CANADA

Debt and dissension

HILARY MACKENZIE March 21 1988
CANADA

Debt and dissension

HILARY MACKENZIE March 21 1988

Debt and dissension

The atmosphere inside the downtown Ottawa hotel meetingroom was tense. The Liberal party’s national financial management committee faced a $4.7-million debt, nervous bankers, lagging fund-raising and the near certainty of an election within the next 12 months— and possibly as early as May. Not suprisingly, the committee was riven with dissent. Party president Michel Robert demanded layoffs of party staff and deep cuts in the budgets of the party’s regional wings. Other senior Liberals attending the charged discussion, including Seymour Iseman, president of the Liberals’ Ontario wing, and Peter Connolly, chief of staff to party leader John Turner, argued that a renewed fund-raising effort could still bring in the roughly $10 million needed to finance an election campaign. In the end, the 20 members of the committee reached a shaky agreement on the second course. But the mood of reconciliation ended at the door. Robert, who had earlier agreed to discuss the meeting’s outcome with reporters, stormed out a fire exit. Reporters later cornered an unprepared Turner in a Commons hallway who also wondered aloud where Robert had gone. Turner, said one colleague afterward, was “livid.”

For Liberals—long accustomed to being the dominant players on the Canadian political scene—it was a disheartening reminder of their party’s profound disarray. Mired by debts and dissension, the Liberals have found that they are no longer in favor with donors. Formerly reliable corporate contributors have begun turning down Liberal requests for support, others are writing smaller cheques than they used to. Individual supporters are also giving less. Reluctant donors cite problems ranging from the size of the party’s debt from the 1984 election to the shifting views of its leader to explain their lack of support.

And last week the setbacks for the Liberals did not end with Turner’s embarrassment at Robert’s disaffection. A Gallup poll reported that support

for the party has slipped to 37 per cent—still ahead of the NDP at 33 per cent and the Conservatives at 28 per cent—but down four points from a month ago. Said one despondent senior party member: “Three weeks ago I

would have said that we had a chance at 106 seats. Now I put that number at 87. We are losing ground.”

Still, the party tried last week to play down its financial woes. A statement issued after the financial committee’s meeting said that 20 cents of

each dollar raised between now and an election will go into a campaign war chest. As well, the party plans to establish a task force to pump new vigor into its grassroots fund-raising effort. Those initiatives, Turner insisted, would provide enough money to fight the next election. Meanwhile, said Iseman, a key finance committee member: “I do not foresee laying anyone off.”

But the optimism was strained as other senior Liberals confirmed that the party’s $4.7-million debt to the Royal Bank of Canada is only part of its money malaise. Unpaid telephone accounts and other outstanding bills total another $600,000 in debts. In addition, the party’s head office owes $395,000 in overdue remittances to local riding associations. Earlier this year the Royal became alarmed at the deeply indebted party’s lack of assets and began shopping for a second lender to share the risk of a possible default. The National Bank eventually agreed to accept a portion of the party’s debt. But senior Liberals continue to exî press concern that the banks may restrict the party’s future

borrowing.

Indeed, the size of the Liberals’ debt appears to be discouraging the very donations that could reduce it. Corporate donors, in particular, are reluctant to write cheques that they suspect will be used to pay off the debt from the last election instead of fighting the next one. As one party fund raiser put it, “Possible contributors know that they are paying off past sins.” Added Iseman: “Clearly, as long as we have a deficit there is a problem.”

Turner’s lacklustre image —he trailed both Prime Minister Brian Mulroney and NDP Leader Ed Broadbent in personal popularity in an Angus Reid poll—and his opposition to free trade have also eroded corporate donors’ enthusiasm for the party. Observed one senior Ontario Liberal: “There is tremendous indifference to the leader.” Business donors, many of whom disagree with Turner’s stance on free trade, were further dismayed when the Liberal leader mused publicly last December that the Liberals might form a coalition with the NDP after the next election.

And despite Turner’s assurances last week, the party’s financial troubles threaten to cast a long shadow over Liberal prospects in an election. Asked one senior Liberal: “What are we going to offer Air Canada on deposit to charter a plane? How are we going to set up a computer network, a communications system, a facsimile system?” Those problems could be compounded if, as many analysts predict, the election hinges on close contests decided by the swing of no more than two per cent of a riding’s voters. “To reach that two per cent,” noted one veteran campaigner, “we have to be organized to the hilt: phone banks, direct mail. I see our chances slipping away.” That is not the optimistic attitude that Turner and his despondent party badly need to recapture before an election.

HILARY MACKENZIE

Ottawa

MARY JANIGAN

Toronto

LISA VAN DUSEN

Montreal