The glossy 27-page booklet painted a promising picture of the state of federal-provincial relations. Produced by Prime Minister Brian Mulroney’s office and distributed for his meeting in Halifax last week with the 10 premiers, the tract insisted that
Ottawa had walked “the extra mile” for the provinces during its first year in office. But when Mulroney met the premiers in the Halifax World Trade and Convention Centre, heated exchanges began even before the first mid-morning coffee break. As the twoday event wore on, it became clear that Mulroney’s most vocal critic on the crucial issues of free trade and federal transfer payments to the provinces was Ontario’s David Peterson, the only Liberal premier. “I don’t want to hound you,” Peterson told Mulroney, “I don’t want to harp. But I want to persuade you.”
The provinces’ coolness in the face of the Prime Minister’s determined optimism contrasted sharply with the euphoric mood when Mulroney met the premiers in Regina last February. Most observers considered that Valen-
tine’s Day gathering to be a “love-in” when the premiers praised Mulroney for bringing new harmony to federalprovincial affairs. But last week Mulroney was the target of sometimes stinging provincial criticism.
The most heated debates during the nationally televised forum centred on
proposed Canada-U.S trade talks—and on Ottawa’s plans to reduce its contribution to shared-cost programs with the provinces by $2 billion a year by 1990. The premiers argued that the provinces must be represented at the negotiating table when talks on widened Canada-U.S. trade get under way, possibly early next year. Said British Columbia Premier William Bennett: “Physically, you must be there to hear the discussions, the demands and the responses to our demands.” For his part, Mulroney pledged to work closely with the provinces, but one of his senior advisers told reporters in Ottawa that “it would be totally impractical to talk to Washington with 11 people around the table.”
The debate over trade provoked the first of several pointed exchanges between Mulroney and Peterson. The On-
tario premier arrived in Halifax armed with a study by his government predicting that as many as 281,000 jobs—one-third of all the jobs in Ontario’s manufacturing sector—could be jeopardized by a freer trade arrangement. Peterson also declared that everything from unemployment insur-
anee to cultural industries could be in danger. Insisted the premier: “We cannot trade away Canada’s heart, nor can we trade away Canada’s soul.” Retorted Mulroney: “We’re not talking about the heart and soul of Canada,” but only about the “commercial relationship” between the two countries.
During the second day of talks the Prime Minister and the premiers tried to narrow their differences on trade by compromise. Following private discussions, the 11 leaders agreed to “full provincial participation” in the trade talks—but gave themselves 90 days to work out exactly how. Alberta Premier Donald Getty, making his first appearance at a federal-provincial conference, said that he was pleased that Mulroney had agreed to provincial participation but he added, “Now the way that manifests itself is
what we are interested in.”
When the discussion turned to federal-provincial fiscal arrangements, Mulroney and Peterson clashed again. Mulroney charged that Peterson was showing “an unbecoming degree of temerity” in questioning Ottawa’s commitment to health and education. Then Peterson declared that it required “temerity” to suggest that Ottawa was not breaking its undertaking to the provinces.
At the heart of the debate was the future of federal transfer payments, amounting to more than $14 billion this year, which help the provinces pay for health care and higher education. Federal Finance Minister Michael Wilson said in his May budget that Ottawa would continue to increase the payments each year—but by less than the provinces had earlier been promised. The new formula will save Ottawa $2 billion a year by 1990. According to Peterson, that would not solve the problem of the $33.8-billion federal budget deficit—“you’ve just transferred it from your pocket to ours.” Other premiers expressed anger that the federal decision revoked an earlier understanding that transfer payments would remain untouched until 1987. Declared New Brunswick’s Richard Hatfield: “Prime Minister, you are breaking an agreement.”
Nova Scotia Premier John Buchanan appeared to be the most conciliatory, softening his earlier criticism of Ottawa’s transfer payment policy after a 50-minute meeting with Mulroney on the eve of the conference. For his part, Mulroney tried to defuse the debate by delaying detailed discussion of transfer payments until federal and provincial finance ministers meet in Toronto on Dec. 12.
In the end Mulroney managed to avoid failure by persuading the premiers to postpone their final decisions on both trade and transfer payments. But he acknowledged that his relations with the premiers had changed. Said the Prime Minister: “Some speak with some surprise of the end of the honeymoon. But for me there is no surprise. It is the normal evolution of a federal state in its relationship with its provincial counterparts.” In the meantime, while Peterson and Manitoba New Democratic Party Premier Howard Pawley told Mulroney that he may face tough encounters in the future, most of the other premiers, who are predominately Conservative, praised the Prime Minister. Bennett even appeared to apologize for the quarrels. Said the Social Credit premier: “There has been disagreement, but I hope we haven’t been disagreeable.”
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