CANADA

New team, old problems

A realigned cabinet faces a daunting agenda

BRUCE WALLACE April 29 1991
CANADA

New team, old problems

A realigned cabinet faces a daunting agenda

BRUCE WALLACE April 29 1991

New team, old problems

CANADA

A realigned cabinet faces a daunting agenda

The beaming faces in the 1984 portrait of newly elected Prime Minister Brian Mulroney’s first cabinet reveal the optimism with which its 40 members looked to the future. Six and a half gruelling years in power later, the smiles of most Conservative ministers are tighter, their optimism tempered by experience. As Mulroney recast his cabinet on Sunday, his ministers were well aware that they faced some of the most daunting challenges ever to confront a Canadian government. Indeed, said Tory pollster Allan Gregg, in the face of intractable national divisions and a host of domestic problems, “there is an argument that this country is virtually ungovernable.” Added Gregg: “It is a tough time to be a cabinet minister.”

The twin threats of Quebec nationalism and regional alienation will clearly ensure that Ottawa’s overriding concern in the months ahead remains with the shaky state of the federation. But the Tories cannot ignore a rash of other political problems, from the possibility of a general strike by the federal civil service to restiveness among Canada’s native communities—which raises concerns of a possible repeat of last summer’s scenes of violence and confrontation. And, as they prepare for new continental free trade negotiations involving

Mexico, the Tories must also deal at home with rising unemployment and a shrinking economy—the symptoms of a recession that many Canadians blame at least partly on the 1988 Free Trade Agreement with the United States.

With that in mind, Mulroney’s choice of economic ministers was one of his most sensitive decisions. In the run-up to the shuffle, one option being widely discussed by senior government officials was the creation of a new ministry of international trade and competitiveness, to be formed from elements of the former departments of industry, trade and commerce and external affairs. Many analysts expected Michael Wilson to head the new ministry, a role that would allow him to leave the finance portfolio that he has held for 6V2 years while remaining involved with economic policy. But whoever holds the new post would accept responsibility for tricky trilateral negotiations with the United States and Mexico leading towards a continental trade agreement. That prospect has already galvanized opposition in the labor and environmental movements.

Any reassignment of Wilson, meanwhile, will leave a critical vacancy in the government’s central financial-planning portfolio. Leading the choices for a replacement finance minister

at press time was Deputy Prime Minister Donald Mazankowski. But with the country struggling in the grip of a deepening yearlong recession, many analysts predicted that a new minister will have little choice but to moderate some of Wilson’s tough-minded policies on taxes, government spending cuts and high interest rates. Said Neil Baker, for one, a broker with Toronto’s Gordon Capital Corp.: “The Gallup poll and political needs are going to call the tune. You could put a chimpanzee in the finance job and it would not make a difference.”

But any action to further reduce interest rates, in particular, could bring a new minister into early conflict with Bank of Canada governor John Crow. Crow has I kept the central bank’s trend□ setting rate high in order to I combat inflation—a policy 0 that Wilson supported. And some analysts argue that Wilson’s successor should stick with his policies. Said Simon Reisman, former deputy minister of finance and free trade negotiator: “What we have got between us and disaster at the moment is the policy of the minister of finance and the governor. We will thank them for this some day.” Another contentious aspect of Wilson’s tenure was the government’s tightfisted spending. In Edmonton last week, Mazankowski announced a rare departure from that policy: a $400-million federal contribution to an income support program for farmers. Still, the amount fell short of the expectations of farmers’ groups, who sourly criticized the plan. And Mazankowski has been almost alone in winning approval to spend new money. Almost every other minister is under strict instructions to control spending in order to help contain a stubborn, $30.5-billion federal budget deficit.

Those instructions have set the stage for a bitter confrontation between the government and the federal public service. Pressed to limit civil-service salaries, Treasury Board President Gilles Loiselle announced on Feb. 22 that new wage settlements for federal employees would be frozen in 1991 and limited to three per cent for the next two years. If, as many insiders predicted, Loiselle is reassigned— possibly to External Affairs—his successor will face the wrath of Ottawa’s workforce. Their anger is pronounced: on April 15, spokesmen for unions representing 155,000 federal employees announced that their membership had voted to launch a general strike in the summer to protest the wage cap. Still, the Tories may be eager for a showdown over the issue. With 1.4 million Canadians seeking work, many Tories say that there is little sympathy for the

problems of civil servants, and that a tough stand against higher wages would improve the government’s rating in many parts of the country, especially in Western Canada.

Restraint will likely be more difficult for other new ministers. Among the departments feeling the pinch:

• Health and Welfare: With little money available, the Tories have had to lower expectations for such earlier commitments as a national day care program. Instead, the minister is likely to spend a great deal of time coaxing provincial counterparts into maintaining services while federal funding shrinks.

• Indian and Northern Affairs: Natives are furious with the slow pace of negotiations over land claims and self-government. Some native groups predict that relations with authorities will again descend into violence over such powder-keg issues as hydroelectric developments affecting vast areas of northern Quebec.

• Justice: As justice minister, Kim Campbell failed to win Senate approval for new abortion legislation. She also failed to deliver on another front: an initiative to tighten gun-control laws. While Campbell has stated that the government does not intend to re-introduce abortion legislation, she insisted that the Tories will try again on gun control. In fact, many senior party officials see the gun issue as an inexpensive way to demonstrate Ottawa’s resolve to act nationally. Still, many rural Tory MPs are unhappy with the idea of further restricting access to firearms.

Only one department may escape the prohibition on additional spending: Environment. Last December, the Tories committed themselves to a green plan under which the government will spend $3 billion over five years— nearly double the department’s previous budget. That made the portfolio a coveted one among cabinet contenders. But even the environment minister faces tough political challenges. The depth of the Tories’ sincerity towards the green plan has encountered widespread public cynicism. That may deepen if a new minister bends to pressure from industry and some provinces to relax environmental standards in order to stimulate economic growth.

The political problems ahead cast doubt over whether a new slate of ministers—or new assignments for many existing ones—can rehabilitate the government’s rock-bottom reputation among voters. For his part, Mulroney has optimistically told friends that he believes he can win a third term. But, with the national economy still bound by a global recession and Quebec pressing persistently to radically redraw Confederation, many of the Tory problems appear to be beyond their control. Said economist Thomas Shoyama, now living in Victoria after a long career as federal deputy minister of finance: “The problems are so bad that I would not want the job right now. That is why I stick to my garden.” That is one option which Mulroney and his new cabinet do not have—yet.

BRUCE WALLACE