CANADA

On to unfinished business

The quest for an industrial strategy: Trudeau wants to outdo Sir John A.

Ian Anderson June 29 1981
CANADA

On to unfinished business

The quest for an industrial strategy: Trudeau wants to outdo Sir John A.

Ian Anderson June 29 1981

On to unfinished business

CANADA

The quest for an industrial strategy: Trudeau wants to outdo Sir John A.

Ian Anderson

There sage in was the perhaps way Pierre a subtle Trudeau mestooled his classic 1959 Mercedes ragtop past the glinting camera lenses on the way to joining his cabinet. Al-

most exactly two years ago was the last time he had driven it publicly—and then it was the symbol of his newfound freedom as he handed over power to Joe Clark at Government House after 11 contentious years as prime minister. Now he was meeting his cabinet for the annual summer think-in at Meach Lake, in the peaceful Gatineau hills north of Ottawa. And now he could bask in the pleasure of good opinion polls, a happy Liberal party and the prospect of a summer and autumn of international exposure. Fresh from the party’s policy conference, policy chairman Lorna Marsden was gushing her praise of Trudeau’s newfound activism. “Boy, the party likes it,” said the University of Toronto sociology professor. “I don’t think I’ve ever the membership

so happy.” As for Trudeau’s promised retirement, Marsden brushed it off as “the farthest thing from our minds.” From all indications it may also be the farthest thing from Trudeau’s. Any disappointment he felt at the Supreme Court of Canada’s decision to recess for the summer before rendering its ruling on the legality of Trudeau’s constitutional proposals spilled out Thursday in vituperative exchanges with the “morally bankrupt” Joe Clark and “jerk” John Crosbie. But he left the hubbub of the House behind to dash to Europe this week to discuss next month’s economic summit in Ottawa, the most prestigious gathering of foreign leaders he has ever hosted.

The Meach Lake sessions used to loom much larger in the summer’s political calendar. They were designed to set the government’s priorities for the fall and winter. While the insiders talked boldly this spring of Trudeau’s intention to devote his government’s

energies toward designing an industrial strategy for the country, such intentions seem thwarted by tight budgets and political realities. There lingers the suspicion, however, that Trudeau and his principal ministers—Allan MacEachen, Marc Lalonde and Jean Chrétien—still intend to leave their mark on the country’s economy in the way Sir John A. Macdonald did with the only really coherent industrial strategy the country has had—the century-old National Policy, which raised tariff barriers and impeded western industrial development in favor of promoting manufacturing in Central Canada.

With all the talk of an industrial grand design, businessmen are naturally spooked. “Everyone’s sitting out there wondering what’s going to come down from Ottawa,” says the Canadian Manufacturers’ Association’s executive vice-president, Larry Thibault. “We’re all just guessing.” At the front of their minds is the ease with which Ottawa bulled through its National Energy Program (NEP), an unprecedented piece of industrial intervention which successfully tilted the game in favor of Canadian companies. But Ottawa seems more hesitant in taking the next step, despite its belief that there is a strong underlying current of public support. “Industrial what?” giggles a Liberal backbencher who confides that the caucus has no idea what Industry Minister Herb Gray is concocting to replace the $2.75-billion industrial policy proposal aborted by the cabinet last fall. “Yes, we could 3 afford it,” suggests a o senior finance departement bureaucrat. “But t; not without a lot of privation in other areas.” That message may - seem like small consolation to business executives whose bruised tones indicate they feel like the rubber ball at the end of the Wham-0 paddle. Government insiders indicate that there is still a desire by key members of Trudeau’s inner circle to alter radically the structure of Canadian industry—particularly in terms of exports, research and development, upgrading of primary resources and foreign ownership. As Marsden puts it, there is in the party a “spirit for making some change in the country.” But there exists no plan for doing it, aside from highly interventionist proposals from Herb Gray.

For the moment, however, cabinet appears bent more toward the softer,

piecemeal line promoted by Senator Horace Andrew (Bud) Olsen, the stoopshouldered boss of the 100 bureaucrats at the tiny, powerful ministry of state for economic development. The Albertan rancher and former Social Créditer wears the velvet glove when he promises business there will be no NEP-style intervention—but only so long as “companies do their job and invest in Canada to maximize the benefits to Canadians.” That message has also been conveyed to business by consultants such as Morrey Ewing of the Canada Consulting Group. A graduate of the Harvard business school, Ewing suggests business study the governmental concerns behind the NEP and determine how it can lead Ottawa toward mutually acceptable goals, rather than stay taciturn and be dragged. With Italy and Britain, Canada is stuck in the so-called “second tier” of industrial countries, having a limited domestic technology base and, according to the Science Council of Canada, scant chance of joining the United States and Japan in tier one. In 1980,

Canada imported nearly $18 billion more manufactured goods than it exported, and the Science Council warned the government last fall that “the dismal trend in this trade is of profound concern.”

In this atmosphere Ewing touts as Ottawa’s “heroes” those few foreignowned companies, such as Westinghouse and Black and Decker, that have allowed their Canadian subsidiaries to develop a world market for their products. In this manner they enlarge the Canadian content of their goods and cushion their factories against downturns in the small Canadian economy. In its own self-interest, says Ewing, business should adapt itself to meeting government economic goals—on terms satisfactory to business. “One of the things business needs to understand is that government is like any other market,” he proposes. “You have to appeal to it. You have to be there first.”

Given the present feistiness of the Trudeau Liberals, such conciliatory advice may be hard for business to swallow. Trudeau himself has talked recently of the “two solitudes” of business and government. This has been echoed by Tom d’Aquino, a former Trudeau aide who now sits as president of the Business Council on National Issues— an umbrella group of the country’s most senior chief executives. D’Aquino’s sermon to business is to take an approach “strongon statesmanship, with an avoidance of the traditional clattering of special-interest groups.” Such advice will be put to the test this fall, as Ottawa inevitably turns its gaze toward industrial change. The business community is well warned to remember Petro-Canada Chairman Bill Hopper’s advice to the government—that the wheel that squeaks loudest gets the most grease. And no one should be surprised when Ottawa’s economic ministers start squeaking much louder than they do now.