CHRIS WOOD March 5 1990



CHRIS WOOD March 5 1990





Snow fell gently from the grey Ottawa sky onto the shoulders of Canada’s new justice minister as she gave her first news conference last week, in the open air outside Ottawa’s Rideau Hall. She had been sworn into office by Gov. Gen. Ramon Hnatyshyn just minutes earlier. Kim Campbell, 42, is a bright, blond and personable Vancouver lawyer who brings to her new job a fluency in four languages, a background in Soviet studies and a personal view that abortion should be a matter of a woman’s private choice (page 18). She will need stamina as well as intellect in the months ahead: Campbell’s first assignment is to shepherd contentious new legislation on abortion through the House of Commons. But her appointment, as part of a shuffle that reassigned 15 posts in a new 39-minister cabinet, capped a week of activity by the Conservatives that was directed at an even more difficult task: putting a new face on the least popular government

since polling began in Canada during the Second World War.

That verdict on the Tories’ performance emerged from a Gallup poll released late last week. It reported that only 19 per cent of decided voters would support the party in an election held at the time of polling. By contrast, nearly half—47 per cent—would cast ballots for the leaderless Liberal party, and 27 per cent would vote for the New Democratic Party. Gallup released its numbers amid a flurry of activity by the Tories. On Tuesday, Finance Minister Michael Wilson presented a 19901991 budget that contained no new taxes—the first federal budget in 22 years to accomplish that feat. Then, on Friday, Prime Minister Brian Mulroney unveiled a cautious shuffle of his cabinet, including Campbell’s appointment, but left untouched the group of senior ministers who direct the government’s central policy, among them Deputy Prime Minister Donald Mazankowski and Wilson himself. And two

hours later, Mulroney completed the one-two-three combination of headlinegrabbing initiatives by holding his first formal news conference in three years.

Morale: It was measure of the party's standing with the public, however, that most of the questions directed at Mulroney during the 45-minute appearance dealt with neither the budget nor that morning’s cabinet shuffle. Instead, all but a few questioners focused on the deadlocked Meech Lake constitutional accord, the fractious spirit of Canada’s two linguistic groups, troubles in the East and West Coast fisheries and his own party’s plunge in the polls. For his part, the Prime Minister acknowledged the obvious. “We are down in the polls,” he told reporters. “I can’t deny that. We’ve been trying to do some pretty unpopular things.” Then, Mulroney took personal responsibility for his party’s poor standings, saying, “I’m probably the principal culprit when it comes to that.”

But Mulroney made it clear that he has no intention of dropping such unpopular initiatives as the seven-per-cent Goods and Services Tax (GST) scheduled to go into effect next January. “We are going to keep doing them because we think they have to be done on behalf of the country,” Mulroney said. He added, however, that the morning’s shuffle of junior cabinet ministers had been directed, at least in part, at

restoring his party’s _

standing in the polls. And, in a remark that might have been intended to raise the morale of worried grassroots Conservatives, he declared, “The only thing worse than being the Prime Minister at 20 per cent is being leader of the Opposition at 50— three years from an election.”

Rescue: Still, the second question directed at the Prime Minister underscored the challenge facing the Tories as they try to restore their popularity. A reporter from Quebec, Radio-Canada’s Daniel L’Heureux, asked what Mulroney plans to do to rescue the Meech Lake accord. The 1987

agreement will fail if it is not ratified by all 10 provinces before June 23—but the current governments of Manitoba, New Brunswick and Newfoundland all reject it. Mulroney admitted to harboring “certain apprehensions” about Meech Lake’s future. But he said that he had no plans to call a meeting of the 11 First Ministers to try to reach a new agreement on the accord. And while not entirely ruling out a parallel accord to deal with the dissenting provinces’ objections to the existing text, Mulroney said that Ottawa would not take the lead in drafting such a compromise document.

But, on other fronts, the Tory counterattack last week displayed skilful political timing and adroit financial juggling. For his part, Wilson moved to placate opposition to the GST by avoiding any new taxes in his budget plan to spend $147.8 billion during the next financial year, beginning on April 1. At the same time, Wilson trimmed $2.8 billion from existing spending plans, appeasing his critics in the financial community who have voiced alarm about Ottawa’s mounting debt. He also spread those cuts thinly across a wide range of programs, making it unlikely that any would become the target of focused public criticism.

Wilson’s central goal, plainly, was to demonstrate that Ottawa is firm in its intent to reduce the persistent deficit between its income and its spending on government programs and debt payments. According to the finance minister, that shortfall will shrink to $28.5 billion in the 1990-1991 fiscal year, compared with $30.5 billion in the 12 months ending on March 31. Still, that remains higher than his previous target of $28 billion for the coming year.

Symbolism: But Wilson clearly believes that the economy is too weak to withstand deeper cuts in federal spending. Indeed, his own figures indicate that the unemployment rate will rise to 8.5 per cent by the end of this year from its current level of 7.8 per cent. And Wilson forecast that real economic growth would slow to a negligible 1.3 per cent in 1990, compared

_ with 2.6 per cent in 1989.

“This will be a testing year for the Canadian economy,” he said in his budget speech. “The economic news will not be encouraging in the months ahead.”

Political considerations also lay behind Wilson’s decision not to raise taxes. A senior Finance official who took part in the budget preparations said that the minister himself personally ruled out any discussion of higher excise taxes on gasoline, tobacco and alcohol. One reason, he said, was that Canadians still have not forgotten the $3.7-billion increase in personal and corporate income taxes and excise taxes imposed


in the previous year’s budget—the full effect of which will not be felt until this year. “For strategic reasons, the message in the budget had to be ‘No new taxes,’ ” a senior adviser to Mulroney told Maclean’s. “We probably could have got away with another small hike in taxes on cigarettes and booze, but that would have destroyed the no-taxes symbolism.”

On the spending side, the biggest change was Ottawa’s plan to cut its transfer payments to the provinces by $944 million—accounting for almost one-third of the total projected savings in the budget. Most dramatically, federal contributions towards health care and postsecondary education will be frozen for two years. That provoked a storm of criticism from provincial treasurers, who complained that Wilson was trying to duck the political consequences of his attack on the deficit by shifting the burden onto their backs (page 26).

Cash: In another controversial development, Wilson announced that, 15 years after the Liberals created Petro-Canada as a federally owned window onto the volatile oil and gas industry, the Conservatives plan to sell the company to private investors. An initial sale of 15 per cent of the shares in the company will provide Petro-Canada with a cash infusion of between $500 million and $720 million. For his part, Petrocan chairman Wilbert Hopper welcomed the announcement, adding: “The government is in far, far better shape to understand this industry than it was a few years ago. The need for a window is just not there anymore.” But some industry analysts noted that a drop in oil prices could leave the government selling off the remaining 85 per cent of PetroCanada—in several stages over the next five years—at bargain-basement prices. And some critics charged that the plan was a blow to Canadian sovereignty. Said Nova Scotia Liberal MP Russell MacLellan: “We have lost control of oil and gas except for Petro-Canada. The only thing we had to ensure competition was that [Petrocan] was in there.”

In the cabinet shuffle three days later, Campbell was the clearest winner. She vaulted from the junior role of minister of state (Indian Affairs) to the important justice ministry. Only one MP was elevated to cabinet rank for the first time: Quebecer Marcel Danis, 46, who became minister of state for sport and youth. But another winner was New Brunswick MP Bernard Valcourt, named to the trouble-laden Fisheries portfolio: he left the cabinet last summer after a motorcycle accident, which led to a $600 fine for impaired driving (page 24).

Among the other changes: Thomas Siddon, acknowledged by Mulroney to have spent too long in the Fisheries portfolio, moved to Indian Affairs and Northern Development instead; Benoît Bouchard, the transport minister who slashed Via Rail’s passenger service last year,

went to the new department of industry, science and technology; and Douglas Lewis, who relinquished Justice to Campbell, takes over Bouchard’s job at Transport (page 22).

Power: But the wide-ranging realignment was confined, for the most part, to the second tier of the federal cabinet. None of those moving into new cabinet posts sits on the powerful operations committee of cabinet, which meets each Monday to set the government’s day-by-day agenda. And despite rumors

earlier last week that some of the committee’s eight members—Mazankowski, Wilson, External Affairs Minister Joe Clark, International Trade Minister John Crosbie, Environment Minister Lucien Bouchard, Treasury Board President Robert de Cotret, Employment and Immigration Minister Barbara McDougall and Senator Lowell Murray—might be on thenway out, in the end nobody was.

Dismay: Shortly after the new ministers’ swearing-in ceremony, Mulroney appeared for the first time in more than three years on the blue-draped stage of the news conference theatre in the National Press Building across from Parliament Hill. The timing was not accidental. Indeed, Mulroney’s advisers have made it plain in recent weeks that Canadians can expect to see and hear more of their Prime Minister in the months ahead. The intent, they have told

reporters privately, is to reassure rank-and-file Conservatives dismayed at the party’s low standing in the polls by presenting Mulroney as an accessible leader who is clearly in charge of the government’s agenda.

With the House of Commons adjourned this week for a winter break, at least some members of the opposition were forced, grudgingly, to concede that the Tory strategy had proved effective. Noted Liberal trade critic Lloyd Axworthy, for one: “We have got a real problem because of all the diversionary tactics. It is going to be very hard to refocus [the attack] when we come back in 10 days.”

Meanwhile, Mulroney planned to keep up the pace of the Tory counteroffensive this week. The Prime Minister and his wife, Mila, planned to go to Trois Rivières, Que., on

Tuesday to begin a three-day campaign-style round of speeches to local Tory gatherings, interviews with local media and appearances at factories, schools and old-age homes, and a visit to Mulroney’s home town of Baie Comeau.

For their part, the 15 newly assigned ministers had just a week to study their new portfolios before they face the opposition’s renewed attack when the Commons resumes sitting on March 5. And while Mulroney and his deeply unpopular six-year-old government struggle through the challenging early stages of thensecond term, they can take comfort in at least one reality: an election—the only poll that really counts—does not have to be called for more than three years.