Macdonald’s master plan

ROY MACGREGOR September 16 1985

Macdonald’s master plan

ROY MACGREGOR September 16 1985

Macdonald’s master plan

In economy the fall mired of 1982, in with recession the Canadian and unemployment at its worst levels since the 1930s, then-prime minister Pierre Trudeau resorted to the classic facesaving solution for intractable Canadian problems. Announcing the formation of a royal commission under former Liberal Finance Minister Donald S. Macdonald to inquire into Canada’s eco-

nomic prospects, Trudeau declared that the commission’s terms of reference would be “perhaps the most important and far-reaching” in Canada’s history. Thirty-four months later, and at a cost to taxpayers of $20.6 million, Macdonald’s commission last week presented a threevolume, 2,011-page report which put forward sweeping proposals ranging from a guaranteed minimum income for poor families to suggestions for boosting Canada’s population and revamping the education system to better supply future labor markets.

The report also endorsed the idea of a free trade arrangement with the United States just as Prime Minister Brian

Mulroney’s Conservative -

administration is deciding whether to embark on negotiations with Washington (page 24). The report, which was accompanied by 72 volumes of research, urged Canadians to “venture into untried ways that will demand open-mindedness, courage, innovation and determination.” Even so, many of the key proposals advanced by the commission were, in fact, familiar ideas, dusted off and presented with abundant new detail. Said Alberta’s Tory Premier Peter Lougheed: “If the Macdonald commission, which I felt was so heavily loaded with Liberals and centralists, feels the way to go is free trade, that speaks a lot for the conclusion.”

The commission’s blueprint for Canada’s future involves a guaranteed annual income. In its proposal for a Universal Income Security Program (UISP), the commission urged the government to scrap existing social support programs which cost Canadian taxpayers about $40 billion a year and replace them with a guaranteed annual income.

Among its other recommendations: cut the federal deficit by $10 billion by 1990-91; reduce state intervention in the marketplace; cut back the role for agricultural marketing boards; toughen unemployment insurance regulations and lower benefits; introduce a consumption-based system that would tax only that portion of income actually spent on goods and services and reward savings; double immigration to 125,000 new Canadians a year; and provide for an elect-

ed senate in an effort to make government institutions more democratic. To finance guaranteed income Ottawa would have to abolish family allowances, child tax credits, income tax exemptions for spouses and children and the Guaranteed Income Supplement for pensioners (the basic federal pension program would be left intact). As well, federal contributions to public housing and welfare programs would have to cease. Under the proposed new program, a family of four with no other income would receive $13,000 a year, and, at the other end of the scale, a family earning $50,000 would lose about $5,000 annually in disposable personal income.

The report also attacked Ottawa’s unemployment insurance program, which it blamed for encouraging as many as two per cent of unemployed Canadians—there were 1.3 million jobless Canadians in July—to stay out of the work force. As part of its plea for less government intervention and more freedom for capitalist enterprise, the commission proposed sharply reduced unemployment insurance payments and a new system of early retirement, worker relocation and job retraining programs. The commission also recommended that companies that regularly lay off workers should pay higher unemployment insurance premiums. Said Macdonald in an interview: “What was possible in the 1960s is no longer true in the 1980s. If we hope to have continued increases in the standard of living, we are just going to have to change.”

Turning to the political sphere, the commission suggested that the Senate be replaced by an elected upper cham-

an upper ber. It proposed that the number of senators be increased to 144 from 104 and that they be elected by a system of regional representation weighted to the less populous parts of the country.

In its other recommendations, the committee proposed that Ottawa adopt a more expansionist monetary policy in order to bring down interest rates and promote job-creating economic growth, and argued that Ottawa should be prepared to reimpose wage and price controls if inflation soars again. The commission also argued ÜgSi^ that federal aid to higher education should go directly to students rather than to the institutions.

Initial response to the massive report varied

widely, but even critics

appeared impressed by the breadth and encyclopedic detail of the report. Roger Hamel, president of the Canadian Chamber of Commerce, described the result as “a monumental work that merits applause for its quality and depth.” Other Canadians, and particularly those who saw their own economic interests or regions threatened by the commission’s laissez-faire economic philosophy, were less enthusiastic. Declared Gerald Yetman, president of the Nova Scotia Federation of Labour, who feared the implications of free trade and changes in the unemployment insurance system: “Soon we’ll just be little tourist havens.” For his part, Mulroney warmly welcomed the commission’s advocacy of free trade. But for the rest of the report, Mulroney merely noted that it contained “some excellent ideas.” Still, a confident Macdonald said he is satisfied that the government will take action at least on the free trade issue, adding, “Something will happen.”


in Ottawa

with correspondent’s reports