Winnipeg Free Press

Winnipeg Free Press (Newspaper) - April 29, 1981, Winnipeg, Manitoba Winnipeg free press wednesday april 29, 1981 7 focus seeking political credibility Ottawa is past in the constitutional Row Between the Federal government and eight provinces is merely prologue. The big Battle Between centralized Power and provincial rights is now turning to a quarrel Over tax revenues and which level of government will choose the programs on which they Are spent. Finance minister Allan Maceachen fired the opening gun for the new round last thursday when he appeared before the parliamentary task Force on fed eral provincial fiscal arrangements. The task Force chaired by Liberal my Herb Breau has been set up to examine financial arrangements through which the Federal government makes Transfer payments to the prov inces to help pay for Hospital and medical care insurance Post second Ary education Public assistance Wel fare services and other provincially delivered services As Well As equalization payments to lower income provinces. Presumably the task Force will have some influence Over revised fiscal arrangements which will come into effect april 1, 1982. But Maceachen made it Clear he will be developing his own approaches even while the task Force is holding hear Ings across the country. It is difficult to avoid the suspicion that the task Force dominated by liberals is More of a Public relations exercise than a genuine advisory body whose recommendations will direct future actions. There is a definite thrust by the Federal government to enhance its Fis Peter Thomson Ottawa editor Cal Powers and thereby its political credibility at the expense of the prov inces. Maceachen was surprisingly candid on that Point in his appearance before the task Force. The immediate Federal strategy is to Cut Down on its contributions to established shared Cost programs. This will Force provinces to use their own tax revenues to take up the Slack just to maintain the same level of service. Such action would not be a crushing blow to the wealthier provinces like Alberta Saskatchewan and . But it will be devastating on Manitoba que and the Atlantic provinces. The other effect of reducing Federal Transfer payments will be to leave More funds available to the Federr. Government to reduce its deficit and to launch new economic programs. It is a stated goal of the Trudeau government to become More involved in the Canadian Economy of canadians needed a reminder on that score it will be apparent on May 1 when they pay three cents a gallon More for gasoline to cover the Cost of Petro Canada s acquisition of Petro Fina the Federal government s objective of becoming More involved in the econ omy and of becoming More prominent on the political scene has been impeded by its Lack of funds. Maceachen emphasized that Point to the task Force. It now takes about 20 per cent of Federal revenues to pay interest on the National debt. Direct payments to individuals takes another Large position out of the Federal Treasury and fiscal transfers to the provinces take another 20 per cent of revenues. There is no flexibility. Expenditures which Are already earmarked take All of Federal revenues and More deficit keeps growing. Therefore it has become the most urgent priority of the Federal govern ment to strengthen its fiscal position Maceachen declared. Transfers to the provinces cannot be insulated from policies of restraint he contended or the full Burden of restraint would fall within exclusive fedral program areas. And this would place the Federal government in an even weaker position vis a vis the provinces. Maceachen is obviously deeply pre neb reverses its pipeline position Ottawa one of the More intriguing decisions in Ottawa in recent months is the National Energy Board approval of an Oil pipeline from Zama Alberta to Norman Wells in the North West territories. The pipeline still requires Cabinet approval but after one reversal Why Liot another Arctic pipelines and proposed pipe lines have been a prominent Issue Ever since the discovery of Oil and natural Gas at Prudhoe Bay on Alaska s North slope. A consortium of major Energy companies proposed a natural Gas pipeline from Prudhoe Bay across the Northern Yukon to the Mackenzie Delta and then up the Mackenzie Valley to Northern Alberta. It seemed a logical Way to go. The pipeline in addition to moving alaskan Gas to the Southern 48 states would when needed be Able to deliver Canad an Gas from the Mackenzie Delta to Southern Canada. In Short the Ameri cans could finance the line and Canada could later Hook in to bring Beaufort and Delta Gas to Southern markets at the lowest possible Price. But economics have a Way of getting entangled with politics. In this instance there was concern for the fragile Northern environment and for the rights of native Peoples. Partly to appease the new democratic party in the minority government Ottawa diary Peter Thomson Days of 1972-74, the Liberal government of the Day appointed or. Justice Thomas Berger to investigate the so Cial and economic Impact of such a pipeline. In 1977 Berger recommended a 10 year moratorium on pipeline develop ment in the Yukon and Northwest territories. He Felt native land claims should be settled first and expressed concern for social Impact of pipelines on the native people. The National Energy Board Early in 1978 agreed that the Mackenzie route for an Arctic pipeline was not in the Public interest until a land claim by the Dene nation Indian brotherhood had been settled. The neb favored the Alaska High Way route is still on the Agenda but not moving because of difficulties in securing private financing without government guarantees. Now comes the reversal at least so far As the neb is concerned and there is no evidence the government intends to reverse the neb decision. This raises the question of what has happened in the past three years to change attitudes. One word filtering through Ottawa is that the Dene nation has been altogether too difficult in its demands wanting a virtual veto on economic develop ment in the area. Also the Federal government has become More conscious of the need to develop new Oil supplies. And there has been increasingly in the past few years a deem Phasis of environmental concerns and a revival of economic ones. Obviously construction of a pipeline from Zama to Norman Wells offers no great technological problems which cannot be overcome. However it raises the question that if an Oil pipeline can be built to Norman Wells Why not All the Way to the Mackenzie Delta transport Beau fort sea and Delta Oil and if an Oil pipeline can be built to Norman Wells Why not a natural Gas pipeline to the Delta of even to Prudhoe Bay natural Gas is after All less danger Ous to the environment than is Oil. One of the arguments against Arctic pipelines has been the possible effect on Caribou migration. That imaginary danger has been pretty Well eliminated through photos of Caribou rubbing their horns and backs on the Alaska Oil pipeline patently unconcerned with it As a migration obstacle and welcoming the warmth from the heated Oil. In any event there should be some interesting decisions on Northern pipe lines in the months and years ahead. And one recalls the comeback by former minister Jack Homer when argued that a pipeline across the Northern Yukon even one that was built close to the Beaufort would inter Fere with Caribou travels. Homer agreed that he might not know everything about Caribou but one thing he did know they Don t drink Salt d d last week s Gallup poll which showed Liberal popularity up and conservative and nip popularity Down stirred new speculation about Joe Clark s future As tory Leader. While there is still general agreement among conservatives that a new Leader must be chosen there seems to be a dearth of candidates for the Job. There Are reports that Brian Mulroney is losing interest in contesting first Joliette constituency in a by election and then the leadership. Former finance minister John Cros Bie appears to have lost interest in contesting the leadership and David Crombie likewise seems to have cooled off on the leadership quest. Clark might yet remain by default. However there Are still those willing to Wager that All three parties will have new leaders by the time of the next general election. Occupied with what he called the Fis Cal balance within a there Are numerous considerations which determine the political leverage of any government within a Federal system and it is Clear that fiscal strength is one of he stated. As provinces individually and collectively become fiscally stronger they attempt to increase their political leverage within the federation. At the same time As the fiscal position of the Federal gov emment weakens its Politi Cal leverage he added. Maceachen noted that in a Federal state the exercise of political Power is always the object of some Competition Between the two orders of govern ment. The Competition will be More vigor Ous if the residents of certain provinces feel that they do not or can not participate adequately in the exercise of Power through the Central institutions of government and if provincial governments can exploit this sentiment to enhance their own legitimacy. Maceachen singled out Alberta As the province whose wealth fiscal strength has created extreme fiscal disparities in Canada and he focused on natural resource wealth. Alberta has a per capita capacity to raise revenues that is four times As Large As that of the two poorest provinces Prince Edward Island and Newfoundland. And with what appeared to be a thinly veiled warning that the Federal government will make a grab for much of that wealthy Maceachen invited the task Force to consider whether we can afford to allow disparities of these kinds to persist and to Widen even More in the future. If we did allow them to persist what Yould be the Impact on the operation of the Canadian economic Union How would their persistence affect the capacity of the Federal government to conduct stabilization policies and to implement a policy of balanced eco nomic development in the various parts of the country How would they affect in the longer operation of our political system How would they affect our sense of common nationhood these Are critical questions on which i would Welcome the insight of task Force Maceachen stated. To avoid struggles placing excessive Strain on the fabric of a nation it is essential that the Fisca Fand political balance Between two orders of govern ment be capable of continued adaptation. If these adjustments take too Long and lag too much behind the emergence of new realities then the fiscal and political balance of the federation can be severely disrupted Maceachen warned. Maceachen noted that the current pressure for More decentralized Power Between the Federal and provincial governments is somewhat different from previous regional protest movements such As the maritime rights movement and the progressive movement in Western Canada. In general earlier protest movements sought to improve the lot of a particular province or Region by pressing for More favourable Federal policies. At the pres ent time the emphasis is very much upon further decentralization. There can be no doubt that Maceachen correctly diagnosed the political problem in Canada a wealthy Region of the country which has Little or no say in Federal affairs and thus a natural inclination to keep the Money and Deci Sion making at Home where it is under trusted control. The Federal approach is obviously to remove the Money and use it ironically for purposes with which Alberta does not agree. Having Ridden roughshod Over the provinces in its constitutional aspirations there is no reason to believe the Ontario and Quebec dominated govern ment will not use its elbows and every political trick it can Muster to follow through on the fiscal front. The stage is set for further confrontations Between the Federal govern ment and the three westernmost prov inces Canada s richest and the ones farthest removed from Ottawa Deci Sion making. Maceachen s Case for shunting pres ent Federal expenditure items on to the provinces is not particularly Strong. It is not the Transfer payments that Are riddling his budget. As tory my Don Blenkarn a Mem Ber of the task Force pointed out in 1977 transfers to the provinces took 21.9 per cent of the Federal budget in 1980 the percentage was Down to 20.6 in 1980-81 it was 18.6 per cent and in 1981-82 it is estimated at 18.3 per cent. When confronted with those figures Maceachen responded that to achieve National objectives the Federal govern ment needs fiscal strength and fiscal flexibility. A government that gets boxed in by fiscal restraint is bound to lose political credibility. Obviously he intends to see the prov inces boxed in and losing credibility. It is an attitude that provides the ingredients for an interesting political Battle because the National objectives of the Trudeau government Are not Likely to impress the people of Western Canada. They would rather set their own expenditure priorities something they cannot do through a Federal government that looks to Ontario and que for its re election. Nip strategy ready on Mega projects Issue when Energy minister Don Craik Rose in the legislature last week to announce the signing of a letter of intent Between the government and the aluminium company of Canada for a feasibility study into a world class smelter in Manitoba the initial response of the official opposition was decidedly muted. The Deal contained a clause which Many thought would pull the opposition to its feet immediately a precondition of Alcan s that the company have minority ownership of the next major Power station on the Nelson River. However neither nip Leader Howard Pawley nor economic develop ment critic Len Evans Brandon East denounced the Deal outright. Evans said that certainly everyone in the province knows we need and Pawley while expressing reservations about the privatization of Hydro said the party would not adopt a position on the proposal until it had had a Chance to study the details. Had the opposition by its continued hammering of the government Over the poor state of the provincial Economy been outfoxed by the tories was the nip now trapped on a major Issue Likely to dominate the next election Campaign the plan of the tories to go to the people on perhaps As Many As three so called Mega projects the smelter a Potash development and a Long term Power Sale to Alberta has been known for some time. And things appear to be going the government s Way. They now have the Alcan letter. Another letter of intent Between Mani Toba and Alberta for the Power Sale is expected to be signed soon. And an other step in the Potash development is reported to be in the offing As Well. While obviously the government would prefer to be Able to go to the people with More than just feasibility studies and letters of intent there is political advantage to the uncertainties As Well. If they can Force the nip into repudiating some or All of the deals for philosophical reasons the tories will have an Issue elect us they can Tell or these things will never happen the stage will once More be set for a classic socialism versus free Enterprise Battle in the coming Campaign. And on these terms the govern ment no doubt feels it has a Good Chance of turning around its current lag in Public opinion polls. The new democrats Are obviously caught in a squeeze and know it. How Ever All indications Point to the fact that the party is not about to forsake its principles even if those principles May mean it will lose the election. In an interview Pawley said the party s strategy will be to Welcome All three deals if they materialize and to pursue them itself but to insist that Manitoba s interests be protected. Mega projects Are Fine As Long As we Don t sell out the province to get the nip Leader said. The party he continued finds it offensive to sell off any part of any Crown corporation to a private company not Only on philosophical grounds but because of the precedent established. Does this mean that a Large truck ing firm locating in Manitoba will be Able to demand a share in aut Opac won t it be possible that a big company with a sizeable requirement for Tele phones could expect to have an interest in the Telephone system How will the government be Able to draw the at the same time however Pawley admitted that the party would not be proclaiming its opposition to the Alcan Deal from the rooftops. But he denied that this was because he would be worried about the Public Impact. Quite frankly we just Don t want to give a feasibility study that has at least a year to run that much he said. The same strategy will be used for the Alberta Power Sale and the Potash development if both reach the stage of letters of intent the opposition Leader said. We have nothing against the Power Sale but we Are afraid that Manitoban May not find out the taste of the goods until they buy Manitoban May find themselves subsidizing Alberta and Saskatchewan on Power. After All there has been no Long term Power Sale in my knowledge that has t resulted in the seller losing. The same applies to the Potash Deal. There Are indications of a sell out of Public interest there As Pawley said the nip will also continue to stress that the government s preoccupation with Mega projects has led it to forsake existing business in the province particularly Small Busi Ness which has suffered a 10-year High in bankruptcies this past year. These projects Are All five years or More in the offing. Manitoban will want to know what the government plans to do for the Economy in the Pawley believes that big bang eco nomic development announcements do not have the political Appeal that they used to. There is a cutting Edge for these things. The Public has become suspicious about sell outs to big com and the nip Leader denies that the Prospect of fighting an election Campaign in which his party can be cast As anti development worries him. I be Lieve the people of Manitoba will not want to see a dilution of their Public interest to swing a Long term Deal with a he said. Perhaps. But Manitoban May in deed want development at any Price in part because of the woeful economic statistics that the nip has stressed. Doonesbury zonked it s Elena tone Bottom a Haw a6aintd pay 6otwssthah vol prepare for urfi Michw choose Hal mix. Tan Lav if Prift Don t mind Mike mind him. I m i s from Aho mgr. Champ newer. Focused of. Sorry. I i ;