Premier Peter Lougheed of Alberta, along with the nine other provincial premiers, met with Prime Minister Pierre Trudeau in Ottawa following the tabling of the June 28 federal budget. Lougheed emerged from this meeting resigned to accept the fact that there is a deep ideological rift between the federal government and the provinces. As rumors swirled of a provincial election call, Maclean’s Alberta Bureau Chief Gordon Legge interviewed Lougheed following his return to Alberta.
Maclean’s: Do you believe that there is an economic crisis in Canada right now?
Lougheed: I think there’s a crisis in confidence. Jobs are dependent on privatesector confidence, and that confidence isn’t there. We have a federal government that is not disposed toward the private sector and wants to see more and more involvement of government in the marketplace; one that believes the approach should be by way of grants controlled by government discretion rather than tax incentives, and that wants to put an investment wall around Canada. In a cumulative way, this has created a crisis of investor confidence by entrepreneurs both within Canada and worldwide.
Maclean’s: What prescription do you offer to turn the country around? Lougheed: The first and most important element is to have an awareness by Canadians that the problems are not going to be solved by government. They’re going to be solved by the private-sector entrepreneur who believes that Canada is a good place to risk his money, to create jobs and to create opportunity. Second, that the parliamentary caucus of the governing party in Ottawa take control of the bureaucracy so that it doesn’t continue to run the country. Third, that Ottawa make the necessary policy changes to convince investors in other parts of the world that their investment is welcome here. Fourth, that we change our tax system to encourage the investor—not a system of grants but a system of tax incentives. Fifth, that we try to change our tax system to encourage Canadians to place their savings not in debt instruments but in equity. And sixth, that we return to cooperative federalism, where the provinces and the federal government are working together—achieving a consen-
sus of national economic policy. Maclean’s: Do you think it is going to be necessary to have wholesale changes in the bureaucracy in Ottawa in order to change the direction of the country and the economy?
Lougheed: Yes, I think we have to have people in the federal bureaucracy who are better skilled and more aware of the realities of the marketplace, be that marketplace within Canada or in our external trade markets. The classic, of
course, is in the area of energy, where there just is not an awareness of the marketplace and what’s involved and of what creates an incentive for a person to invest and risk his money to drill a well. Investors have a choice. They do not have to invest in job creation in Canada. They can take their risk money and invest in other parts of the world, particularly in the United States. We’ve had a flight of capital from Canada — almost $11 billion in 1981 compared to less than $2 billion in 1979.
Maclean’s: Do you think the Canadian public appreciates the importance of the private-enterprise system ?
Lougheed: No, and that particularly
shows up when we raise the foreign investment issue and we hear the response from the prime minister that his polls show that Canadians support increased Canadian ownership of the oil and gas industry. The problem with these simplified polls is that they do not ask the next question—‘if we have to have a reduction in our standard of living to acquire that Canadian ownership, would you then favor it?’ And then you get quite a different answer! In the same poll they should ask, ‘Are you aware that the provincial governments own the majority of the resources and, hence, adequately protect the Canadian sovereignty in the public interest?’ Maclean’s: Do we have the British disease? What kinds of measures must be taken to restore productivity?
Lougheed: Oh yes. We’ve been moving toward it as the percentage of our gross
national product (GNP) becomes eaten up by public expenditures and hence reduces the scope for productivity in the private sector. There is a line there, and once you’ve gone by it you require the sort of measures that Mrs. Thatcher is being forced to introduce in the United Kingdom. We’re not quite there yet, but we’re approaching it.
We are going to have to reduce the portion of our GNP undertaken by governments. This involves, for example, eliminating the duplication that we have in the federal system between levels of government. I think we have to develop, in our system and in our collective bargaining, more incentives to
increase individual productivity. Union leaders in the United States have recognized that they’ve priced themselves out of the competitive market in such areas as automobiles and a number of others, and therefore are adjusting. We do not see that adjusting occuring in Canada yet. We are going to have to build on the strengths of our economy instead of shoring up the weaknesses. The resource area is obviously one of the keys. The increasing technological capacity that we’ve seen in the oil-andgas-servicing industry is another. Maclean’s: Are you concerned about the level of the federal deficit?
Lougheed: We can’t help but be concerned but we can’t expect to turn it around in the space of a few short years. The deficit we have today is the result of decisions that were taken over two decades, in which the citizens accepted, for example, this medicare and hospitalization system which is one of the most expensive in the world. We just have to recognize that there is a limit to what our country can provide in terms of services without weakening the overall vitality of our economy.
Maclean’s: How has the perception developed in Alberta that you have not been as sensitive as you might have been in the past few years?
Lougheed: I think it developed because we were so wrapped up in the energy and constitutional issues, and had to be, although they were not of our choosing in terms of the timetable. We did not have sufficient opportunity to move around the province, to communicate what we were doing and what our feelings were. This all occurred at the very same time that the Alberta economy, which had grown in a dramatic way, had a fairly dramatic decline, which, although we warned [that it] was coming, was still a shock to our citizens. I have always felt that we have been making mistakes and that the most important thing for a government is that if you have made a mistake in terms of policy, you admit you made it, that you be flexible and you listen to the people and respond. I believe that with a province such as ours, which has enjoyed a level of prosperity and growth, it’s just human nature that you are going to be upset with whatever government is near-at-hand, even if you are aware that the responsibilities are primarily with the federal government. You are going to be upset about your circumstances, and that has to reflect itself in a reaction toward the first government that comes to bat, particularly if that government has a Heritage Fund. Maclean’s: Do you think the creation of the Heritage Fund was a mistake, given the amount it has detracted from your government ’s performance?
Lougheed: We recognized at the outset
that it would contain a major political risk, but we don’t see how we had an alternative. We could not keep the oil in the ground and we did not want to spend the proceeds as we received them, so we had to set up a savings trust fund. I believe our mandate in 1975 and 1979 indicates that the people of Alberta agree with the concept, but we have not done a good job of communicating how we invested the fund and how this investment has been beneficial to our citizens. For example, we have not communicated even the simple fact that 70 per cent of the resource revenues is used in
our present provincial budget to provide for the demands and the needs of our citizens on a current basis for education, health, roads and other areas. Maclean’s: You say this is your last election and that you are not interested in getting involved in federal politics. Would you reconsider if you were prevailed upon out of a sense of duty? Lougheed: No. I’m confident that with either Mr. Clark or with others who might seek the national Conservative leadership, there is a good chance of success, and I believe that we share a common philosophy,
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