CANADA

Toeing the party lines

E. KAYE FULTON December 25 1995
CANADA

Toeing the party lines

E. KAYE FULTON December 25 1995

Toeing the party lines

CANADA

Liberals and Tories split on the Pearson airport deal

From the start to the finish of the largely futile $1.3-million exercise, the two long-standing rivals half-jokingly portrayed themselves as the prosecution and the defence. That much Canadians understood: few expected the four Liberal and five Tory members of a politically seasoned Senate committee to betray party loyalty in their assessments of a 1993 deal by the former Tory government to privatize Toronto’s lucrative Pearson International Airport to private developers. True to form, the glossy pink report released by the senators last week in Ottawa revealed more political bickering than impartial judgment of the worthiness, or folly, of the $750-million deal that the Liberals cancelled two months after it was signed. In wry acknowledgment of the excessive partisanship that traded Liberal jibe for Tory taunt and argument for counterargument, Tory Senator Finlay MacDonald suggested that Canadians had good reason to be disappointed. Conceded MacDonald: “Someone is going to have to hold our feet to the fire to take the partisan stink off this exercise.”

Most participants in the lingering controversy have a simpler wish: that the Pearson debacle and its messy implications would go away. Anxious to shed the taint of election opportunism that led them to scrap the contract in the first place, the federal Liberal government is expected this week to unveil a new deal to turn the two Pearson terminals over to a nonprofit local airport authority. For taxpayers and the travelling public, confronted with the prospect of at least another seven years before Canada’s most congested airport is brought up to world-class standards, a break in the political stalemate that has paralyzed development of Pearson is welcome news. But there is a hefty price yet to pay. Despite proposed Liberal legislation to limit the amount of compensation for lost profits—a bill now stalled in the Tory-dominated Senate—taxpayers are liable for at least $30 million, and as much as $454 million, in damages to developers. Said one senior Liberal strategist: ‘The political fallout from this mess is something no politicians, especially Liberal politicians, want to think about.”

The senators’ conflicting versions of events did more to confuse the issue than to clarity the murky dealings that colored an important matter of public policy. The Senate committee heard 65 witnesses and amassed more than 40,000 pages of documents during an eightweek scrutiny of the 57-year, $750-million contract between Ottawa and Pearson Development Corp., a private consortium of developers that planned to renovate and run two of Canada’s busiest, and most profitable, airport terminals. But the conclusions drawn from the same information could not have been more dramatically—or predictably—different. The 172-page Tory version of events conceded only that the Pearson transaction at times revealed “a Byzantine complexity, displaying a normal quota of human fallibility and limitation.” The Tory senators insisted that the cast of characters in the deal followed “an utterly routine course of events” that was ethical, diligent and above reproach. Killing the deal, they said, “was a rush to judgment so flawed it may cost Canadian taxpayers in the millions of dollars.” On the contrary, said the Liberals. Their 125-page minority report cited golf games between lobbyists and government officials, as well as inordinately generous terms and consulting fees, as proof that the process was riddled with undue influence and unseemly political interference. Said Liberal Senator Michael Kirby, the committee’s deputy chairman: “It was a very bad business deal for Canadians.”

Incapable of reaching a unanimous verdict on the deal itself, the senators nevertheless uncovered an intriguing array of details about the way the private and public sectors do business. For those involved in the original bid—including former Tory party president Donald Matthews, the major shareholder in Paxport Inc., and Liberal supporter Charles Bronfman, who controls Claridge Holdings Inc., a Montreal-based company that later merged with Paxport—the deal presented impressive rewards. Included in the agreement, and funded from Pearson revenues, was a $3.5-million payment to Matthews for unspecified consulting services. Paxport president Ray Hession, a former senior federal bureaucrat, was offered a “post-employment package” of $83,750 a year for life, or $41,875 a year for his wife if he should die before her. Fred Doucet, former Tory senior adviser and longtime friend of former prime minister Brian Mulroney, was guaranteed more than $2 million in lobbying fees if the deal went through as planned.

Perhaps the most revealing lesson of what Tory senators described as “a cautionary tale for politicians,” is how vulnerable the socalled chamber of sober second thought has become. Touted by one Tory senator as the party’s “last hurrah” as the majority party in the chamber, the partisan bickering instead suggested that the Senate may be the last place Canadians can look for balanced examination of important public policy. By complaining about the lack of power to extract confidential government documents that might have cast a sharper focus on the Pearson deal—the one issue on which Liberals and Tories agreed—the Senate inadvertently exposed itself to even more potent truth. ‘What are we to conclude?” asked a clearly exasperated MacDonald last week. “That both reports cancel each other out? That it [the exercise] was hogwash?” In the unsettled wake of the Pearson affair, it seemed a fair question.

E. KAYE FULTON in Ottawa

E. KAYE FULTON