my discussions, they’re not concerned with the fine print and the details and how is this sub-regulation going to work. They’re confident that it will.”

It was Trudeau himself, against the advice of many officials, who opted for a “flexible” controls program with no comprehensive freeze at the outset. The flexible approach avoided the problems of market distortions and inequities experienced by the Americans when they instituted their freeze in 1971, but it left many people confused and wondering if the guidelines applied to them or to anyone at all. It made life particularly difficult for the Anti-Inflation Board, the central agency of the program, which had to develop its administrative apparatus and a set of working rules while it was being accused on all sides of not doing anything.

But all the board really needed to make an impact on the Canadian public was one ruling on a major price or wage increase. The tough decisions on the schoolteachers left no doubts that the board means business. Board Chairman Jean-Luc Pepin warned afterward: “Everyone has a bit of suffering to do.” The decision to take on the teachers was a surprise. The board had been expected to tackle a price increase first in response to labor complaints that, in the words of NDP leader Ed Broadbent, the controls program amounts to “wage control without price control.” But board spokesmen explained that, much as they would have liked to have started out with a price rollback, there was no really major price increase before the board.

The board, therefore, had the choice of waiting for a big price increase to come along and meanwhile appear to be procrastinating or acting now and appear to be anti-labor. It chose the latter course after some heated internal debate.

The reaction of the teachers was predictably harsh. About 500 striking Toronto teachers were bused to Ottawa on December 1 to picket Parliament Hill, and confront MPS with cries of “Why us?” Mrs. Sonya Mamo, 52, wife of a math teacher, came with her own sign: a picture of Trudeau with the caption, “Pierre, you let me down.” She explained that she voted for Trudeau in the last three elections and believed she was voting against controls in the 1974 election. When Finance Minister Donald Macdonald made an appearance to speak about the need for restraint, the picketing teachers responded by yelling, “Bullshit.” Said teacher union president Jim Forster: “This is not rough justice. This is injustice.”

Trudeau had a ready answer for the teachers’ question. “Why us?” He told Maclean’s: “Nobody likes to be first. If suddenly you decide Main Street is going to become a one-way street with traffic lights and the guy who had driven down it all his life suddenly didn’t know or forgets about it, and he drives down the wrong way and he’s arrested, well, he says, ‘Why me? People have been doing it . . .’ Well, the law begins today. In that sense, it’s too bad that you were first. But I think he (the driver) is reassured if he realizes that the law will apply not only to him but to everyone who follows and makes the same mistake.”

Although the ruling on the teachers was the board’s most visible action, it was active on the price and profit side as well and had reportedly made decisions on 20 proposed price or dividend increases by the end of November. But none of the decisions had been announced by the following week and there was a dispute on the board over whether they should ever be announced because they involved cases where the companies approached the board for rulings before making a move. Maclean’s learned, however, that two of the decisions involved rejections of proposed dividend increases, one by Kaiser Resources Ltd. of Vancouver and the other by Voyager Petroleums Ltd. of Calgary.

If it continues to suppress information about its activities on the price and profit front, the board will almost certainly encounter credibility problems with labor, which is already on the record in opposition to the program, although its solid front appears to be cracking (see page 18). Nor have the public statements of some of the board members given labor much reason for encouragement. Board member Jack Biddell, a Toronto accountant, has been reported as complaining that the anti-inflation program will be “too restrictive and inflexible” for business. Biddell also suggested allowing small companies to opt into the program, which now covers only companies with 500 or more employees, so that they could take a tougher stand in dealings with their employees.

Small construction firms apparently did ask the government to be included under the program on the grounds that they have to pay wages set by industry-wide bargaining. The government has complied with this request, which could bring another 50.000 companies (no one knows the exact figure) into the program. The government’s original estimate that only 1,500 firms would be affected has already been revised upward to at least 3,000 because somebody forgot to count the subsidiary firms. All this extra workload has also forced an upward revision of the eventual size of the staff of the anti-inflation board. Originally estimated at just 200, the best guess now is more like 400.

Another problem facing the government is the continued foot-dragging by the provinces, which called on Ottawa last September to do something—anything— about inflation and pledged their support. They still have not signed agreements to bring their own civil servants under the program. Finance Minister Macdonald had hoped to get them signed up at a federal-provincial meeting of finance ministers November 26, but he failed. Now his office admits that this was probably an unrealistic hope in the first place. No province has said it does not want to do anything about inflation, but some, especially Saskatchewan, are questioning aspects of the federal program. Saskatchewan, backed to a greater or lesser degree by fellow' NDP governments in British Columbia and Manitoba and by the Conservatives in Ontario, has asked in particular what the federal government plans to do about controlling professional fees charged by doctors, lawyers and the like.

The government’s first proposal was to have some professionals—for example, the lawyers from the 176 biggest legal firms and the accountants from the top 18 accounting firms—file a statement of their income with the Anti-Inflation Board at the same time as they fill out their income tax returns. Any increase in income of more than $2,400 over the previous year would have to be justified on the grounds of a bigger, or more complicated, case load. Saskatchewan has rejected this approach as not comprehensive enough and impossible to police. Saskatchewan Finance Minister Walter Smishek has suggested instead that a surtax be placed on all additional income above $2,400 earned by professionals. The federal government has dug in its heels on this point, however, and argued that such a surtax would only discourage professionals from working long hours.

“At the outset, the idea of a surtax looked good to everybody, including us,” says Trudeau. “But when you get to look at it, you have some doubts about it. If you want to have a surtax, why have it only on professionals? Why not have it on everybody? What about the small businessman? Why should he be able to make a killing and not the doctor or the lawyer? ... If they want to work twice as hard, there’s no reason why they should be limited any more than if the plumber wants to work twice as hard.” A compromise, at this point, would seem to be out of reach.

The business community has been relatively quiet to date about the controls, but Trudeau recognizes there could be trouble in the future: “I think that perhaps what will become apparent down the road is that, far from having to sell it to labor unions, we’ll have to start selling it to the businessmen who say, ‘We didn’t realize you were going to hit us this way. This is going to kill incentives to invest,’ and so on. We’ll say, ‘Sorry, we don’t want to kill productivity, but you’ll have to pull in your belt.’... I’ll be spending my time with them (the businessmen) rather than with the labor unions and perhaps the month after that it will be with the professional classes, who will say, ‘Well, I’m a doctor and I really haven’t had my fee increased and can’t I catch up more than you’re letting me do?’ And we’ll just say, ‘No. In normal times, perhaps you would be catching up, but these are not normal times, we’ve all got to do something.’ ” IAN URQUHART

Some dissension in the ranks

The official voices of labor, led by the Canadian Labor Congress, have denounced the government’s anti-inflation legislation as a virtual Wage Measures Act. Considering the limitations it imposes on free collective bargaining and in the light of the Anti-Inflation Board’s velvety handling of prices, profits and professional fees, they may have good reason. “The problem is optics,” notes Claude Edwards, president of the Public Service Alliance of Canada, which represents 177,000 federal civil servants. “It doesn’t look like the other guy is suffering.” And yet the veneer of labor opposition to the controls is beginning to chip away. Several leaders, Edwards included, have indicated a grudging willingness to work within the guidelines, despite their CLC affiliation, and have met privately with Prime Minister Trudeau and his ministers in recent weeks to probe the possibilities. The CLC, whose affiliated membership runs to two million, is continuing its campaign against the control program, in the words of executive vice-president Shirley Carr, “to see that it fails,” but some labor leaders concede the fight is losing steam. Ken Rose, Canadian vice-president of the 65,000-member International Brotherhood of Electrical Workers, says it was “unrealistic” of the CLC to expect the government to withdraw the bill. “They should admit defeat on that front,” he says, “and show government how to correct the dangerous effects of the program.” Rose was part of the delegation from the construction trades that met for 90 minutes with Trudeau, Labor Minister John Munro, his deputy minister Tom Eberlee and finance department deputy minister Tommy Shoyama in a basement room of parliament in late November. James McCambly, executive secretary of the advisory board for the trades, concedes that “some form of control that could equally affect all members of society” is needed. “Something needs to be done.” The construction leaders, representing 350,000 carpenters, plumbers, electricians and laborers, were turned down when they appealed for a delay of controls until 1977—by which time contracts covering 200,000 members might have been signed. Trudeau was receptive, however, to the suggestion a committee be established under the AIB to work with the trades. The main concern of the unions is that the guidelines will prevent workers who are coming off twoand three-year contracts in British Columbia, Saskatchewan. Quebec and parts of the Maritimes from matching wages of workers who have signed new agreements in other provinces.

agreements Edwards’ Public Service Alliance agreed it could support controls if the AIB is tough on corporate balance sheets and professional fees, controls marketing board prices and raises the minimum wage. The alliance has 100,000 workers’ contracts in negotiation at present, with agreements for another 40,000 due next year. “We’ve got to be pragmatic,” says Edwards. “It’s like the inevitability of rape; maybe we have to spread the pillows around.” The government made a commitment to control prices set by boards and to increase the minimum wage, but Edwards’ rivals were nevertheless bitter about the alliance’s change of heart; originally, it had offered its unqualified support for the CLC campaign against the government. Edwards was repudiated by the leader of the largest component in the alliance, Joe Power of the Union of National Defense Employees. Others accused him of bucking for a federal job after retirement next spring. Edwards met privately with Treasury Board Chairman Jean Chrétien, the employer of last resort for civil servants, and was offered the job as labor’s permanent member of the AIB, but he declined as have a growing list of candidates, including Senator Carl Goldenberg.

The government moved to befriend 25,000 striking pulp and paper workers when Labor Minister John Munro, speaking at a meeting in Cornwall, Ontario, accused the companies, led by Abitibi, of “using the guidelines as an excuse for not sitting down at the bargaining table.” Some pulp and paper workers have been on strike since the summer.

But Ottawa is far from being out of the woods with labor on controls. In the new year a striking array of negotiations will be in progress, among them contract talks covering 100,000 rail workers and 115,000 municipal workers. Both groups could bring the country more grief by voting to strike. One of the most explosive situations involves bargaining next summer between Dennis McDermott’s United Auto Workers and the big car companies. In 1970, the UAW spent $169 million in a strike against General Motors that uncapped cost of living increases. “Now,” says a disgruntled UAW official, “along comes Trudeau and puts the cap back on.” But if the CLC’S Shirley Carr has her way, there will be trouble ahead. “If Pepin and company continue to roll back these collective agreements,” she declares, “you’re going to find working people striking against the Anti-Inflation Board.” ROBERT LEWIS

TORONTO_

With friends like Mackasey...

From the beginning of the 42-day national postal strike. Postmaster General Bryce Mackasey recognized that the Toronto local was the one weak link in the outwardly militant front presented by the Canadian Union of Postal Workers. With approximately 4,800 members, the Toronto local is the largest in the 22,000-member union and it also handles by far the biggest chunk (60%) of the country’s mail. Lou Murphy, the president of the Toronto local, conceded that “if you break Toronto, you break the strike.”

Mackasey, well aware that only a minority of the Toronto local had voted in favor of the strike in the first place, set out to exploit the union weakness. The Post Office even provided the local with documents on the latest government offers before presenting them to the official union negotiators. Visiting Toronto on Grey Cup day, Mackasey (through local officials) invited both Murphy and Ontario regional head Arnold Gould to meet with him for private talks. Both say they declined the offer but the appearance of chumminess between the Postmaster General and the Toronto union riled the national executive so much that at one point they considered putting the local under trusteeship.

Late last month the Post Office strategy paid off. Succumbing to internal pressure, the union submitted to a referendum a government offer essentially unchanged since the beginning of the strike. The union’s national executive recommended rejection and CUPW president Joe Davidson made a personal last-minute plea to the Toronto local to turn down the contract. But when the count was in, the Toronto local had voted overwhelmingly to accept, offsetting the “no” votes in other major cities and pushing the final total to 51.8% in favor of a return to work. Fumed chief union negotiator Jean-Claude Parrot: “Mackasey used the Toronto local to divide the union. The government will reap a bitter harvest from the seeds of conflict it has sown.” Retorted Mackasey: “They didn’t have a strike mandate to begin with. The pressure to settle eventually came from the members. I may have helped out a bit.”

No one came away a winner from the long fight. The union was left with a giant rift in its ranks, a large debt and precious few gains to show for the sacrifices of its members. A wage increase of $1.70 per hour brings the top pay of the inside workers from $9,500 to $13,000 over the 30month contract. But neither could Mackasey gloat over the settlement. The bitter confrontation and the media campaign he waged raised serious questions about the future relations between management and labor within the Post Office.

For the union, the biggest problem will be to patch up the traditional animosity between the Toronto and Montreal locals. Marcel Perreault, the militant president of the Montreal local, berated Toronto for “playing the game of the employer and discouraging the workers” by repeatedly calling for a referendum on the government’s offer and said the union should get rid of Murphy. For his part, Murphy blamed Montreal for the union failure. “They didn’t explore all avenues before calling the strike,” he said. “Fve never seen eye to eye with Perreault. I don’t like his politics—he’s a separatist and I’ve got no use for separatists.”

Privately Mackasey harbored fears that his long fight with CUPW may have tarnished his image as a “friend of labor.” Although Mackasey denied any attempt at strike breaking, an official close to the talks said: “Mackasey knew the sentiment in the Toronto local, just as he knew the sentiment in the Montreal local. At times he tried to foment or develop the differences between the two attitudes.” Unfortunately Canada’s longest postal strike failed to soften the stubbornness on either side. Said Parrot: “If we had to do it over again, we would.” To which Mackasey responded: “I wouldn’t do anything differently.” Peace in the postal service is still a long way off.

ANGELA FERRANTE/ROBERT LEWIS

The great white hunters

Griffith Island is a chunky, 4'/2-squaremile hump of land three miles offshore from Owen Sound, Ontario, in Georgian Bay. It has always been something of a mystery island for residents of the area. But for some of Ontario’s richest and most prominent men it is an idyllic hunting retreat, an opulent killing ground for the privileged. The game is plump, the facilities are luxurious and, until recently, the provincial hunting laws were something to be winked at by the 55-odd members of the exclusive Griffith Island Club.

For 13 years. Griffith Island was the private playground of top General Motors executives. It then passed into the hands of a Toronto millionaire and for the past three years has been run by powerful Ontario businessmen. First president of the club was former Ontario premier John Robarts and the membership list is a reprint of The Canadian Who’s Who. It includes Ernie Jackson, Robarts’ former campaign manager, John Cronyn of London, Ont., corporate director of John Labatt Ltd., and Frederik Eaton, president of Eaton’s of Canada Ltd. Membership is pricey. The initiation fee is about $20,000 plus $2,000 annual dues and another $1,000 as prepayment against credit.

During a trip to the island last month, Bob Meyer of the Windsor Star discovered interesting variations in the application of game laws. For instance, Griffith Island is the only place in Ontario where wild turkey hunting is allowed. In most areas in the province, the pheasant season is a maximum of two weeks; on Griffith Island, it extends seven months. And while deer hunters in other places are restricted to 10 days shooting, the Griffith Islanders can hunt deer for two months. The club’s argument is that because it stocks and feeds its own wildlife it is entitled to special hunting privileges. But conservation officers are now taking a different view; recently they laid a charge of hunting deer without a license against club manager Bud Tripp.

The club’s annual operating expenses are upward of $150,000 a year, with $30,000 going to feed for wildlife. It offers members a runway for private planes, an elegant dining room, a 40-foot launch and a comfortable lodge complete with a fulltime staff of six. Members are touchy about their preserve and none more than its best-known hunter, former premier Robarts. When questioned about Griffith Island, Robarts bristled: “Everybody’s trying to prove we’re doing something wrong. We try very hard to stay within the limits of the law; of course, because you have a name people recognize you attract attention. I’m entitled to be an individual without constant scrutiny.” CLAIRE HOY

MONTREAL

The mayor is not for burning

Just two days after his sixth election as Mayor of Montreal last year, Jean Drapeau turned up at a meeting of the Chambre de Commerce to thunder against radio open-line shows, calling them a threat to civilization. Hardened Drapeauwatchers are used to seeing his worship change gears more often than a Mack truck trying to climb Mount Everest, but even they were taken aback w hen in the space of three days this month he appeared—civilization be damned—on five open-line radio programs and two television show's to defend his 12-year-old dream, the Montreal Olympiad. “When all is over, I will not look as dumb and stupid as 1 look now,” was the harried message from one show. Things had gone from bad to worse and Drapeau had to say something; even if it meant breaking a long and sulky silence.

The deficit for the games had swelled to $600 million, about $300 per Montrealer. The province had lifted the whole project from Drapeau’s hands, establishing an Olympic Installations Board of its own. Police had raided contractors of the $90million pyramidal Olympic Village and even the home and offices of Olympic Organizing Committee (COJO) vice-president Simon St. Pierre looking for evidence of fraud and kickbacks. And the foreign press was full of those wild stories again. The games, they said, would be held in Mexico or Iran; the Mafia was in charge of the Montreal games. And so on.

Drapeau’s message to hot-line followers was his usual time-tried mix of platitude, prevarication and the odd bold lie (claiming the city w'as in good financial shape, the mayor said the municipal debt amounted to only 11% of the assessed property value even though his own finance department pegs it closer to 17%).

Most welcome to the ears of worried Montreal ratepayers w'as his statement that the games were still a self-financing proposition. The deficit was really a “gap” and though the mayor didn’t say how it would be closed the latest scheme heard in the halls of Montreal’s Hotel de Ville would have the mayor approach the federal government on behalf of the Provincial Installations Board to ask for an interest-free $600-million loan. There will be a heavy hint reminding Ottawa that Canada’s image will suffer as much as Montreal’s if the games are late or incomplete for want of funds. Not-so-gentle blackmail maybe, but a high city hall source told reporters “It’ll be Drapeau’s greatest coup ever.”

The looming scandal in the Olympic Village? Drapeau says those raided by the 100 RCMP and QPF officers taking part in Operation Hermes “should be given the benefit of the doubt.” And police say that so far they can document only a $8,900 kickback by a trailer dealer, though once they sift through the stacks and mounds of seized files—some of which an officer said were almost impossible to understand— they would have more. One view is that the police operation was a pretext for federal and provincial officials to get a look at the Olympic Village books. They are worried, with reason.

A billion dollars is being spent on the games. The Village project, in particular, was strange from the start. First, it is a blatant copy of the Marina Baie des Anges resort near Nice, France (French architect André Minangoy has complained but says he won’t sue). Second, the City of Montreal did not let tenders for it. Third, costs have zoomed from $30 million to $90 million even though two main subcontractors supplying the structures finished their work—they got a bonus of $ 1.38 million— in half the time allotted.

The biggest question of all and one that COJO doesn’t like people to ask is: Will the games be ready on time? Mayor Drapeau, who used to say they “will” be ready, now says they “can” be ready, given a “holy alliance between capital and labor.” However, it is almost certain that when the Olympic flame is lit next summer it will be in a stadium minus its convertible roof and short of most of the tower. The $564-million, 70,000-seat stadium will look more like a big doughnut beached in a mudhole than the architectural masterwork it was supposed to be.

But the games can’t be delayed very easily. Any later in the season and the television networks are into the American football season and the U.S. Presidential campaign. And Lord Killanin, president of the International Olympic Committee, says flatly the games are Montreal’s. A change in venue is not possible, he said. “Speculation by any national Olympic committee is regretted.” GLEN ALLEN