CANADA

DAMAGE CONTROL

THE BUDGET LEAK CONTROVERSY IS RAISING QUESTIONS ABOUT THE SKILLS OF MULRONEY’S POLITICAL ADVISERS

THERESA TEDESCO June 12 1989
CANADA

DAMAGE CONTROL

THE BUDGET LEAK CONTROVERSY IS RAISING QUESTIONS ABOUT THE SKILLS OF MULRONEY’S POLITICAL ADVISERS

THERESA TEDESCO June 12 1989

The call from the president of the country’s sixth-largest insurance company reached deputy Finance Minister Fred Gorbet at 1:30 p.m. on April 27. Jack Masterman informed Gorbet that several Mutual Life Assurance Co. of Canada employees had seen copies of the government pamphlet Budget in Brief even before a TV reporter broke the budget’s secrecy on April 26. Within minutes, Gorbet informed the RCMP of Masterman’s call and began to advise other officials, including the government’s senior civil servant, Privy Council clerk Paul Tellier, and Richard Rémillard, a special assistant to Finance Minister Michael Wilson. But, in a potentially significant omission, the man centrally responsible for the government’s strategy for containing the unfolding crisis was among the last senior advisers to learn of the Mutual leak. Indeed, almost two hours elapsed before anyone told Stanley Hartt, 51, chief of staff in the Prime Minister’s Office, PMO spokesman Gilbert Lavoie confirmed last week. Hartt then participated in a top-level meeting where it was decided not to release any information about the second budget leak. But as the strategy began to crumble a month later, critics re-examined both Hartt’s role and the political grasp of the PMO.

Indeed, as the budget controversy continued to embroil Parliament last week, some Conservatives charged that the government had lost control of its political direction. Observed Bill Domm, veteran Tory MP for Peterborough, Ont., for one: “We are being sidetracked with the budget leak as if it were the only item on the agenda.” Added a former senior adviser to Prime Minister Brian Mulroney: “The feeling is that there is no shape to the policy agenda anymore. The only agenda is deficit reduction, and that is not even working.” In fact, the budget leaks had echoes of the Mulroney government’s troubled early years in office. Between 1984 and 1986, the Tory agenda was repeatedly derailed by political crises that ranged from cases of tainted tuna being released for public sale to charges—subsequently confirmed by a judicial inquiry—that Industry Minister Sinclair Stevens had let his business interests conflict with his public responsibilities. It was not until Mulroney named Derek Burney—a strong-minded career public servant—as his chief of staff in 1987 that the Tories regained control of the political agenda and reversed their plunging popularity in opinion polls.

Under Burney’s direction, the PMO successfully salvaged the free trade negotiations after a breakdown in the talks in October, 1987, and it avoided any lasting political damage from the February, 1988, resignation of Minister of Supply and Service Michel Côté, following revelations that he had accepted financial benefits from a supporter in his Quebec City riding of Langlier. But Burney left the PMO last January to become ambassador to Washington, and Mulroney replaced him with Hartt, a former fellow law student. Since then, a series of controversies has caught the government off guard, and its popularity has fallen again. Indeed, two weeks ago, Gallup Canada Inc. reported that public support for the Conservatives has declined by five points to 32 per cent from 37 per cent since Hartt counselled the Prime Minister to remain silent about the second budget leak. In the same period, support for the Liberals has climbed to 40 from 38 per cent, while the New Democrats have seen their support rise to 25 from 22 per cent.

Meanwhile, there was no indication that the government had a clear strategy for reversing its setbacks. For his part, Mulroney, after a hectic eight-day trip to Africa and Europe to attend summits of the Francophonie and NATO, maintained a firm defence of the government’s actions. He insisted that he might have interfered with an RCMP investigation if he had revealed his knowledge of the Mutual leak to the Commons. Then, on May 29, the RCMP laid charges of possession of stolen property against five people involved in the leaks and additional charges of theft against two of the five. Among those charged with possession of stolen property was Global TV’s Ottawa bureau chief, Doug Small. It was his on-air revelations from a leaked copy of Budget in Brief on April 26 that forced Wilson to present his taxing and spending plans at a news conference that night, a day before he planned to table them in the Commons. But far from dampening the political furor, the charges started another wave of controversy (page 16).

Still, Mulroney said that the charges justified his refusal to discuss the details of the affair. Added the Prime Minister: “We believe individuals charged are entitled to the presumption of innocence. We are not saying anything in this House that will diminish their rights to a fair trial.” But he also drew opposition charges of prejudicing the case against the five when he used the word “unlawful” in describing the government’s response to the Global reports. Said Mulroney: “There had clearly been unlawful dissemination of a very important federal document.” And late last week, some Conservative backbench MPs openly questioned the handling of the crisis. Said Donald Blenkarn, Tory MP for Mississauga South: “The leak did not help our management of the news.”

The budget scandal is one of several recent setbacks to Mulroney and the PMO. In March, Mulroney acknowledged publicly that he was embarrassed after a Revenue Canada official temporarily halted imports into Canada of the controversial novel The Satanic Verses by British author Salman Rushdie. The book provoked worldwide protests from Moslems who consider it insulting to their faith. Canada’s import ban was lifted after just three days—when a customs official found no evidence of hate mongering—but it opened Mulroney to criticism that the government had succumbed to Islamic pressure.

Just two weeks later, the government again seemed to be caught off guard by events. On March 24, the Exxon tanker Valdez ran aground in Prince William Sound, off Alaska, spilling 1.4 million barrels of oil into waters near the British Columbia coastline. And opposition critics charged Environment Minister Lucien Bouchard with neglecting his responsibilities when he did not send Canadian observers to monitor the spill’s movements.

The environment again proved politically explosive last month, when several New York-based companies were accused of importing fuel containing hazardous wastes—including such potent contaminants as polychlorinated biphenyls (PCBs)—into Canada. Bouchard denied any knowledge of the operation. But when it became clear that Shirley Martin, the junior minister of state for transport, as well as some federal officials had heard reports of the traffic as long ago as 1987, Liberal and New Democrat MPs accused the government of hypocrisy in its attempts to portray itself as environmentally sensitive. The government closed some border crossings to tanker trucks and tightened inspection procedures at the others. But the belated response prompted some critics to say that the government had been ill-prepared for events. Declared Bruce Doern, a professor at Ottawa’s Carleton University whose specialty is public administration: “The crisis management isn’t being addressed properly.”

Crisis management is largely the responsibility of Hartt. While no definitive job description exists for the chief of staff, among his central functions is to try to detect emerging crises in time to avoid them or, when they erupt without warning, to limit the political damage they cause. The chief of staff is clearly the official best placed to carry out those tasks. In theory, at least, every issue on the government’s agenda and every communication with the Prime Minister crosses Hartt’s desk. In Burney’s case, the steely 25-year veteran of the civil service handled the job with ruthless efficiency. He was not considered a Conservative partisan, but he managed to protect Mulroney’s political interests and ensure that the government’s policy agenda was implemented effectively.

For Hartt, the job is his second major posting in the Mulroney government. He gave up a $450,000-a-year job as a labor lawyer at the Montreal-based firm Stikeman Elliott in 1985 to become Wilson’s deputy minister of finance for 2-1/2 years before returning to the private sector briefly in May, 1988. His friends describe him as Burney’s opposite in temperament and style. Those who know him well say that he is genial, quick-witted and formidably intelligent. Said William Fox, a former director of communications under Burney: “Stanley is a man of superior intellect. He is a happy warrior and can grasp complex issues faster than most people.” But even his friends add that Hartt is not nearly as well organized as Burney.

Like his predecessor, Hartt has limited other advisers’ access to Mulroney. But, unlike Burney, Hartt himself has become an isolated figure. He is seldom seen outside the Langevin Block at meetings with special-interest groups or at working lunches with other senior public servants, activities that often provided Burney with early warnings of impending crises. At the same time, Hartt himself has become so difficult to reach that some ministers and government advisers now try to circumvent Hartt when dealing with the PMO, instead routing their communication through other aides, including principal secretary Peter White or senior policy adviser Tom Trbovitch, to the Prime Minister.

On the other hand, some Tories dismissed suggestions that the PMO has mishandled the recent political problems. Newfoundland Conservative MP Ross Reid said there have been numerous personnel changes during the past six months among the 80 people in the PMO. He added that the new advisers, including Hartt, simply need some time to adjust. Said Reid, a senior policy adviser to Mulroney before winning a seat representing St. John’s in last November’s federal election: “The PMO is always an easy target because by implication you can blame the Prime Minister. The feeling in caucus is that we are prepared to give them a while to settle in.”

But among some others, that patience appeared last week to be badly stretched. “Quite frankly, I think they have blown all their strength in the first six months [after the election],” one former I policy adviser said. Added a senior Tory strategist who is still active in advising Mulroney but who asked not to be named: “Right now, it’s 1984-1985 all over again. It’s very tough sledding.” It will clearly place increased pressure on Stanley Hartt, whose most critical task is to keep the pressure off his boss, the Prime Minister.