Canada

Glen Clark Stands Firm

Jennifer Hunter August 2 1999
Canada

Glen Clark Stands Firm

Jennifer Hunter August 2 1999

Singing the tax-cut refrain

Big business and Ottawa lock horns over talent moving south

John Geddes

When Nortel’s John Roth jumped into the great braindrain debate, his name was added to two mental lists kept around Ottawa. For Liberal politicians who are fed up with being accused of driving Canadian talent south with high taxes, Roth joined the roster of high-profile critics who need to be shot down. But for true believers in the tax-cut crusade, Roth joined an honour roll of corporate shoguns—an exclusive club that includes Power Corp. patriarch Paul Desmarais and Canadian Pacific Ltd. chief executive David O’Brien—who have been willing to take on an obviously annoyed government in this year’s most heated economic argument.

Nobody was more grateful for Roth’s intervention than Thomas d’Aquino. As president and chief executive of the Business Council on National Issues, d’Aquino is the beleaguered point man for Canada’s biggest corporations in this acrimonious battle. The squabble over taxation has driven Canadas boardroom elite and the country’s ruling party farther apart than any other policy file since Jean Chrétien took power nearly six years ago. Chrétien has dismissed the brain drain as a fabrication of a business class. This miffs d’Aquino. “When a John Roth or a David O’Brien says he is having trouble attracting or keeping people, that is not an invention,” he told Macleans. “That the Prime Minister would question the veracity of that is absolutely stupefying. ”

Those are strong words for d’Aquino. Since 1981, when he took the helm of the BCNI, representing the CEOs of Canadas 150 biggest enterprises, he has often butted heads with politicians behind closed doors. But in public, he is usually scrupulously diplomatic. That astringent tone has added to his image as a consummate Ottawa insider. (It doesn’t hurt that he is married to senior finance department bureaucrat Susan Peterson, and that the power couple lives in a showpiece home in the capital’s exclusive Rockcliffe Park enclave.) His clout seemed boundless in the 1980s, when the BCNI’s enthusiasm for free trade dovetailed neatly with the Conservative government’s goals. When the Liberals were poised to return to power in 1993, d’Aquino smoothed the transition by praising the party for taking a rightward policy shift.

But relations between the BCNI and the Liberals have not always been cosy. The organization was onside with Finance Minister Paul Martin’s strategy of wiping out Ottawa’s annual deficits by setting a series of targets. But when the BCNI called for a similar set of targets for the accumulated debt, Martin declined. On another key issue,

d’Aquino urged the government not to agree to ambitious targets at the UN-sponsored 1997 Kyoto, Japan, conference on global warming that might force Canada to curb fossil fuel burning. He suggested that avoiding an economically damaging clampdown on oil, coal and natural gas consumption was even more important than fighting separatists or lowering taxes. The government shrugged and agreed to the targets.

D’Aquino insists that those were not defeats. On debt, he says Martin’s recent budgets contain implied targets, even if not the explicit ones the BCNI had urged. He predicts— and many experts agree—that Canada will not achieve its promised Kyoto reductions. Still, the BCNI longs for a victory in the tax debate. Grabbing the upper hand in the argument over whether some of the best high-tech talent is fleeing high taxes would be a master stroke, and d’Aquino promises to provide definitive analysis by the fall.

In government circles, though, resistance to aggressive personal income tax reduction remains stiff “Some of the expectations of business people like Roth are simply unrealistic,” says Liberal insider and longtime Martin adviser Mike Robinson. He says Roth, d’Aquino and the rest of the tax-relief chorus need to accept that spending in areas like health, education and research must also grab a piece of the burgeoning federal surplus: “It hurts their credibility with government if they aren’t willing to make demands that fit reality.”

D’Aquino claims political reality is, in fact, on his side. “A Liberal government,” he asserts, “could not possibly present itself before the Canadian electorate next time around and say, ‘Terribly sorry, but after eight years in power we have been not been able to provide you with any significant increase in your disposable income.’ ” GH