Winnipeg Free Press

Winnipeg Free Press (Newspaper) - May 8, 1981, Winnipeg, Manitoba Winnipeg free press Friday May 8. 1981 7 an can Ottawa proposed cutback in Federal Transfer payments would obviously have drastic consequences for the poorer provinces including Manitoba. The Clear implication is that Provin Cial governments will have to raise taxes to offset the reduction in Federal funding or will have to reduce the level of services. Finance minister Allan Maceachen has stated that he would like to reduce fiscal transfers to the provinces by billion Over the next two years. It would not necessarily mean an absolute reduction in fiscal transfers but a slow ing of the rate of increase would have the same effect. A parliamentary task Force is now holding hearings across Canada to obtain different views on the Issue. And in Newfoundland Early this week the task Force was told just How devastating the proposed cutback would be. Newfoundland is one of Canada s poorest provinces. It obtains 50 per cent of its revenues from Ottawa. Even with the million Newfoundland will receive from the Federal government this year it still cannot provide a Basic level of service in health and Post secondary education Newfoundland finance min ister John Collins told the task Force. Any further reduction in Federal fiscal transfers can result Only in a further widening of the already sub Stantial disparities which exist Between this province and the rest of Collins declared. Canada s highest Newfoundland already has the High est provincial tax rate in the country but still cannot afford to provide a number of health services available in other provinces. And the per capita University enrol ment is 30 per cent below the National average a province where the secondary school system does not yet go beyond Grade 11 and almost 25 per cent of the labour Force has less than a Grade nine education. Some 87 per cent of Newfoundland s old age pensioners also need Ottawa s guaranteed income supplement to bring them up to the poverty line. The National average is 54 per cent. Collins and social services minister Thomas Hickey argued that any reduction in Federal Transfer payments will Widen regional disparities and Ottawa s aim should be the opposite. Other provinces Are expected to take a similar position if and when they make representations to the task Force. Manitoba Happy in an initial reaction to the Federal cutback Manitoba s Deputy Premier and former finance Don Craik said present arrangements have worked Well. It might be possible for the Federal government to withdraw from its agreed participation in these essential services almost invisibly the Only apparent effect would be in diminished services normally provided by prov inces for which provinces would be blamed or in rising provincial deficits to cover the additional costs falling upon the provinces. That the Federal government is considering reducing its contribution to such shared Cost services As health and Hospital insurance and Post secondary education Marks a major departure in priorities by the Federal government. A Book recently published by the school of Public administration of car Leton University and edited by Bruce Doern deals with these changing priorities. Doern claims that the 1981-82 expenditure plans of the liberals reflect what is perhaps the most coherent Asser Tion of political belief and principle since the Early years of the Peai Peter Thomson Ottawa editor government when the liberals launched a series of social welfare initiatives. The application of these principles cannot help but produce greater Politi Cal conflict among Doern warns. The study concludes that the Trudeau government has decided that its expenditure plans must be designed so that the Federal government is More visible. Such a presence and identity is to be fostered by actions and expenditures which Are aimed directly at individuals businesses and other social institutions rather than through Provin Cial governments. It notes that the National Energy program developed under conditions of extreme bureaucratic secrecy makes assumptions about changes in human behaviour which Are life style in nature rather than being economic and sensitive to pricing changes and direct financial the study entitled How Ottawa spends your tax dollars says the social policy Field is clearly the major loser in the Federal expenditure plan for the next three years. The relative abandonment of social priorities is made worse by the failure to fusion the effect of higher Oil and Gas prices on lower income groups through a Energy tax credit As had been a feature of the 1878 conservative budget. There was nothing in the testimony of finance minister Allan Maceachen to the task Force that would contradict Doern s thesis on where the Trudeau government is directing the nation nor has there been any denial of the j changed direction in government actions. Maceachen was candid about want ing higher visibility for the Federal government. His excuse that Transfer payments have to be reduced because of huge Federal deficits does not hold water. It has been noted that Transfer payments have formed a diminishing share of Federal expenditures in recent years. Maceachen did state that the govern ment wants to direct More of its re sources into economic activities. Canadians have had a taste of that in the National Energy program which in effect provides for a government administered Industry and a total repudiation of the fundamental Tenet of a Market Economy that Price will affect Supply and demand. The real irony in Maceachen s Testi Mony was his statement that he would not like to see taxes increased in order to maintain the present level of trans Fer payments. That statement was made just a few Days before a new tax a Canadian ownership Levy 0.5 cents a litre was added on Gas and fuel Oil to pay for the government s acquisition of Petrosina inc. Obviously there was room for additional taxes if the purpose suited the government. In order to bring about a dramatic change in the Canadian Economy from one that is Market oriented to one that is largely state run an additional ele ment is needed. That element is social unrest or at least a Large measure of Public dissatisfaction with institutions which stand in the Way of Federal objectives. A sudden reduction in social services blamed on the provinces would go a Long Way toward creating such an atmosphere and thus pave the Way for massive intrusion into the Economy by the Federal government. That certainly appears to be the Road that the Federal government is travel Ling. Says Allan Maceachen s payments cuts would increase already which exist Between this province and the rest of Canada any uen Itu i me line i a a Cuta Wuriu me Recta e substantial Dis panties which exist Between this province and the rest of Canada 1 Rudeau s powerful coterie of insiders Ottawa for a inn Timp new hut 1 Pearson Ottawa for a Long time now but most particularly because of his experiences during last summer s Quebec referendum Justice minister Jean Chretien has been convinced that the Csc s French network is crammed with closet separatists. A week ago when the Cabinet debated the Csc s request for million to Start a second elite audience network the loudest naysayer at the Oval table was Chretien. At the afternoons end the Cabinet s decision was the Point Here is not whether Chretien s opinions about the Csc Are right or wrong. The Point instead is that his opinions matter. Depending upon the Way he thinks so most times will the government think. Chretien is one of just a dozen individuals in this town who really matter. One third of them All elected politicians possess direct Power. The others two political aides and a half dozen civil servants command influence and possess Access that most priceless of All Power broking assets. Never before has so much been done in Ottawa by so few. The source of this concentration of Power is of course Pierre Trudeau himself. He has become a liberated prime minister such As we have never experienced before. Since he does not have to face the voters again and since anyway the polls show that canadians like what he is doing he can do just about anything he wants draft a Constitution that is almost a Carbon copy of the one he wrote 20 years ago As a University professor make a private passion North South relations into his government s third priority after the Constitution and Energy. The familiar phrases like Kitchen Cabinet or Imperial do not quite fit the present circumstances. Far from being Cut off from the outside world and even less so hiding from it As he once did Trudeau today is far More open More pragmatic and More political than during his earlier Impe rial prime rather Trudeau has constructed his government into a series of concentric circles of which Only the inner one really matters. He has positioned him self not so much at the head of his government As at its Centre from which through the few he fully respects and trusts Power radiates on out to the rest of us. Besides Trudeau himself three of the inner Core members Are Cabinet minis ters. There is Allan Maceachen finance minister and the one individual besides Jim Coutts to whom Trudeau acknowledges a personal political debt. There is Energy minister Marc la Londe. Still As close As Ever to Trudeau Lalonde has now liberated himself to try to make his own Mark in the history books by his National Energy program and there is Chretien. Two other ministers Are close to the inner Circle. Fisheries minister Romeo Leblanc matters because Trudeau turns to him to learn what real canadians really environment min ister John Roberts Chretien s Back up on the Constitution matters because he is now being pushed to become the Cabinet s Ontario Star. Lalonde and Leblanc were once aides in Trudeau s office. Roberts is a close Friend of Coutts. Maceachen and Coutts stage managed Trudeau s Politi Cal resurrection in 1978. It is ties like these that bind the insiders. Of the two Back room aides who count one of course is Coutts. The other is Manitoban Tom a worthy. They have worked together since 1975, like a relay team Axworthy comes up with the policy ideas Coutts figures out How to put them into Politi Cal practice. Other ideas Are tossed up by half a dozen civil service mandarins. On to Deau s behalf privy Council clerk Michael Pitfield windows out the Good and the bad. Of their relationship All that needs to be said is that Trudeau decided to return in 1979 Only after Pitfield then in exile at Harvard University promised to return himself just As in 1968 Trudeau ran for the Liberal Leader ship Only after Pitfield had agreed to work for him. Any ranking of the others is arbitrary. Near the top since the Constitution is at the top of Trudeau s list is Federal provincial relations Secre tary Michael Kirby. He will remain there As principal strategist of Ottawa s plan to Cut Back its subsidies to the provinces which when this Battle Breaks in the fall will make the Row Over the Constitution look like a spat. Kirby once worked in Trudeau s of fice. So did two of the others whose names you should Jot Down in your desk diary. One is Deputy finance minister Ian Stewart whom Trudeau wanted to move there in 1977 but did not because businessmen thought Stewart leaned too much to the left. Today Trudeau Maceachen and Stewart think As one. The other is Deputy communications minister Pierre Juneau once briefly communications minister which now rather than the incumbent Francis Fox he is in All but title. Personality and circumstance brings two others into the inner Circle. Exter Nal affairs undersecretary Allan got Lieb is in charge of trying to move the North South dialogue Forward and of organizing the july Western economic when he turns his attention to Energy Trudeau turns to two people who for convenience Here Are counted As one Deputy minister Mickey Cohen the Diplomat and negotiator assistant Deputy de Clark the idea Generator and number Cruncher. Before the year is out Axworthy May move to private Industry and Gotlieb to Washington As ambassador. At least four others Are moving up and into the inner Circle economic development Secretary Gordon Osbaldeston Indus try Deputy minister Bob Johnstone de Montigny Marchand the no. 2 at external affairs and Bob Rabinovitch the top policy Type under Pitfield. Add All the names and add to them a couple of Low profile but highly rated ministers Treasury Board president Don Johnston and economic develop ment minister senator Bud Olson and the inner government still numbers just Toronto Star Syndicate. 0 Aner Pitnell Tad agreed to Jean Chretien influential. Tor to Star syndic at. Commission savings Are an expensive gift no one would expect a government no one would expect a government Agency even a monopoly profit maker such As the Manitoba liquor control commission to put less than its Best Case Forward in its advertisements. Surely however the captive customer of the commission deserves another explanation equally truthful about Why his booze is going to Cost him More Money. Wednesday a commission advertise ment stated effective May 5, 1981. The Price of most spirits wines and imported Beer will increase. The aver age Price increase for Canadian rum whisky Gin and Vodka will be 80 cents a the average Price increase for scotches and imported gins will Range from to a the fact that the advertisement ran the Day after the Price increases went into effect drove Home the fact that the customer does not have much Freedom of Choice when it comes to buying liquor in Manitoba. No one would expect the Manitoba liquor commission to Tell people that More than half of the increase in Price was due to the fact that Premier Sterling Lyon and finance minister Brian Ransom have decided to dig deeper into the pockets of drinking Manitoba is. The statement however would have been More accurate than the advertisement run by the liquor control commission. Accurate per Fred Cleverley haps but not As appealing As blaming the Cost increases As the commission did on prices paid to suppliers the Federal government and increased transportation costs. Perhaps the commission is relying in presenting its Best Case to its captive customers on the fact that the advertisement placed the free press will be read by far More people than the report produced by the government s own ministerial advisory committee on liquor control. The few busybodies who read the report will not really matter when they Are stacked up against the thousands who will read the commis Sion s advertisement that blames the Price increases partly on Cost in creases that cannot be controlled by the the commission advertisement is True but it is a shining example of How truth can be used to create the wrong impression. The commission says the Purchase of spirits is like shopping for anything else. And we drive a hard the report says there Are ten provincial buying agencies. The Price charged by a distiller. Is the same in All prov on Page 161 of its report the government s own inquiry gives a breakdown on just How liquor is priced right Here in Manitoba. The example Given is for a 25-ounce bottle of sea Gram s five Star Rye which was Selling for before the Price jumped this week to the commission s advertisement blames the Price increase first on the Price it has to pay to suppliers who have been faced with escalating costs on raw materials Glass and labor which Are beyond the control of the commission. Before the Price increase the supplier was paid by the commission. If the percentage of Cost to retail Price is maintained this Means that the supplier will get another 13 6 cents of the 80-cent increase. Next the commission blames the Federal government s increased excise duties and taxes. Under the old Price Federal duties accounted for and taxes for 41 cents. Extending these percentages the Federal government will collect another 20.5 cents of the 80-cent increase. Then there is transportation the third reason for the in crease. Transportation used to account for 10 cents a bottle according to the inquiry report. It will now account for 10.9 cents. Now we come to the last reason listed by the commission. It was the Provin Cial government s decision to increase its own markup five per cent. The government used to take cents As a markup. A five per cent increase would mean an extra 20.2 cents a bottle. Adding All these reasons together the Price of the bottle of Rye should have gone up by 52.4 cents. But it went up 80 cents. In Case you think that someone is picking your pocket you Are right. There is another Cost Factor that is not added until All other costs Are listed. That is the provincial sales tax. Five doonesbury per cent you say. No it is ten per com and is by Law the Only place where the retail sales tax can be hidden in the total Price of the product. Every other merchant in Manitoba must by Law specify the Price of his product without sales tax which is added in full View of the customer at the Cash Register. Not so in the Case of booze. It is a neat Way of hiding the fact that everyone who drinks pays a double sales tax for the privilege. A minor amount of arithmetic shows that when the 80-cent increase in the bottle of Rye is reduced by the addition Al 13.6 cents paid to the supplier by the nine tenths of a cent spent on transportation by the 20.56 cents paid in additional duties and taxes to Ottawa there is still 44.9-1 cents left Over. This amount and a similar percent age of the other larger increases that were put into effect this past week has just one destination. It is the provincial Treasury. It pays for what the liquor commission describes As its determination to provide Manitoban with As wide a variety of Quality products As possible negotiated by the commission at savings which can be passed on to at this rate we should Hope that they cannot find More savings. We just could not afford them. Wash harps. Okuff look of. A Coj have . this cower Wen him. In ;