How Ottawa Spends, 1988-1989: The Conservatives Heading into the Stretch 9780773591196

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OTTAWA SPENDS t9ß8189 The Conservatives Heading into the Stretch Edited By

Katherine A. Graham

Ο Carleton University Press Inc., 1988 ISBN 0-88629-071-6 Printed and bound in Canada Distributed by: Oxford University Press Canada 70 Wynford Drive, Don Mills, Ontario, Canada. 13C 1J9 (416) 441-2941 Cover Design: Robert Chitty ACKNOWLEDGEMENT Carleton University Press gratefully acknowledges the support extended to its publishing programme by the Canada Council and the Ontario Arts Council.

Contents Preface, víí Chapter 1/Heading Into the Stretch: Pathology of a Government, 1 - Katherine A. Graham Chapter 2/What Legacy? The Nielsen Task Force Program Review, 23 -1. Seymour Wilson Chapter 3/Flora and Fauna on the Rideau: The Making of Cultural Policy, 49 - John Mejsel Chapter 4/The Symbolic Mosaic Reaf rmed: Multiculturalism Policy, 81 - Daíva K. Stasiulis Chapter 5/Plus Que Ça Change ... Northern and Native Policy, 113 - Frances Abele and Katherine A. Graham Chapter 6/Fisheríes and Oceans: 1977-1987, 139 - Susan McCorquodale Chapter 7/The Department of National Defence: The Steady Drummer, 165 - Edgar J. Dosman Chapter 8/For Whose Benefit? Smoke and Mirrors: CIDA's Development Assistance Program in the 1980s, 195 - Issir Islam Chapter 9/Consumer and Corporate Affairs: The Dilemmas of Influencing Without Spending, 233 - G. Bruce Diem Chapter 10/The Canada Assistance Plan: A Twenty Year Assessment, 1966-1986, 269 - Allan Moscovjtch

V!

Fiscal Facts and Trends, 309 Subscribers, 330 The Authors, 331

Preface This is the ninth edition of How Ottawa Spends. As in years past, this volume focuses largely on national priorities, federal spending and taxing. However, it also deals with the less visible underside of federal regulatory law and non-discretionary expenditures, such as the federal share of the Canada Assistance Plan. This is appropriate in terms of the theme of this volume: "Heading Into the Stretch". It is likely that this will be the last edition of How Ottawa Spends before the next federal election. Informed discussion and debate about the various federal responsibilities covered in this review are intended to spark public interest and help in consideration of the government record. It is hoped that the examination of the February 1988 budget and 1988-89 Estimates contained in this volume will also be illuminating. How Ottawa Spends is produced by the School of Public Administration at Carleton University. On behalf of the authors, Ι wish to thank the government officials, academic colleagues and administrative staff at Carleton who have assisted us. We are especially indebted to the staff at the School of Public Administration, without whom we could not have met our deadlines. In particular, I wish to thank Margaret Bezanson, Martha Clark and Terri Wir. I also must acknowledge the considerable help of Barbara Lippett-Clark in assisting with the research for Chapter 1, updating the appendix on fiscal facts and trends and in doing a variety of small tasks which did not go unnoticed. Finally, I would like to thank Michael Gnarowsld, of Carleton University Press, and Gordon McMillan for their editorial assistance. Katherine A. Graham Ottawa March 1988

VII

CHAPTER HEADING INTO THE STRETCH: PATHOLOGY OF A GOVERNMENT Katherine A. Graham

How Ottawa Spends is intended to provide informed commentary

and foster debate concerning federal government activities. Obvious targets for such an effort are federal spending and tax initiatives, such as those emanating from the defence and international aid policies dealt with in this volume. Equally important are a myriad of government regulatory endeavors and non-discretionary expenditures. The extent and importance of each of these latter categories of federal activity are exemplified by the examinations of Consumer and Corporate Affairs' framework law on bankruptcy, competition and copyright and that behemoth known as the Canada Assistance Plan (CAP), contained in this edition. The theme of this edition of How Ottawa Spends is "heading into the stretch." It is intended to reflect the fact that this is likely the last volume to appear before the next federal election. Regardless of what issues occupy centre stage in the forthcoming election (likely the aftermath of the Free Trade Agreement, Meech Lake Accord and tax reform, plus the government's record in the areas of regional development, social policy and ethics), it is important to examine the government's record in a wider context to gain a sense of the accomplishments and disappointments. To understand the extent to which any government has room to manoeuvre in a particular policy or program area, one must look beyond its political stripe and the size of its majority. To be sure, a very strong majority and an apparent political bent propel a government in certain directions and foretell particular initiatives. Perhaps the most striking evidence of this comes from the Thatcher government in the United Kingdom. However, there are contextual factors, such as the structure of national interests, views about the ethics of governing and other influences of history, and the structure of a society and its economy, which provide opportunities τ

2 / How Ottawa Spends

and limitations for government action. The assessments of particular government policy and program initiatives contained in the following chapters start with this broader contextual foundation. Some of the major findings that emerge are: •

In principle, task forces such as the Nielsen Task Force are a doomed instrument for effecting major changes in bureaucratic organizations. The fundamental issue is not the elimination of bureaucratic inefficiency but rather how to generate the political will to make fundamental changes to programs, given the existence of entrenched special interests. Creation of the expectation that the Nielsen Task Force would generate reforms can be construed as a manipulative effort to garner votes in the electoral process. The manner in which the parliamentary process handled the government's promise of "parliamentary and public participation" illustrates that, in the final analysis, the Mulroney government had no intention of allowing implementation of the Nielsen Task Force results.

ο The physiognomy of the Conservative Party has been of some considerable influence in the development of cultural policy since 1984. The range of policy reviews and some of the policy initiatives which have followed the last election would not have occurred without a change in government. In addition, the number of important actors in the making of cultural policy has increased, with the federal government becoming increasingly entwined with provincial/territorial governments on cultural issues and the Standing Committee of the House of Commons on Communications and Culture becoming very active. The pattern that emerges out of all this activity is that intrinsic, short-run factors (the state of the economy, caucus mood and agency/policy tradition) are particularly important in the formulation of cultural policy at the present time. Ο Multiculturalism continues to be viewed by the federal government as an effective nation-building ideology, but one which requires minimal support in dollars and administrative infrastructure. The Mulroney government has rejected proposals for fundamental structural reforms designed to "multiculturalize" Canadian state and private institutions. However, the fear shared by

Heading Into the Stretch /3

many ethnoculturai minority groups that the Tory party would work from its traditional Anglo-Celtic base of support to abandon multicultural policy has been allayed. The challenge remains for the government to deal with nascent racism and to heighten its sensitivity to the differences in Blass, culture and material needs and interests found among Canada's ethnic groups. ° While the specific issues of concern vary, the northern and Native policy fields are connected by the need for sustained attention to resolving questions of governance. Early in its mandate, the Conservative government opened the prospect for a major realignment of federal policy with respect to governance issues. But in the latter part of its term, it has been foreclosing opportunities for change and reverting to older patterns directed towards political and economic assimilation of Native societies. In the North, this general perspective is reflected in the pursuit of devolution of federal responsibilities to the territorial governments without apparent federal concern about the impact of devolution on the proposal to divide the NWT or on Native claims. Pessimism resulting from the recent federal record can be offset by the fact that it is possible to identify new approaches to bring about positive change. To achieve such change, the Prime Minister and Cabinet must assume a leadership role in removing the systemic barriers to change and in establishing federal policies that take appropriate account of the needs and interests of northern and Native peoples. ° The Department of Fisheries and Oceans (DFO) operates in a turbulent political and administrative environment. Extension of the 210-mile limit, international fishing disputes and the vagaries of the fishing economy have posed severe problems for successive Ministers of Fisheries and Oceans and departmental officials. These problems and the need to deal with them have been played out in the context of ever-changing political and bureaucratic leadership in the DFO and of competing demands that the Department either centralize or decentralize. In DFO regions, particularly the Atlantic and Pacific regions, mechanisms for meaningful popular involvement in policy making have been established. However, pressures for centralization, an ever-chang-

4/ How Ottawa Spends

ing cast of characters at the centre and concern about the costs (in the broadest sense) of a decentralized policy approach may scuttle the effort. •

The greatest achievement of the Mulroney government in defence has been the revitalization of the Department of National Defence (DID) after years of neglect. But morale and consensus have not yet been translated into assured long-term funding and a vastly improved frontend policy planning capacity within DID coexists with increasing uncertainty in resource management and allocation. The government's achievement, however, should not be underestimated. DID is no longer a fringe player and the public debate about the future of defence policy is now a permanent part of the Canadian political landscape. The challenge facing the next government will be to maintain this momentum, while adapting defence policy (probably drastically) to the rapidly changing domestic and international circumstances affecting Canadian security. If another funding crunch down the road is virtually certain, National Defence has been strengthened by this hour of respect.

O Approximately two cents out of every dollar spent by the Canadian federal government is invested in assisting developing countries. The complexity of foreign aid issues makes the work of the Canadian International Development Agency (CIDA) difficult and controversial. Representing a change from past governments, the Mulroney Cabinet and the Conservative-dominated Parliament have taken an active and keen interest in the reform of our Official Development Assistance (ODA) policies and CIDA operations. The Wínegard report has provided clear political direction to the government, recommending that CIDA give priority to human development in ODA, as opposed to trade promotion or foreign policy considerations. However, the interests of Canada's business and agricultural communities in using aid as a vehicle for trade mitigate against the government engaging in wholesale reform of our ODA policies and CIDA administration. o

The traditionally unobtrusive Department of Consumer and Corporate Affairs seems to be playing a more visible role since the Conservative government came to power.

Heading Into the Stretch /5

This is because of the convergence of two factors of the neo-conservative agenda: trade liberalization and expenditure restraint. Iηternatioηal trading relationships, particularly with the U.S., have created an unprecedented impetus to expand regulation and to clarify the economic framework law which Consumer and Corporate Affairs oversees. In a period of expenditure restraint, the absence of money to spend can cause the federal government to look to the regulatory realm for things to do since it is still under pressure from various interests both to take action and to be seen taking action. However, case studies indicate that the structure of interests served or affected by this Department make decisive, quick action difficult. °

The Canada Assistance Plan (CAP) remains largely as it was when it was enacted in 1966. Accordingly, many of the issues regarding social assistance which any capitalist society must deal with remain unresolved. Reviews of CAP (the paramount being the Social Security Review of the mid-1970s) have foundered due to the inability of the federal and provincial governments to agree on an approach to reforming our social security system, economic decline and the accompanying ideology of restraint. There is little evidence to suggest that the Conservative government has the will to address fundamental issues of the welfare state or to stem the gradual erosion of welfare which started in the 1970s.

Clearly, the picture that emerges from these separate studies is mixed. The present government has realized accomplishments in areas such as fisheries, international aid and defence. In other sectors, such as Indian Affairs and Northern Development and in its handling of the Nielsen Task Force, the government has been a downright disappointment. Even in those areas where contributors to this volume have identified accomplishments, these have not been easily achieved by the Mulroney government, despite its large majority in the House of Commons. This is particularly worthy of note because many of the areas covered here have not been ones that have galvanized public attention and approbation. Even in these more particularistic cases, the government has had trouble. This pattern mirrors the government's much publicized difficulties in selling its major priorities such as free trade, tax reform and the conclusion of the Meech Lake Accord. What is wrong?

6/How Ottαωα Spends

It would be easy to conclude that the government has been hamstrung by scandals and the personal unpopularity of the Prime Minister. But this is simplistic. This chapter will argue that the Conservative agenda had certain inherent characteristics which made it extremely difficult to implement. At the highest level, this is represented by a failure to achieve national consensus on major issues such as free trade. This occurred despite the fact that "national reconciliation" was a rallying cry for the Conservatives in 1984 which received a very positive response. In more specific terms, the various chapters in this volume provide evidence of particular characteristics of Conservative initiatives that have thrown the government into a maelstrom of controversy, frequently followed by retreat or delay. What are the pathological characteristics that have marked government policy in recent years? The eminent political scientist, Theodore Lowi, argues that it is important to consider the relationship between politics and government policy in terms of two reciprocal formulae: politics —. policy and policy --. politics In other words, the realpolitik of a particular governing party contributes to the policies it pursues; but equally important, the nature of a government's policies determines the political environment of the day. Lowí carries this perspective further by distinguishing among different policy types and arguing that the type of policy pursued by a government influences the nature of interests that will be aroused and will either sharpen or blunt political conflict, depending on the extent to which the interest groups involved are broadly based or specific and on the extent to which the policy is seen to result in real winners and real lasers. Of particular interest here is Lowí's distinction between three types of policy: distributive, redistributive and regulatory. In his analysis, distributive polices (such as Family Allowance in Canada) are characterized by low conflict because it is very difficult to identify if anyone loses because of the gains of others. On the other hand, redistributive policies are characterized by greater conflict, as resources are perceived to be taken from some group(s) in society and given to others. Regulatory policies are also the subject of considerable conflict, although in this case it is limited to the particular interests affected by the specifics of the policy (e.g., the trucking industry, cable television companies, etc. )1 It can be suggested that part of the Conservative government's difficulty in sustaining public support for its agenda lies in

Heading into the Stretch 17

the fact that its initiatives have either been or perceived to have been redistributive or regulatory in nature. In cases where the government has tried to sell its policies as being redistributive in a progressive way, it has generally been met with public scepticism—the Conservatives' much vaunted tax reform initiatives, allegedly designed to benefit ordinary Canadians, serve as a case in point2 The public debate on free trade, one of our national preoccupations since the Conservatives Øe to power, but particularly in this past year, has been almost entirely in terms of defining winners and losers. The chapters in this volume dealing with the Department of Consumer and Corporate Affairs, cultural policy and fisheries all illustrate the particular frenzy associated with disturbing the regulatory environment in a given policy area. In casting itself as being "fiscally responsible" and in its espoused practice of "cutback management," the government seems still to be unaware of one of the central truths of the Canadian political environment. As Seymour Wilson points out in Chapter 2, "All public opinion survey data indicate that the public is not prepared to make deep cuts or cancel government social programs." One result is that the government's every move is subject to intense scrutiny by particular interests. Those keeping an avid watching brief now extend well beyond traditional government watchers from the corporate sector. For example, women's groups, Native organizations and various church groups interested in the fate of Canada's Aboriginal Peoples, senior citizens' organizations interested in insuring that the Mulroney government does not repeat its earlier efforts to cap expenditures for social security for the elderly, organizations interested in particular health and social issues (such as the no-smoking and various day-care lobbies) are all mobilized and tend to be suspicious of the government they observe. In many cases, such as Native organizations, senior citizens' and women's rights organizations, this suspicion has been borne out, at times, since 1984. Sometimes the opposition to various government initiatives has found support from within the governing party itself. Although by virtue of their overwhelming majority, Conservatives dominate parliamentary committees, the Mulroney government's adoption of the McGrath Report reforming the parliamentary committee system has provided a sometimes lively opportunity for a review and critique of government initiatives and, as illustrated by the international aid and cultural policy chapters, for new ideas to which the government has to respond.

8/ How Ottawa Spends

From the above, we can suggest that the Conservative government has spent the majority of this term in office learning about the political economy of Canada.3 Α massive electoral victory does not necessarily translate into continuous high public support, as voters identify themselves with particular interests and become aggrieved. Redistribution of traditional benefits and cutback management are just not popular. Doubtless, this learning process has been somewhat traumatic for the government. In at least one case dealt with in this volume, that of Native and northern policy, catatonia seems to have resulted. It has also resulted in the government pulling back from any notion of gutting forward grand designs through the budget process. The use of the budget as a tactical rather than a strategic exercise, noted in last year's edition,4 has continued. An apocryphal story suggests that the hockey game between MPs (Michael Wilson was supposed to be in goal) and NHL Oldtimers which immediately followed the Finance Minister's budget speech paused much more excitement, at least in Ottawa, than the speech itself. This is the context in which we review the main initiatives of the Mulroney government, particularly in the past year, the 1988 budget and departmental spending plans for 1988-89.

THE 1988 BUDGET: AN INVITATION TO THE WINTER BLAHS On February 10, 1988, Finance Minister Michael Wilson brought down his 1988 budget. As any Canadian knows (except, perhaps, lifelong residents of the West Coast), mid-February is typically the low ebb of winter. This budget did nothing to lift us out of our traditional February funk. It was essentially a self-congratulatory accounting document. In Michael Wilson's own words: `The budget I am tabling today is an accounting. ..it is a record of how our policies and initiatives have worked in building the framework for the economic success we now enjoy."5 Clearly, this budget was pitched to avoid controversy, in the short term before the Calgary Olympics and in the longer term as the government heads into the next election. The low key nature of this budget belies a year of major milestones for the Conservative government:

Heading Into the Stretch /9

•

In April 1987, the Prime Minister and the provincial premiers concluded the leech Lake Accord, maling Quebec a partner in the Canadian Constitution and altering in a fundamental way the relationship between the federal government and all of the provinces. The Accord has been the subject of considerable debate. Its advocates say that formal agreement to the Constitution by Quebec is essential to our national purpose and that the terms of the Accord which limit the federal government's ability to act unilaterally to establish national programs and name senators and Supreme Court Justices reflect a vision of confederation based on a healthier respect for the diversity within our borders. Opponents of the Accord have argued that it has critically weakened our national government and may have a deleterious effect on the realization of the fundamental rights of particular groups, such as women, Aboriginal Peoples and the residents of Canada's territorial north:s

•

In June 1987, the Minister. of Finance introduced the government's plan for tax reform. Phase One of the tax reform effort, effective beginning in the 1988 tax year, changed a number of tax exemptions and deductions to tax credits and collapsed the number of marginal tax rates for individuals to three. It also tightened up the corporate income tax regime, in part through a lessening of corporate tax deductions. Mr. Wilson's tax reform proposals have been intensively scrutinized by a wide variety of interest groups and by the House of Commons Standing Committee on Finance and Economic Affairs. Predictably, public response has been mixed, although the Conservative tax reform efforts have aroused nothing like the furore surrounding earlier attempts at tax reform.7

•

In the summer of 1987, the Minister of National Defence unveiled a White Paper on Defence Policy. The White Paper proposals are dealt with at considerable length in Chapter 7 of this volume. Suffice to say here that they have implications for the government's commitment to defence spending. The government signalled its commitment to the direction of the White Paper in the 1988 budget and specifically excluded defence from any announced cuts in non-statutory program spending. The 1988-89 Estimates for the Department of National

10 / How Ottawa Spends

Defence show a 6.2 per cent increase for this coming fiscal year over planned spending in 1987-88.8 o

The government announced a series of new regional economic development initiatives in 1987. These included the creation of the Atlantic Canada Opportunities Agency and the Western Diversification Office to spearhead economic development initiatives in those two regions. The government also announced a Federal Economic Development Initiative in Northern Ontario. Funding for these initiatives came in part from the budget of the Department of Regional Industrial Expansion and in part from previously unallocated reserves.9

o

In December 1987, the government announced a "national daycare policy." The implementation of this policy will bear careful scrutiny since it is the first "national" policy to be announced since the leech Lake Accord. Elements of the policy include the creation of 200,000 new daycare spaces in the next seven years and increased deductions for child care expenses. Critics of the policy have suggested that it represents only half a loaf by not recognizing the true cost of adequate child care and not paying adequate attention to the need for subsidized daycare spaces.10 Regardless, the government pressed forward with an announcement in the 1988 budget that the maximum child care expense deduction will be increased from $2000 to $4000 for each eligible child under seven years of age and elimination of the previous $8000 limit on the total amount of child care expense deduction that any one taxpayer could claim.11

•

In October 1987, the government concluded the Free Trade Agreement with the United States. This realized one of the central priorities of the Conservative agenda. The "free trade debate" has preoccupied Canadians since the last federal election (in fact, since Confederation). It has become a national game to identify winners and losers in the deal which, like the leech Lake Accord, has vociferous advocates and opponents. The battle for public opinion about the Free Trade Agreement continues as this is being written. It will likely carry over into the next federal election.

o

Finally, the Prime Minister hosted a meeting of Commonwealth leaders in Vancouver in the fall of 1987.

Heading into the Stretch 111

This provided a showcase for the Conservative government as a competent player on the international stage, particularly as a leader in dealing with the dilemma of South Africa. The 1988 budget went some way in confirming this government's commitment to an international role by excluding Official Development Assistance (ODA) from the list of candidates for non-statutory expenditure cuts.12 Clearly, these initiatives and others have implications for federal government coffers and for the ability of the federal government to act. For example, the Meech Lake Accord has profound implications for the federal government's ability to act as a central power and to establish national programs. This influence has been felt even before the Accord has been ratified by all provinces. It can be seen in the rather tentative nature of federal daycare policy and in the passive federal response immediately following the January 1988 Supreme Court decision striking down Canada's abortion law. In the days following the Supreme Court decision, virtually every province announced its own policy on the availability of abortion services and on the payment for abortions through our "national health care system." The Canada Health Act was buried. In terms of federal coffers, the question becomes "how to pay?" Whatever their specific strengths or weaknesses, daycare policies, regional economic development initiatives and the like have implications for the public purse. The cost is particularly noticed in a pre-election period, when government policies and programs have to take on heightened visibility among the electorate. A traditional pre-election pressure on the governing party's fiscal plans is the perceived need to gain public support by keeping tax increases down and providing voters with some attractive tax breaks or "giveaway programs." At budget time, Michael Wilson was widely applauded by the business community for not giving in to hypothetical political pressure from his Cabinet colleagues and caucus for election time goodies. Indeed, aside from remission of duties on steel rods for silos and burial shrouds, the 1988 budget was remarkably short on handouts. This does not mean that there will be no new spending programs in the next fiscal year. As the December 1987 announcement of the federal day care policy illustrates, new spending programs can be announced outside of budget time; indeed, this has been the pattern with the Mulroney government as the budget has been used to trumpet the message of restraint. There is still lots of time for goodies before the next election.

12/How Ottawa Spends

Aside from the one cent per litre increase on the gasoline tax, the budget also left ordinary Canadians' wallets untouched. (Although the tightening of provisions allowing the purchase of inventory by wholesalers on a tax free basis may have an impact on the prices Ød by consumers for particular goods; the government estimates that this budget provision will result in up to $200 million in revenue to the federal government, on a one-time basis, over the 1989 and 1990 taxation years.)13 The Finance Minister billed this budget as "good news" with fiscal responsibility and restraint. The Budget Speech trumpeted the dynamic performance of the Canadian economy since 1984 and the government's ability to capitalize on economic growth and simultaneously restrain the state, now and in the future. However, analysis of the 1988 budget, particularly its assessment of our shortand medium-term economic future, suggests that its very "good news" message may, in and of itself, be a pre-election giveaway. The economic projections and government spending plans contained in the 1988 budget seem overly optimistic and may boomerang on the government and all Canadians. The fact that the Minister of Finance has taken such a Pollyanna-like view of the economy and the government's ability to limit its spending suggests that the government will want to get over the nasty business of an election sooner rather than later. THE BUDGET AS A CHIMERA The 1988 Conservative budget is a fanciful conception in at least two ways: first, it presents the most optimistic view possible about the short-term prognosis for the Canadian economy, even while acknowledging the likelihood of an economic downturn in 1988; second, it presents what seem to be overly optimistic forecasts of the government's ability to contain program spending, even in the area of non-statutory programs where the government allegedly has the most control. In the Introduction to a budget document outlining Canada's economic prospects, the Finance Minister captured the essence of his view of the world: Canada is now in its sixth year of economic expansion following the 1981-82 recession. Over the last year, as in 1986, Canada was the fastest growing economy in the Group of Seven largest industrial countries (G-7). Indeed, since 1984

Heading Into the Stretch / 13

Canada has had the strongest employment and output growth among the major industrial countries. Moreover, the substantial improvements in the fundamentals underlying the domestic economy in recent years, coupled with strucTable 1.1 The Canadian Economic Outlook: Main Economic Indicators, 1987 to 1989 1987

1988

1989

(per cent change unless otherwise specified) Expenditures (volumes) Gross domestic product (GDP) Consumer expenditure Residential investment Business non-residential investment Machinery and equipment Non-residential construction Government expenditure Final domestic demand Inventory change (billions of 1981 dollars) Exports Imports Net exports (billions of 1981 dollars)

3.8

2.8

3.0

4.5 14.2 10.0 16.7 0.7 1.2 5.1 0.6 4.4 6.1 15.3

2.2 -11.9 10.6 12.4 7.7 2.5 2.4 2.6 4.0 4.3 15.6

2.9 -1.9 6.0 7.4 3.7 1.3 2.7 1.7 5.5 4.0 18.4

Current account balance (billions of current dollars)

-8.7

-9.7

-9.8

Housing starts (thousands of units)

242

173

175

Prices and costs CPI GDP deflator Average wage settlements

4.4 4.4 3.7

4.0 3.3 3.7

3.9 3.4 3.9

Labour market Labour force Employment Unemployment rate (per cent level)

2.0 2.8 8.9

2.1 2.8 8.3

1.8 2.0 8.1

6.9 25.6 9.0

6.8 4.8 9.2

5.5 12.8 9.2

8.4 4.0

8.6 4.6

7.8 3.9

11.2

11.1

10.3

incomes Personal income Corporate profits Personal savings rate (per cent level) Financial market assumptions 90-day commercial paper rate (per cent level) Nominal

Realt') McLeod Young Weir average of long-term industrial bond rates (per cent level) Nominal

(1) Real interest rates are defined as the nominal rates minus the percentage change in the consumer price index. Source: Canada's Economic Prospects: Looking Ahead to the 1990s, Department of Finance, February 10. 1988.

141 How Ottawa Spends

tural policy initiatives, such as free trade and tax reform, suggest that the Canadian economy is well positioned for sustained, non-inflationary growth into the 1990s.14 Mr. Wilson forecasts that real output growth in Canada will slow in 1988, averaging 2.8 per cent over the year but rebound to 3.6 per cent in 1989. In his words, "Consumer expenditures will be buoyed by large personal income tax refunds associated with tax reform, and business non-residential investment spending and exports will be spurred by the Canada-United States Free Trade Agreement."'5 Table 1 shows the government's short-term economic outlook. The numbers in this table contain some strange anomalies. For example, Mr. Wilson is forecasting that the so-called slowdown in 1988 will be accompanied by an increase in employment and a decrease in the per cent level of the unemployment rate. Of more general interest, Mr. Wilson's predictions are consistently on the optimistic side compared to those of other recognized forecasters. As he himself indicates, forecasters in the Canadian private sector, on average, project real output growth to be 2.5 per cent in 1988 and 2.7 per cent in 1989. Thus, private forecasters are slightly more pessimistic than Mr. Wilson for this year and do not share his view that there will be a signińcant upswing in 1989. Similarly, the majority of private forecasters expect inflation (as measured by the CPI) to remain around 4.5 per cent for 1988 and 1989. They suggest that it will be accompanied by an unemployment rate of about 8.5 per cent." Comparing these numbers with Table 1, we see that both sets of forecasts are higher than Mr. Wilson's. How does the rosy glow surrounding the economic forecasts in the 1988 budget get translated into budgetary expenditures? Mr. Wilson's basic budgetary balance sheet is shown in Table 2. Here again, we seem to have another contradiction. Despite the Finance Minister's suggestion that a 1988 slowdown will be shortlived and have minimal impact, the government's much vaunted efforts at expenditure control and deficit reduction seem to be going out the window. For example, government expenditures for 198889 are forecast to increase by 5.6 per cent over the 1987-88 level. This is higher than the projected rate of inflation. The deficit is to be reduced, but only by 1.4 per cent in 1988-89. In contrast, however, net public debt is forecast to rise by 10 per cent over the

Heading into the Stretch 115 Table 1.2 Summary Statement of Budget Transactions

% Change from

$ Billions Budgetary transactions Budgetary expenditures

Previous Year

87-88(1) 88-89(2) 89-9014

48-89

89-90

4.3 9.9

1.7 2.8

96.1 29.2

100.2 32.1

125.3

132.3

5.6

2.0

Budgetary revenues

96.1

103.3

106.3

7.5

2.9

Deficit Percentage of GDP

29.3 5.3

28.9 4.9

28.6 4.6

-1.4 -7.5

-1.0 -6.1

0.5 6.6 1.2

-0.3 7.3 -0.4

0.0 8.6 1.2

-160.0 10.6 -133.3

17.8 133.3

8.4

6.6 22.3 3.8

9.9

-21.4

50.0

18.7 3.0

322.3 54.9

350.9 56.1

Program expenditures Public debt charges Total expenditures

Non-budgetary transactions Loans, investments and advances Specified purpose accounts Other transactions Net source of funds Financial requirementst'l Percentage of GDP Net public debt Percentage of GDP

101.9 33.0 134.9

20.9 3.8 293.4 53.1

6.7 -16.2 0.0 -21.1 9.9 3.4

Note: Figures may not add due to rounding. (1) Estimate. (2) Forecast. (3) Excluding foreign exchange transactions. Source: The Fiscal Plan, Department of Finance. February 10, 1988.

1987-88 estimate to a level of $322.3 billion in 1988-89. Even in the course of the swift economic recovery that Mr. Wilson predicts, net public debt is expected to rise to 54.9 per cent of the Gross Domestic Product (GDP) in 1988-89 and to 56.1 per cent of the GDP in 1989-90. One must ask if this is progress in the context of the agenda of restraint the Tories espouse? Indeed, if Mr. Wilson's economic forecasts prove to be too optimistic, then his revenue estimates will also be high. This will lead to a higher deficit than projected and push the net public debt up even further. The program spending plans of the Mulroney government are worth examining, particularly in view of the economic forecast accompanying the 1988 budget and the impending election. Ø we noted above, Mr. Wilson's expenditure plans, as outlined in the budget, were not rife with giveaways. Furthermore, while acknowledging a 4.3 per cent increase in total program spending for 1988-89, the Finance Minister proudly projected an increase in

8.9 2.2

16/How Ottawa Spends

non-statutory programs of 3.9 per cent. Non-statutory programs are those which are not demand-driven (such as unemployment insurance) or subject to formula financing (such as the Canada Assistance Plan). Non-statutory programs offer the government some discretion. Table 3 shows the percentage change in budgetary expenditures by major program of the federal government since 1984-85.

Table 1.3 Budgetary Expenditures by Major Program Actual

Forecast

1984-85 1985-86 1986-87

1987-88 1988-89 1989-90

(percentage change) Statutory programs Unemployment insurance benefits Old age security benefits Family allowances Canada Assistance Ran Established Programs Financingt'r Fiscal transfers Olherm

2.8 9.7 4.0 13.9

-0.3 9.7 3.4 4.6

4.3 7.3 1.3 3.4

-2.8 7.6 1.2 6.4

0.8 7.4 0.8 3.8

3.7 6.5 0.7 3.5

12.7 3.7 20.2

1.0 0.5 8.2

1.9 6.6 3.4

1.0 5.5 34.2

5.5 6.6 2.9

4.6 4.8 -10.3

Total statutory programs

8.9

3.9

4.6

6.7

4.6

2.6

11.7 18.0 13.3

3.8 -13.2 -10.4

10.0 24.4 1.1

4.3 12.8 8.4

6.2 6.0 2.8

6.4 3.0 -2.3

Non-statutory programs Defence Official Development Assistance131 Other

12.5

-7.3

4.5

7.6

3.9

0.3

Program spending

10.5

-1.1

4.6

7.1

4.3

1.7

Public debt charges

24.2

13.3

4.8

9.6

9.7

3.1

Total budgetary expenditures

13.0

1.8

4.6

7.7

5.5

2.0

Total non-statutory programs

(1) Cash portion only. Including the tax portion, total entitlements are expected to grow at an annual rate of 5 per cent over the forecast period. (2) Includes payments under the Western Grain Stabilization Act and the Western Grain Transportation Act. (3) Budgetary cash portion only. Source: The Fiscal Plan, Department of Finance. February 10. 1988.

As indicated, the forecast increase for non-statutory program expenditure in 1988-89 is 3.9 per cent. The increase in this category is forecast to be limited to a minuscule 0.3 per cent in 1989-90. This

Heading Into the Stretch / 17

is a remarkable forecast, given the likely temptation of profligacy which will face the Prime Minister as a party leader during the upcoming election campaign. The continuing pressure on this government to spend is suggested by the revised percentage increase in non-statutory program spending for 1987-88 contained in the 1988 budget. In his 1987 budget, the Finance Minister forecast non-statutory program spending would increase by 4.4 per cent in 1987-88.17 As Table 3 shows, this has now been revised upward to an increase of 7.6 per cent. Such an increase is symbolic of the fact that the Gordian knot of restraint has been broken, at least over the short term. Mr. Wilson himself was unwilling to announce non-statutory spending cuts for 1988-89. Instead, his announcement that government departments' non-statutory spending will be reduced by $300 million does not come into effect until 1989-90.18 The forecast percentage increase in statutory program expenditure for 1987-88 was also revised upward in the 1988 budget from 4.6 per cent (in the 1987 budget) to 6.7 per cent. This suggests that the demands of statutory programs on federal coffers do not necessarily abate, even in times of economic prosperity. It also casts into doubt the government's optimism that the growth in statutory program expenditures can be kept to 4.6 per cent in 198889 and to 2.6 per cent in 1989-90, as we enter and allegedly climb out of a period of economic decline. THE ESTIMATES The 1988-89 spending Estimates outlining the government's more detailed expenditure plan suggest again that what we see may not be what we get. The Main Estimates, brought down shortly after the February budget, reflect Mr. Wilson's forecast of an increase in budgetary expenditures of about 5.6 per cent. This is suggested as the total increase for the fiscal year 1988-89. However, the continuing pressure on the Mulroney government to spend more is reflected in the information presented in Figure 1. It shows that the Main Estimates themselves represent a 7.7 per cent increase over the adjusted Main Estimates for 1987-88. The 5.6 per cent growth figure (actually 5.5 per cent in the Estimates) is achieved by forecasting the unallocated reserves for Supplementary Estimates at $4.3 billion. While $4.3 billion in and of itself is not an inconsiderable kitty for the Prime Minister and his colleagues to distribute at

181 How Ottawa Spends

Figure 1.1 Government Expenditure Plan ($ billions) $132.3 Reserves $4.3

$125.3

+5.5%

Reserves for Supplementary Estimates $6.1 Other Elements of the Expenditure Plan $8.4

j

Other Elements of the Expenditure Ρian $8.6 Main Estimates $119.4

+ 7.7"'ο Adjusted Main Estimates' $110.8

1987-88

1988-89

Includes Supplementary Estimates (A) of $700 rif for the Special Canadian Grains Program Source 1988-89 Estimates, Part I, Depanment of Finance

Heading Into the Stretch 119

election time, it is surely a small "c" conservative forecast of the amount of supplementary funding the government will require, given the pressures of an election and the anticipated economic slowdown. The required reserves for Supplementary Estimates in 1987-88 totalled $6.1 billion. It is not unreasonable to suggest that an amount similar to $6.1 billion will also be required in the 198889 fiscal year. If so, a total expenditure increase of seven per cent in budgetary expenditures would result. In summary, the total estimated expenditure of $132.3 billion for 1988-89 is a wish. The unallocated reserves are funny money. The Estimates also deal with the person-year requirements of the federal government. In dealing with person-year changes, it is important to remember that these are positions, not people. Since embarking on its five-year 15,000 person-year reduction plan in 1985, the government has made much of the fact that very few people have actually lost employment as a direct result of the effort. How has this miracle been accomplished? In part, it has been achieved through the elimination of positions as individuals have retired or left government service for other reasons. In other cases, person-years have been reduced through the transfer of positions from federal ranks to other governments or organizations. For example, a habitual loser in the person-year stakes since 1985 has been the Department of Indian Affairs and Northern Development. The 1988-89 Estimates alone show a 737 person-year decrease for that Department. In fact, many of these positions have been shifted off the direct federal payroll but are still there indirectly. They are now considered officially to be part of the complement of the two territorial governments or to be in the employ of individual Indian bands. The transfer of northern health care services to the territorial governments will also contribute to person-year reductions in the Department of Health and Welfare. Finally, we have the intra-governmental process of transferring positions from department to department, thereby effecting a person-year reduction in the loser. This year, a number of departments will lose person-years as a result of the centralization of architectural and engineering services in the Department of Public Works. The Department of Regional Industrial Expansion will lose 358 person-years to the new Atlantic Opportunities Agency and Western Diversification Office. Together, these two new units will require 149 additional person-years to bring their combined complement to 507. Transfers, additions and deletions such as these have

201 How Ottawa Spends

resulted in the government authorizing a complement of 231,164 person-years for 1988-89, a reduction of 1,961 from 1987-88. CONCLUSION What does all this mean? As we head into the stretch before the next election, we can see that the Conservative government has not been a do nothing government. It has some objective accomplishments (the Meech Lake Accord and the Free Trade Agreement, for example) which have been variously praised and criticized and which will be the subject of debate during the next election campaign. As for its initial objective of fiscal restraint and reduction of the role of the state, the government has been less successful. To be sure, various Crown corporations have been privatized and the government is continuing to solicit private sector involvement in dealing with domestic and international problems. However, traditional pressures for the federal government to become involved in the problems of the fishing and farm economies, dealing with regional disparities and maintaining some minimum level of social and economic dignity for all Canadians have not abated. After a rocky start, the Mulroney government seems to be learning that it ignores such pressures at its own peril. The resulting awakening, coupled with the requirement for an election coincident with an economic slowdown, means that the government's rhetoric on restraint will become increasingly hollow and faint, as actions and real numbers will attest.

Heading into the Stretch /21

Notes *

I would like to thank Bruce Diem, Allan Maslove and Gene Swimmer for commenting on a draft of this chapter. Responsibility for the final version rests with me.

1.

T.A. Lowí, "American Business, Public Policy, Case Studies and Political Theory," World Politica 16:4 (July 1964), pp. 677-715. Lowi identified a fourth policy type, constituent policy, which is not of particular interest in this analysis.

2.

Α poll released early in 1988 indicated that a majority of Canadians did not believe that they would benefit substantially from Phase One of tax reform, announced in June 1987. This view seems to be supported by the preliminary results of a study of the impact of tax reform released by the Institute For Research on Public Policy. It indicated that the big winners from tax reform would be the top one per cent of Canadian households. A.M. Manlove, "Preliminary Results of an IRPP Research Study Based on the Statistics Canada Tax/Transfer Model," Institute For Research on Public Policy, [Ottawa], February 10, 1988.

3.

For a further, somewhat more theoretical discussion of this notion, see Allan M. Maslove, "The Public Pursuit of Private Interests," How Ottawa Spends, 1985 (Toronto: Methuen, 1985), pp. 1-28.

4.

Michael J. Prince, "Restraining the State: How Ottawa Shrinks," How Ottawa Spends, 1987-88 (Toronto: Methuen, 1987), pp. 1-35.

5.

Michael Wilson, Minister of Finance, The BØet Speech, February 10, 1988, p.2.

6.

For a positive view of the Accord, see "Reviewing the Accord," The Globe and Mail, [Toronto], January 26, 1988. For a basic critique of the Accord, see Bryan Schwartz, Fathoming Meech Lake (Winnipeg: The University of Manitoba Legal Research Institute, 1987).

7.

See, for example, Cathryn Motherwell, "Small Business Lauds Reform Proposals...But Group Says They Do Not Help The Poor," The Globe and Mail, [Toronto], September 2, 1987, p. B8.

221 How Ottawa Spends 8.

Michael Wilson, Minister of Finance, BØet Speech, p. 10 and BØet Papers, February 10, 1988, p. 4 and 1988-89 Estimates: Part I, p. 34.

9.

Michael Wilson, 1988-89 Estimates: Part Ι, p. 20.

10.

See, for example, Leonard Shífrin, "Daycare Package Unfair and Regressive," The Citizen, [Ottawa], December 10, 1987.

11.

Michael Wilson, BØet Papers, p. 9.

12.

IØ., p. 2.

13.

Ibid., p. 28.

14.

Michael Wilson, Canada's Ecommnw Prospects: Looking Ahead to the 1990s, February 10, 1988, p.1.

15.

IØ., p. 31. Mr. Wilson's optimism is particularly wishful on this point since the Free Trade Agreement does not come into effect until the beginning of 1989 and will be phased in only gradually. First year impacts are likely to be minimal.

16.

IØ., p. 41.

17.

Prince, 1987, Ρ. 34.

18.

Michael Wilson, The BØet Speech, p.7.

CHAPTER 2 WHAT LEGACY? THE NIELSEN TASK FORCE PROGRAM REVIEW V. Seymour Wilson

INTRODUCTION The use of royal commissions in the policy process has had a long, rich and varied history in the development of public policy in Canada. Task forces are, however, of recent vintage: beginning in the last two decades Canadian policy makers, following their American counterparts, have increasingly utilized this device in the policy prοcess.1 As a policy instrument, task forcing has the advantage of being expeditious, or as one Canadian deputy minister recently put it, "short and sweet." This is in fact the difference between a royal commission and a task force: while the royal commission is composed of a phalanx of formally appointed commissioners with a specific mandate typically lasting two to three years, the task force is a much more informal instrument, expediting its task with little fanfare and, on occasions, completing it within a few months. However, in the 1980s, task forcing increasingly afforded another advantage in the era of government restraint: it allowed governments, enamoured with private sector efficiency and effectiveness criteria, to conduct intensive investigations of public administration from an explicitly "private outsider" orientation without the encumbrances of the lengthy and costly methods usually associated with royal commissions. But as one American scholar, commenting on this new purpose of task forcing, lamented:

... despite widespread and long-standing recognition that public and private management are different phenomena, we remain fascinated with the idea that the efficiency and effectiveness of government can be improved by adopting private sector management techniques. Thus, public administrators have much in common with Sisyphus, the legendary king of Corinth who was condemned to spend eternity 23

241 How Ottawa Spends

pushing a heavy rock up a hill only to have it roll down again as it neared the top.2 There are few beliefs more deeply entrenched in the popular consciousness than that governments waste a lot of money and that private enterprise is generally cost-efficient.3 In the United States, Seymour Martin Lipset and William Schneider, in their book The Confe Gap, discuss this general perception of waste and conclude that the paradox of simultaneous public support for maintaining or increasing spending in all major categories of government programs is explained by the perception that waste in government is so pervasive that there can be big spending reductions without service rollbacks. It is important to make this point about public perception at the outset. All public opinion survey data indicate that the public is not prepared to make deep cuts or cancel government social programs. According to this view, much of the waste is in government administration and personnel activities. Richard Johnston, in his review of Canadian public opinion surveys for the Macdonald Royal Commission, puts it succinctly: Government in the abstract is the object of hostility. Specific programs, on the other hand, are usually popular. Thus abstract questions ... evoke antipathy to government, regardless of its order. But little antipathy to government as such emerges from the speØc policy questions. The clearest exception proves the rule: respondents are ready to saØce public sector payrolls.° This subtle public distinction seems, however, to be lost on most private sector observers of the public policy scene. It is fair to say that most private sector critics have generally concluded that the overall public perception of government waste makes the process of identifying and rectifying the condition very dear. Thus, to the private sector the rational consequence is as follows: identify the inefficient programs, the incredible waste of public funds, then publicize the "known facts" and, f'mally, await the public condemnation and the political and administrative embarrassment. "Meaningful" reform will surely follow.5 While this sequence of events might well be expected by some, the general argument put forward in this chapter maintains that public inquiries into government operations, given today's climate of restraint, should not expect to forego the gauntlet of the political process. Thus, in the case of the Task Force on Program

What Legacy? The Nielsen Task 125

Review (the Nielsen Task Force), its purported rationality and eminent common sense did not preclude the government from questioning its recommendations, let alone not acting on them. At best, the process of using a task force to deal with perceived waste in government can be highly illuminating about the dynamics of public policy making and administration; at worst, it has the potential to develop into an expensive farce. The whole exercise must, therefore, be construed as a gamble, with the die loaded in favour of administrative caution and political expediency. Thus, there are a number of pitfalls for such an exercise: if there is any hint of internal dissension, any revelation of shoddy homework, any head-on clash with government policy, any unusual proposals unacceptable to entrenched interests, the mission stands in grave danger of being compromised and effectively stalled as far as action on its major recommendations are concerned. If this is the general environment, then critics of staged inquiries into the policy process argue that these exercises must fall into two categories: (a) validating stamps of approval on changes already effected or sanctioned by the bureaucracy, and (b) reports that will never be implemented because they lack a powerful constituency. To attempt more is to ask for serious trouble. Tinkering with improving the inputs into the policy process is a very safe exercise. However, once task forces or other forms of inquiries start interfering or fundamentally questioning how resources are utilized, they challenge administrative competence. Should they be bold enough to question outputs, then they challenge political competence. Therefore, inquiries into the policy process in today's climate which construe their missions as being much wider than mere technical administrative exercises will end up as embarrassingly political trials. Such reasoning would conclude that, given public opinion is against alleged bureaucratic waste for most established programs, such task force exercises would end up tinkering on the edges. The final result would be cutting a few million dollars through administrative changes or eliminating some jobs, thus saving a few hundred person-years. How valid is this general hypothesis? The following commentary on the dynamics of the Nielsen Task Force on Program Review will attempt some assessment of this. The chapter first looks at public policy events in the United States which many interviewees maintain had some influence on the Canadian thinking leading up to the Nielsen Task Force. Second, the dynamics of the Task Force on Program Review are examined: first in its formation

26/How Ottawa Spends

and subsequent work and then in the attempts to implement its recommendations. Finally, a general assessment of the Nielsen Task Force's legacy is given against the backdrop of the hypothesis we have posed about task forcing. Prelude to Nielsen: The Gospel According to Grace During the 1980 American federal election campaign, Ronald Reagan stressed that the federal government could, and should, be operated with private sector efficiency. Eighteen months after taking office, in June 1982, the President established the President's Private Sector Survey on Cost Control (PSSCC) and named J. Peter Grace, Chief Executive Officer of W.R. Grace Company as chairman. The mandate of the Grace Commission was to identify opportunities for increased efficiency and reduced costs achievable by executive or legislative action. Grace took approximately 18 months to accomplish his task, submitting his final report in January 1984. The end product was a two-volume report that summarized 48 separate reports and one and one-half million pages of documentation. The total number of recommendations offered were 2,478, with a purported savings of more than $424 billion over three years.? Here is not the most appropriate place to examine in detail the report of the Grace Commission. However, from a comparative perspective and for its influence on Canadian events, a few salient observations should be made. The report has been described as an amalgam of new ideas, old ideas, good ideas and bad ideas. Critics have argued that such an amalgam gives a misleading picture of achievable savings to the Americo public. Established prejudices about government are only reinforced by facile, Use claims that the deficit can be significantly reduced by simply cutting administrative waste and inefficiency.s Thus, the Congressional Budget Office and the Government Accounting Office have both been severely critical of the report for proposing changes already instituted, overestimating savings and, most significantly, suggesting policy changes rather than administrative modifications.9 It has also been noted that the report, in many areas, is less an analytical review of management practices than a polemical attack on government spending and regulation. The Commission was dominated by a chairman who possessed a rather fixed social philosophy which conceived the United States as a "nanny state" and welfare as "an alternative lifestyle" with the admonition that "work cures poverty while welfare perpetuates it."'0

What Legacy? The Nielsen Task! 27

The biases inherent in this philosophy were given further sanction in the way the task force was organized; the study was conducted solely by members of the private sector with the clear purpose of applying efficient business practices to the management of government operations. In the application of these practices, the Commission suggested that many services currently performed by the government could be made more efficient by the adoption of private sector management techniques in government operations and by widespread privatization. How did the Commission accomplish its job? The management aspects of the federal government were the first to be examined by the Commission's members; and some of their analyses have been judged to be of extremely high quality. Useful analyses were conducted in such areas as the modus operandi of some organizations, the raising of employee skill levels, the need to increase contractual work to the private sector and increased investment in work-facilitating equípment.12 If the Commission had stopped here, all would have been well. However, Grace and his private sector colleagues soon moved beyond management concerns to address major public policy issues. This is not surprising given the views of the chairman about the role of the state. The report called for wide-ranging reforms in regulatory areas —transportation, health, safety, natural resources and social programs, to name a few. Its most radical recommendations came in the area of the environment where the Commission argued that the environment would be better served by adopting a policy of self-regulation.13 Enough has been said to give Canadian readers a sense of this Commission's philosophy and its recommendations. Suffice it to state that where Grace made recommendations in substantive policy areas, his Commission has engendered considerable public criticisms. Assessments in the academic and popular journals have been harsh. One such commentary concluded: ... while the PSSCC worked hard and produced a number of good ideas, its blizzard of paper, uneven quality of analysis, dubious savings estimates, business bias, centralization mania, anti-public service posture, and penchant for stealth make the liabilities of such an operation far outweigh its worth.14 One comment alluding to Grace's ultimate impact was made by a senior Canadian public servant interviewed during the prep-

28/How Ottawa Spends

aration of this chapter. He noted, without any further comment, that the Grace Commission was mentioned in only one sentence in the whole of the General Accounting Office report for 1986. THE CANADIAN EXPERIENCE: FORMATION AND WORK OF THE NIELSEN TASK FORCE The Grace Report was barely eight months old when a Progressive Conservative government swept to power in Canada. The public agenda of the new government was clear: attention to federal deficit reduction, less generous social programs, cutbacks in spending, tax simplification, deregulation and the privatization of some Crown corporations–all were components of a distinct philosophy to reduce the role of government in Canadian society. Within some quarters of the mandarinate, indeed specifically within the Privy Council Office, there were a few individuals who championed a review of the whole gamut of government programs, not unlike the recent U.S. experience. These individuals were, however, not enamoured by the antics of Grace in the United States. It was argued that the Grace Commission took too long, the studies were too detailed and unbalanced, and the chairman made a cardinal mistake in using his Commission's findings to ridicule the bureaucracy in his weekly press conferences.15 The most senior public servant, the Clerk of the Privy Press Council, advised the new government to proceed with a review but to do so as a joint public sector/private sector venture. The government, one day after being sworn in on September 17, 1984, announced the establishment of the Task Force on Program Review, with the Deputy Prime Minister, the Honourable Erik Nielsen assigned the special responsibility of heading the operation. The Task Force was instructed "to produce a profile of government programs in each department which is simpler, more understandable and more accessible to their clientele, and where decision-making is decentralized as far as possible to those in direct contact with client groups." The Task Force, which began its work in September 1984 and included three other key ministers of the government: Michael Wilson, the Minister of Finance, John Crosbie, the Minister of Justice and Robert de Cotret, President of the Treasury Board of Canada. The ministerial Task Force was asked to review approximately one thousand federal programs with two major objectives in mind—better service to the public and improved management of these governmental outputs. Following up on its bureaucratic advice, the government sought labour, business and professional

What Legacy? The Nielsen Task /29

organizational involvement in the task force exercise. The Private Sector Advisory Committee, chaired by Phillip Aspinall from the Canadian Institute of Chartered Accountants, was thus• formed, comprising some 14 individuals and having as its task the review and examination of the work of the program review before recommendations were sent on to the Task Force of ministers and, ultimately, to the federal cabinet. The specific program reviews were conducted by study teams composed of a balance of private sector and public sector specialists, including representatives from provincial and municipal governments. Twenty-two such teams were created, involving 110 individuals from the public sector and some 115 people from the private sector. Heáiíng each of these teams were individuals having such positions as president or vice-president of organizations in the private sector. Public sector leadership included assistant deputy ministers, directors and directors general. The activity of these study teams was incredibly intensive: they were asked to complete their tasks in four to five months. As one private sector individual interviewed pointed out, this mandate led to many 18-hour days. It also led to a much deeper appreciation of the work of the public service and, unlike the Grace experience, many private sector participants came away from the study with a healthy respect for the high quality of professionalism and dedication in the Canadian federal bureaucracy. As to the modus operandi of the study teams, it is best to quote one of the Task Force's reports: Study teams reviewed existing evaluations and other available analyses and consulted with many hundreds of people and organizations. The teams split into smaller groups and consulted with interested persons in the private sector. There were also discussions with program recipients, provincial and municipal governments at all levels, from officials to cabinet ministers. Twenty provincial officials, including three deputy ministers, were members of various study teams.16 This vast public sector/private sector undertaking was judged as worthwhile by participants. The review was unique in Canadian history. Never before has there been such broad representation from outside government in such a wide-ranging examination of government programs. The release of the work of the mixed study

301 How Ottawa Spends

teams is a public acknowledgement of this extraordinarily valuable contribution to this difficult task.17 Terms of reference were first enumerated for each study team. Not all the study teams were appointed simultaneously; indeed, some were winding up operations when others were coming into existence. Study team members and leaders were appointed with assistance from the Private Sector Advisory Committee and the two Task Force advisors, Mr. D'Arcy McKeough, a former Ontario cabinet minister now in the private sector and Dr. Peter Meyboom, then a senior Treasury Board official and subsequently Deputy Minister of Fisheries and Oceans. The government maintained throughout the exercise that the Task Force was operating at arm's length and that the recommendations did not, in any way, bind the government to a policy of full acceptance. To quote the Task Force: The study team reports represent the first orderly step toward cabinet discussion. These reports outline options as seen by the respective study teams and present them in the form of recommendations to the Task Force for consideration. The reports of the study teams do not represent government policy, nor are they decisions of the government. 's This careful orchestration of the experience was to a great extent due to the fact that Canadian officials had learned a great deal from Grace's omissions and commissions. Indeed, senior members of the Task Force interviewed Grace Commission members to learn of their experience. The advice on strategy (joint private sector/public sector membership on teams, avoidance of a shroud of secrecy, expedite the tasks as quickly as possible, avoid the spectacular announcements about "randon examples of bureaucratic absurdity") was well received, but much was reinforcing because it had already been surmised and adopted by the Task Force. By December 1985, all the study teams had completed their missions and had reported back to the Task Force. Three months later, on March 11, 1986, the Deputy Prime Minister tabled his report and 21 volumes of study in Parliament. The effο}t had taken a total of 19 months to complete, reportedly at a cost of $3.7 million to the federal government. For general classification purposes, the volumes are in four categories—Economic Growth (designated by a yellow cover), Management of Government (green), Service to the Public (blue) and Improved Program Delivery

What Legacy? The Nielsen Task / 31

(orange). With the exceptions of defence and foreign aid, the Task Force examined virtually every federal government department, over 1,000 programs costing approximately $90 billion per year. It is, of course, neither possible nor desirable to detail the substantive findings of this massive eflbrt here. However, in general terms, it can be said that the 21 volume report attácked the rationale, delivery and success of the myriad of government programs. Furthermore, it argued that the public service lacked the tools and the incentives to control costs.19 As the Deputy Prime Minister remarked in the House of Commons: A central conclusion of the study teams, and one with potentially profound implications, is the degree to which there has developed a vast array of government programs that are designed to subsidize activity rather than results, effort rather than success.. .Few who take the time and spend the effort to read the study team reports could dispute the observation that we have become a nation of program junides? WHAT HAT!! NIELSEN WROUGHT? As noted earlier, the gestation period of the Task Force lasted approximately 19 months. It was during this period that the political dynamics of the exercise were most interesting. Perhaps the most committed person to the work of the Task Force was the Honourable Erik Nielsen himself. Those interviewed for this chapter indicated that Nielsen was perhaps the only politician who diligently read all the reports of the various sub-committees. He conducted interminable vetting sessions to ensure the cohesiveness and consistency of much of the documentation finally submitted to Cabinet for consideration. The problems of becoming embroiled in policy choices which had plagued the Grace experience also confronted the Nielsen Task Force. The Deputy Prime Minister was insistent that his Task Force was intended primarily to examine program delivery or output in the federal government; but observers noted that very quickly the exercise breached this mandate by becoming embroiled in questions having to do with policy formulation. One former senior civil servant who was a keen observer of the exercise expressed it this way: The Task Force had no mandate to ask the question, "Should the federal government be delivering program X or Y?"

32/ How Ottawa Spends

This, to my mind, is a policy question for the politicians and not for any task force, however competent these individuals might be. Many of the Nielsen teams soon began muddying the waters. Two cases in point are the recommendations dealing with the abolition of subsidies to the Newfoundland railway system and the virtual elimination of the National Capital Commission, reducing the latter to being the nation's custodian of "symbolic facilities." Another was the half-baked recommendation to abolish the dairy subsidies to farmers. To a politician coming from Quebec, this latter recommendation was madness. I was very surprised that Nielsen did not see the extremely sensitive political drift of these socalled "recommendations on program delivery," which he carried to the cabinet table.21 But perhaps this critical judgement of Erik Nielsen's performance is too harsh. During the summer of 1984, while the election campaign was being waged, the Conservative party had left the distinct perception that if they were elected to omce, a tidal wave of reform would hit Οttawa.22 This was not unlike the same experience of anticipation developed by Reagan in the United States. Therefore the distinctions between policy formulation and implementation would be quickly lost in the euphoria of expected reforms. Certainly the new government was viewed as one having an overwhelming mandate to curb government "gone mad" in Ottawa, and Nielsen was only part of this. It was this perception of a distinct climate of impending change that caused the expectations of the private sector to rise and made labour very nervous about what to expect. The rising expectations of reform were given further impetus by the new government's mini-budget of November 1984. Barely two months in power, the Conservatives signalled a new approach to deficit and expenditure reductions and control—a commitment to encourage private initiative and to improve government effectiveness. In practice, these alms were to be pursued through four major approaches: reorienting public policies to encourage entrepreneurship, investment and risk-taking; rationalizing the management of government resources and programs; restoring fiscal balance between spending and taxation; and reducing both the size and role of the federal government.24 Nielsen's exercise was somehow involved in all this. The distinction between policy and imρlementation would therefore be lost on virtually every observer of the process.

What Legacy? The Nielsen Task! 33

The May 1985 budget continued to emphasize the need for less government, linking it to a reliance on private initiative and programs for job creation. But the almost concurrent issuance of the preliminary results of the Nielsen Task Force's efforts indicated that the government was much more cautious in effecting immediate wide-scale reforms in program delivery. Of the three study teams that reported in the early months of 1985, 284 programs were assessed and nearly two thirds were unaltered, while less than eight per cent of these programs were actually recommended to be terminated, privatized or devolved to provincial governments.2b This initial government response shocked and disappointed many in the private sector who had participated in the Task Force and expected radical surgery on government programs. One of these, Sydney Handleman, a former Ontario cabinet minister, has Øe his views extremely clear: If the government had known what the Nielsen Task Force would reveal and recommend, it is likely it would never have proceeded with it shortly after the 1984 election. But here was a new government with a huge mandate for reform and it did not know very much about the thousands of programs it had inherited from its predecessors.26 The fact that an experienced politician such as Handleman could also get caught up in the euphoria of policy reform is indicative of what was anticipated of Nielsen's efforts. Handleman's argument that failure of the Task Force's efforts is primarily due to "bureaucratic inertia" or, as he puts it, "turf-protecting bureaucrats" is not borne out by the arguments of others involved hi the exercise. Much closer to the majority view is the general observation made by a student of the process: The reality of attempting to change government programs. ..is not wholly a matter of bureaucratic inefficiency. Trying to alter benefi es' entitlements to a public service or benefit is also a matter of disrupting the prevailing political settlement or social contract. The difficulty of making cuts stick also rests with the dynamics of cabinet...All ministers in a large cabinet expect to get their way on some items and must if cabinet solidarity is to be maintained.27

34 / How Ottawa Spends

These comments are almost tailor-made for summing up the vicissitudes of the Nielsen Task Force's recommendations during 1985 and early 1986. Cabinet deliberations determined much of what went on, and it was this crucial, secret and dynamic process that determined-the political direction the Conservatives would take with the final recommendations of the Task Force. Cabinet ministers, responding to political pressures, sought cover in accepting some recommendations, forestalling others, urging that others be given more careful thought, and outrightly fighting against others within Cabinet. As already indicated, both the Newfoundland transportation subsidies and the dairy subsidies were cases in point; but there were others: the recommendation that the Department of Fisheries and Oceans be reduced to half of its present mandate because there was too much regional and provincial duplication of its efforts met with considerable political resistance from cabinet members from Eastern Canada. This early political fallout of the Task Force's efforts (along with the political rhetoric on the public agenda) did set a climate of restraint in Ottawa, a backdrop against which certain reforms did occur in 1985 and 1986. Changes in government programs did include the following. o termination of Katimavik; o scaling down of the activities of the Science Council of Canada; o implementation of the initiatives of the Department of Public Works to rationalize engineering and architecture contracting;" o consolidation of services to veterans and the introduction of "one-stop shopping" for services catering to the veteran population; and o increased emphasis on privatization, and the appointment of a Minister of State for Privatization. Three other proposed reform measures are worthy of further commentary. First, the government has made much of the linkage between the establishment of an office of regulatory reform and the work of the Nielsen Task Fοrce.80 This contention is somewhat overblown because no credit is given to the previous government's efforts in encouraging the need for regulatory reform in the Canadian context.81 The Conservatives, however, have proceeded with further reforms. In the House of Commons on March 6, 1986, the Honourable Ray Hnatyshyn, then Minister Responsible for Regulatory Affairs, announced that a regulatory improvement package, based on the Task Force's efforts, had targeted 43 specific reform

What Legacy? The Nielsen Task 135

initiatives affecting regulatory programs in sixteen federal departments and seven agencies. A second attempt at reform is represented by the government's announcement on December 9, 1985 of the establishment of a Bureau of Real Property Management under the auíhoríty of the President of the Treasury Board. SpeØcally, the new organization was given the mandate to oversee the implementation, on a long-term basis, of the extensive changes recommended by the Task Force dealing with real property matters.' A third offshoot of the Task Force's work is the so-called "Osbaldeston study on the accountability system within the federal government." Gordon Osbaldeston, the former Clerk of the Privy Council who had advised the establishment of the Nielsen Task Force in the first place, is now retired from government service and is attached to the School of Business at the University of Western Ontario. In 1984 he was asked to head up this study in accountability. The rationale for yet another study on accountability in the public service was justified by the government on the grounds that in its concentration on program delivery to the public, the Task Force paid very little attention to the systems designed to direct and police the bureaucracy itself. Nielsen, in announcing the need for the Osbaldeston study, explained his motivations: As I reviewed the results of the Task Force on Program Review, I was struck by the need to improve the system of management control and responsibility if we are to improve productivity in the government of Canada. Such a system is fundamental if we are to correct the problems we have identified. ..Ultimately, it is the people of Canada who hold governments accountable. We have, in our turn, the responsibility to hold our members and public servants accountable for their actions. Accountability is at the heart of democratic government.84 At the time of writing this chapter, the Osbaldeston accountability study is in its final stages and will be published by the fall of 1988. The Process of Implementation Having commissioned the 15,000 pages and three million words in studies, the Mulroney government announced, when the Task Force

36/ How Ottawa Spends

reports were released, that all individual study reports would be referred to the House of Commons committees for consideration and public contribution. Nielsen contended that this process would ensure that "parliamentarians will become meaningfully involved in broader reforms to public policy." Information supplied by the Statistical Clerk of the House of Commons revealed that the parliamentary process spent very little time on the Nielsen Task Force's volumes after the initial fanfare had subsided. At the end of the first session of the 33rd Parliament a grand total of approximately 20 hours was devoted to "parliamentary and public contribution" to the process of reform. Since then Parliament has not resumed committee deliberations on the subject, and so far as the House of Commons is concerned, the Nielsen Task Force is now ancient histοry.85 With the departure of Erik Nielsen from the federal Cabinet in 1986, overall responsibility for continuing the initiative of reviewing government programs was transferred to the President of the Treasury Board. This turn of events alarmed many who participated in the Nielsen exercise. One such prominent member maintained that: "Any survey of the private sector participants in the Nielsen study would reveal that almost all of us feel frustrated and disappointed...These recommendations will fade away, a part of the Mulroney government's history of failed good intentions."36 A careful assessment of parliamentary speeches and news releases indicates that although the government created a climate of reform expectations, it nevertheless was cautious in declaring its specific intentions on the Nielsen study. At the time of the public release of the recommendations the government Øe it quite clear that "it has not and will not be bound just to the options put forward by study teams.' Moreover, the Task Force in many cases presented several options for consideration, ranging from abolishing specfic programs to minor tinkering with administrative details. Furthermore, in a large majority of its recommendations, the Nielsen study conspicuously avoided estimating dollar savings and the civil service job cuts that would result. As D'Arcy McKeough, the co-chairman of the advisory committee put it, "a lot of these recommendations were phrased in terms of options, so final savings would depend on cabinet choices.' Thus, the process of program review had reached the inevitable stage where in the majority of cases more information was needed as to precisely where, how and when to cut. In addition,

What Legacy? The Nielsen Task /37

coordination among programs had to be considered so that increases in some did not balance out decreases in οthers.89 Finally, incentives were required to make it worthwhile for each department to contribute toward total reduction. In the Department of the Secretary of State, for example, the Nielsen Task Force recommended simply abolishing the citizenship court judges and giving the delicate task of oral examinations to potentially new immigrants to the bureaucracy. This was a dubious gift. Also, cost savings were simply assumed without serious thought given to the increased number of bureaucrats needed to ensure that the job would be done well. Thus the Task Force created an additional puzzle to resolve which took still more financial and human resources. When the Task Force report was released the then Treasury Board President, Robert de Cbtret, reportedly predicted that a savings estimate of $150 million would be achieved in the next fiscal year, growing to $750 million over the next three years.40 By March 1987, the Task Force recommendations were now in the hands of de Cotret's secretariat and predictions were now much less sanguine. Α news release from Treasury Board on restraint and productivity in the management of the public service announced that: Specific reductions amounting to $500 million in on-going direct and tax expenditures can be attributed to Program Review. However, since this initiative has been carried out concurrently with departmental efforts to meet reduction targets, the total dollar savings attributable to Program Review cannot be determined.' The news release also indicated that certain reform initiatives were being undertaken, chief amongst them being: o a series of pilot projects on new "make or buy" options that will challenge the efficiency and effectiveness of government operations through competition with the private sector; o the establishment of guidelines on the "stacking" of business subsidies, including the reduction of investment tax credits; o special initiatives undertaken to eliminate, combine or rationalize the delivery of small programs; and o the examination of the relevance of in-house government research, the role of the private sector in research and the need for better technology transfer.

38/ How Ottawa Spends

The news release also indicated that in some cases the theme of a report had been incorporated into government policy initiatives. One notable example was the Canadian Jobs Strategy which included much of the Job Creation report of the Nielsen study. In other cases the Board indicated that it was seeking alternative views to the recommendations of the Task Force. In the area of culture and communications, the government had commissioned and was assessing alternative reports on broadcasting, museums, the National Arts Centre, funding of the arts, and the status of the artist in Canadian society. Alternative approaches were also being pursued to fit the needs and aspirations of Canada's Aboriginal Peoples. Indeed, as far as the latter are concerned, the government has had to virtually disown the Nielsen study team report because, as critics have indicated, the policy thrust advocated amounted to nothing more than a combination of abandonment and benign neglect of Canada's Native Peoples. The government itself and interest groups who find the Task Force's reports potentially damaging are not the only ones keeping a watching brief. The Canadian Chamber of Commerce has noted that its clientele have a "particular interest" in the fortunes of the Task Force studies. Hence it will continue to have "a watching brief in its efforts to monitor ongoing developments concerning the Task Force reports." Every three to four months, beginning from November 1986, the Chamber has released an update on the progress of implementation. Thus far, there have been reports on services and subsidies to business (a responsibility of the Department of Regional Industrial Expansion), and cabinet implementation instructions to the Departments of Labour, Agriculture, Fisheries and Oceans, Energy, Mines and Resources, and Employment and Immigration Canada. WHAT LEGACY? EVALUATION OF THE REFORM EXPERIENCE The 21 volume study of the Nielsen Task Force is fast becoming Canadian administrative history. What observations can be made on this legacy of Canadian administrative experience? At the outset of this chapter, I hypothesized that, in principle, task forces were a doomed instrument for effecting major changes in bureaucratic organizations. Reference to the Grace Commission experience in the United States and to the Nielsen Task Force in Canada bears out this hypothesis. Additionally, two broad observations seem merited here.

What Legacy? The Nielsen Task /39

Changing policy to eliminate "glaring inefficiencies" in government has, in the vast majority of cases, little to do with management. It has everything to do with the special interest state. Elected politicians can make changes if they are determined to do so, but major change is a question of political calculus and not one of management efficiency. We have seen this very dearly in the Nielsen Task Force experience. Nielsen is probably right that our governmental system has encouraged a whole system of "program junkies." Far more important to our elected officials are issues such ds major social programs (especially as a federal election draws nearer), constituent service, the awarding of federal contracts, and the location of federal installations and construction projects. Nielsen's commitment was admirable but few of his colleagues, either in the Cabinet or in the House of Commons, would fmd it profitable to invest much energy on the nitty-gritty details of government management. There is little political mileage to be made examining and commenting on the details of program delivery unless there is a major scandal or horror story. Such tasks are best left to the day-to-day deliberations of bureaucrats in central agencies. The short shrift of 20 hours consideration that the Task Force's volumes received in the standing committees of the House of Commons is clearly indicative of this fact. Of more fundamental importance is the fact that the sheer size and complexity of the federal bureaucracy creates managerial and leadership problems that dwarf those of every other organization in this country. Faced with these problems, politicians and their senior advisers seek answers to many of the daunting problems of public sector management from the private sector. They generally appoint a royal commission or investigative task force to analyse the organization and administration of the government, and these appointed bodies always find that the government is badly organized, poorly managed and in need of drastic overhauls in administrative practices and procedures. For over eight decades of our administrative experience, we have had these very predictable inquiries: from Griffenhagen (1918) to Gordon (1946) to Glassco (1962) and to Lambert (1979). The Nielsen Task Force is a variation to this pattern, but only because it was headed by a senior politician and not a chief executive officer from the private sector. But the private sector's influence was just as pervasive as in the other past exercises. Reorganization and, of more recent vintage, program surgery, are the remedies often prescribed for the ills identified. As we have seen in both the Grace Commission and the Nielsen

40/ How Ottawa Spends

Task Force experiences, the anticipated results touted are huge savings and vastly improved service delivery. The growing academic literature on this topic is, however, much less sanguine. Some social scientists, such as March and Olson, emphasize the potency of reform measures as a symbolic tool used by governmental leaders to manipulate public ορiniοn. Others, such as Seidman, emphasize its value as a strategic vehicle for enhancing or limiting individual and group access to the decisionmaking process." Shades of both of these perspectives or insights are captured in the recent Neilsen Task Force experience: the expectations of impending reforms Ø be construed as a manipulative tool to garner votes in the electoral process; the manner in which the parliamentary process handled the government's promise of "parliamentary and public participation" illustrates that, in the final analysis, the government had no intention of allowing such an exercise in the first place. Much more fundamental is the fact that we really do not know what are the consequences of such reforms. Why? Hundreds of factors could intervene to make objective measurement of results well nigh impossible to calculate: changes in the economy, legislative mandates, new rules, regulations and technοlοgíes." Apart from these daunting problems empirical analysis of bottom line results is also time-consuming and very expensive. The Nielsen Task Force, however, had no difficulty in blaming the public service for not solving these methodological problems. It contended that the bureaucracy's lack of an analytical framework to assess its program spending and the cost of various tax exemptions produced a "general inability to advise ministers about the precise financial inter-relationships of new programs and old programs.' The non-existence of objective measurements leads to a host of other consequences or expectations. There are, for example, at least two different conceptions about the end results expected from an exercise such as Nielsen's. The Mulroney government and the business community certainly gave the impression that they expected results which would drastically curtail unnecessary or wasteful government programs and spending. As the exercise progressed, others involved gave another impression by de-emphasizing any claims of large dollar savings, focusing instead on the need to rationalize the administrative structure and to effect some n1οdest savings. This is exemplified in the Treasury Board release of March 2, 1987 quoted a?ove. Others who subscribe to this school of thought hold even more modest expectations about the bottom

What Legacy? The Nielsen Task 141

line consequences of reform. Some contend that the real business of government reform is to improve governmental performance (efficiency and effectiveness), leaving the questions of economy to be viewed as a by-product of reorganization." Given this confusion and difference of opinion, it is hardly surprising that enduring answers to managerial problems in the public sector continue to elude us. This creates a growth industry in Ottawa: "For a few–the management consultants—the reports and the public interest which they have aroused create a sort of happy hunting ground where new commissions and new studies can be proposed with confidence—all of them requiring the specialized skills of the management consultant." Those words by A.W. Johnson remain as true today as they were 25 years ago when they were first written. Perhaps we are indeed condemned to a Sisyphean exercise: we will always roll the heavy rock of intended reforms up the hill only to have it roll down again as it nears the top.

Appendix 2.1 Parliamentary Standing çommlttees' Consideration of Task Force Reports Committee

Date Considered

Time Spent

Agriculture

April 30, 1986 June 19, 1986

2 hrs. 25 min. 2 hrs. 7 min.

Communications and Culture

June 17, 1986

1 hr. 25 min.

Environment and Forestry

April 29, 1986 June 3, 1986 June 12, 1986

1 hr. 8 min. 1 hr. 16 min. 1 hr. 21 min.

Energy. Mines and Resources

June 12, 1986

1 hr. 40 min.

Government Operations

June 12, 1986 June 19, 1986

1 hr. 20 min. 1 hr. 3 min.

Research, Science and Technology

May 2, 1986 May 12, 1986 June 25, 1986

1 hr. 32 min. 2 hrs. 2 hrs. 27 min.

42/ How Ottawa Spends

Notes *

Thanks are due to my research assistant, Ms. Gudrun Johnson, for her cheerful and competent help in library research and assistance in the interview schedule.

1.

See V. Seymour Wilson, "The Role of Royal Commissions and Task Forces" in G. Bruce Diem and Peter Aucun (eds.), The Structures of Policy Making in Canada (Toronto: Macmillan of Canada, 1971), pp. 113-129.

2.

Terry W. Hartle, "Sisyphus Revisited: Running the Government Like a Business," Public Administration Review, March/April 1985, p. 341.

3.

In Canada, for example, here is what one survey study reported: The one area where cynicism about public officials was pervasive concerned the disposition of tax dollars—over four fifths of those surveyed agreed that people in the government waste a lot of money that we pay in taxes. H.D. Clarke et. al., Absent Mante (Toronto: Gage, 1984), p. 52.

4.

Richard Johnston, Public Opinion and Public Policy in Canada (Toronto: University of Toronto Press, 1986), pp. 189, 214.

5.

One can infer this anticipation of events from the interview one of the co-chairmen of the Nielsen Task Force gave on May 8, 1986. Obviously expecting a surfeit of requests from the public to discuss the massive report submitted to the government, Phillip Aspinall reported that, two months after, neither he nor the other co-chairman, D'Arcy Mckeough, had "one request to make a speech or talk to a conference." See Susan Riley, "Co-chairmen of government spending task force ready, able and waiting to explain report," The Citizen [Ottawa], May 8, 1986, p. G-8.

6.

See The Globe and Mail [Toronto], March 12, 1986, p. 1.

7.

President's Private Sector Survey on Cost Control, Α Report to the President, 2 volumes, (Washington, D.C.: Government Printing Office, 1984). Also published as War on Waste (New York: Macmillan, 1984).

What Legacy? The Nielsen Task / 43 8.

James P. Love, A Critique of the President's Private Sector Survey of Cost Control (Washington, Centre for the Study of Responsible Law, 1984), p. 134.

9.

United States Government. Analysis of the Grace Commission's Major Proposals for Cost Control, A Joint Study by the Congressional Budget Offiee and the General Accounting Office, (Washington, D.C.: Government Printing Office, 1984). See also, Michael Gordon, "Amazing Grace," National Journal, February 18, 1984, p. 332.

10.

J. Peter Grace, Burning Money: The Waste of your Tax Dollars (New York: Macmillan 1984).

11.

Charles T. Goodsell, "The Grace Commission: Seeking Efficiency for the Whole People?" Public Administration Review, Vol. 44, No. 3, May/June 1984, pp. 196-204.

12.

United States Government. Analysis of the Grace Commission's Major Proposals for Cost Control, op. cit.

13.

Ibid., p. 143.

14.

Charles T. Goodsell, p. 203.

15.

Grace travelled the length and breadth of the United States in his private jet to expose "the deplorable, unbelievable waste" emanating from Washington. He also used his weekly press conferences to announce "the stupidity of the week." After some time, these antics wore thin on the media, the politicians and the public. It is argued that the Commission went wrong when the strategic decision was made (as reflected in early memos from Grace to Commission members) to go for "horror stories" and mega-numbers in examining government management. See Steven Kelman, "The Grace Commission: How Much Waste in Government?" The Publie Interest, Winter 1985. See also the J.W. Grace and Steven Kelman exchange in The Publie Interest, Spring 1985, pp. 111-133.

16.

See, for example, the Nielsen Task Force Report, Improved Program Delivery: The Environment (Ottawa: Supply and Services Canada, 1986), p. í.

17.

Ibid., p. i.

44 Ι How Ottawa Spends 18.

Ibid., p. ií.

19.

These general criticisms did not sit well with at least one former senior public servant. Α.W. Johnson, formerly Secretary to the Treasury Board and CBC President, publicly declared that the Task Force had the "vision of a bookkeeper and the soul of a cost-benefit analyst." Reported in The Citizen [Ottawa], May 27, 1986, p. 9.

20.

The Globe and Mail [Toronto], March 12, 1986, p. Α-4.

21.

Interview, April 11, 1986.

22.

Many informed observers, anticipating such change, called for reasoned orderly reforms. See, for example, Thomas d'Aquin, "The public service of Canada: the case for political neutrality," Canadian Public Administration, Spring 1984, Vol. 27, No. 1, pp. 14-23.

23.

Labour representatives from the Canadian Labour Congress (CLC) were reluctant members of the Task Force. Nevertheless, there was a need to keep a watching brief on the activities of the Nielsen exercise. Few of the CLC representatives were involved in the study teams. Indeed virtually no senior personnel from the CLC were engaged in the enterprise.

24.

Michael J. Prince, "The Mulroney Agenda: A Right Turn for Ottawa?" in M.J. Prince (ed. ), How Ottawa Spends, 198687 (Toronto: Methuen, 1984), p. 10.

25.

Hon. E. Nielsen, New Management Initiatives: Initial Results rοm the Ministerial Task Force on Program Review (Ottawa, May 1985).

26.

S. Handleman, "Nielsen Task Force Forgotten," The Sunday Star [Toronto], March 15, 1987.

27.

Michael J. Prince, "The Mulroney Agenda: A Right Turn for Ottawa?" in M.J. Prince (ed.), How Ottawa Spends, 198687 (Toronto: Methuen, 1986), p. 28.

28.

SpeØcally, the Task Force's recommendation, after going through the gauntlet of the cabinet process, was that the Department of Fisheries and Oceans focus more on the

What Legacy? The Nielsen Task / 45

primary objective of perfecting and enhancing the resource, and less on attempting to regulate the socio-economic aspects of the industry. Cabinet minister John Crosbie, while accepting in principle this recommendation, is reported to have commented that the "whole darn thing is plumb Ø." An environment for reform has been established however in the Department to begin reforms along the lines of the recommendation. 29.

These reforms form part of the government's approach to real property further explicated below. The government approved a more dominant and visible role for Public Works who now represent federal interests with the private sector real estate communities. Additionally, the large government departments, such as National Defence, Transport, Environment, and Indian and Northern Affairs, have consolidated their design and construction staff, over 1,300 in number, under the jurisdiction of the Minister of Public Works.

30.

Canada. Privy Council Office, Communiqué, March 6, 1986.

31.

For a detailed analysis of this evolution see Richard Schultz and AØ Alexandroff, Économie Regulation and the Fedeml System, Vol. 42, Royal Commission on the Economic Union and Development Prospects for Canada (Toronto: University of Toronto Press, 1985).

32.

See also Hon. R. Hnatyshyn, "Better Regulation for a Changing Canada," an address delivered at the Four Seasons Hotel, Toronto, May 27, 1986.

33.

Real property means big business for Ottawa. Federal assets' replacement value is estimated in excess of $50 billion, with annual expenditures exceeding $5 billion. Throughout the federal government over 34,000 employees are involved, either directly or indirectly, in the handling of real property. The Nielsen Task Force raised concerns about the continued holding of underutilized assets. In the budgets of 1986 and 1987, the government linked the Task Force's recommendations to its intention to improve investment decisions, and to dispose of property no longer required for government programs.

46 / How Ottawa Spends 34.

The Citizen, [Ottawa], June 13, 1986. Exactly why this Sisyphean examination of accountability had to be undertaken is not made entirely clear. The Royal Commission on Financial Management and Accountability (popularly known as the Lambert Commission after its chairman, the Chief Executive Officer of the Royal Bank of Canada) spent millions examining accountability only a few years ago but did not involve an examination of links between the top public servants and the political level (i.e., to ministers, to caucus, to the Prime Minister and to Parliament). The Osbaldeston exercise appears to be designed to address mainly these links with some replication of the Lambert exercise in order to establish context. Referred to in the press as "Nielsen II," the Osbaldeston study is composed of a team of academics, the University of Western Ontario's National Centre for Management Research (where Osbaldeston is the senior fellow at the School of Business), the Institute for Research on Public Policy, the Conference Board of Canada, and the Business Council on National Issues and some strength seconded from the PCO and the Office of the Auditor General.

35.

Study team reports were not referred to the standing committees through the regular rules process. The committees therefore had no power to amend these reports, only to review and comment on them. Because of these restrictions some committees did not spend much time on the reports. Others held brief meetings as indicated in Appendix I. The motions referring the reports to the committees died at the prorogation of Parliament, and to this day have not been reintroduced. Parliamentary officials interviewed believe that they will never be reintroduced as most of the reports and viable suggestions were acted upon by the government.

36.

Sydney Handleman, ορ. cit.

37.

The Globe and Mail, [Toronto), March 12, 1986.

38.

I bid.

39.

Indeed, Handleman argues that his study team on culture and communications was given a mandate not to cost-cut but to enhance programs that were underfunded in the team's estimation. See The Sunday Star, [Toronto], March 15, 1987.

What Legacy? The Nielsen Task Ι 47 40.

The Globe and Mail, [Toronto], March 12, 1986.

41.

Treasury Board of Canada. News Release, March 2, 1987. Fact Sheet No. 6., The Management of the Public Service: Restraint and Productivity, Annex 2, p. 2.

42.

Katherine Graham, "Indian Policy and the Tories: Cleaning Up after the Buffalo Jump," How Ottawa Spends, 1987- 88 (Toronto: Methuen, 1987).

43.

James G. March and J. Olson, "Organizing Political Life: What Administrative Reorganization Tells Us about Governments," American Political Science Review, Vol. 77, June 1983, pp. 284, 288.

44.

Harold Seidman, Politics, Position and Power: The Dynamics of Federal Organization (New York: Oxford University Press, 1975).

45.

For examples, see Herbert Emmerich, Essays on Federal Reorganization (Alabama: University of Alabama Press, 1950), p. 72; Lester Salomon, "The Goals of Reorganization," in Peter Szarton (ed.), Federal Reorganization (Chatham, Ν.J.: Chatham House, 1981).

46.

The Globe and Mail, [Toronto], March 12, 1986.

47.

This, for example, is the clear import of two articles found in the Canadian literature: Α.W. Johnson, "Efficiency in Government and Business," Canadian Public Administration, Vol. 6, No. 3, September 1963, pp. 245-260; D.C. McFetrídge, "Commercial and Political Efficiency," in Donald G. McFetrídge (ed.), Canadian Industrial Policy in Action (Toronto: University of Toronto Press, 1985).

48.

A.W. Johnson, Ibid., p. 245.

CHAPTER 3 FLORA AND FAUNA ON THE RIDEAU: THE MAKING OF CULTURAL POLICY John Meisel

. history is not a seamless web but rather a web of which the warp and the woof are space and time woven in a very uneven fashion and producing distorted patterns. H.A. Innis, The Bias of Communication INTRODUCTION In the great scheme of things, the arts and culture are generally deemed to be of minor consequence, at least insofar as governments and their groupies are concerned. This generalization, like virtually all such sweeping assertions, no doubt requires modification; but on balance it is a reasonably accurate assessment. One refinement, however, is in order. This state of affairs is changing: leisure life generally, and culture in particular, are increasingly becoming recognized as critical aspects of human experience. Thus they are of growing concern to modern governments. The reason for this altered perception is not only because, in the long run, leisure culture affects the political choices of electorates,' but also because governments have become aware that poets, painters, musicians, film-makers, broadcasters and their ilk define for any society its values and goals. They distil the quintessential character of prevailing values and at the same time shape the awareness people have of some sort of collective self. This awareness of the importance of culture is nowhere more evident than in Canada today; a relatively young country hitherto characterized by a low-key and fragile sense of national identity and national cohesion. In this kind of setting, as even official 49

50! How Ottawa Spends government publications proclaim, "The creative activity of all Canadians, whether Francophone or Anglophone, both reposes on our culture and becomes its most active form of expression, to ourselves and to others. It draws from our collective memory, and uses the current events of this place, at this and other times, along with the evolution of our two linguistic communities, as its signposts.' But although the intrinsic value of cultural endeavours needs no justification, certain by-products or extraneous aspects of artistic creation have taken on a new importance in our postindustrial, information society: they are now being perceived as having a utilitarian purpose. Two such serendipitous features in particular commend themselves to the political authorities: economic benefits and societal consequences. For instance, some 200,000 jobs exist in the various cultural industries in Canada. This is of considerable economic significance, particularly at a time when the number of people employed in manufacturing is declining. Insofar as the national product is concerned, they contribute as much as the textile, aircraft and chemical industries combined.3 A paragraph in the 1987-88 Estimates of the Department of Communications (DOC) perfectly encapsulates the societal consequences of cultural endeavours that are appealing to governments: It is generally recognized that the shared values and common goals that reside at the core of Canada's identity are central to the task of nation-building. For Canadians, the presence of the symbols of their nationhood is only made possible through the production and dissemination of cultural products, that is, the books, magazines, television programs, sound recordings, films, plays and works of art which celebrate the distinct identity of Canadians and reaffirm a sense of national pride.4 Because of the rising importance of this sector in our leisure and economic lives, governmental structures have been created, and are constantly being modified, to encourage and support (and in some sectors even supervise) the country's cultural activities. The number of individuals involved, and the range of programs provided are quite dazzling. This chapter describes and analyses some aspects of cultural policy making by the federal government. The focus, for reasons noted below, is not on the substance of the cultural policy of the Mulroney government, but rather on the processes involved in its

Table 3.1

73-74

74-75

75-76

76-77

77-78

78-79

79-80

80-81

81-82

82-83

83-84

(a) Millions of Current Dollars 325.2 All 87.4 Federal 91.2 Provincial 146.6 Local

427.4 126.1 116.2 185.1

493.2 161.3 154.7 177.2

538.2 154.7 167.2 216.3

670.1 222.7 210.5 236.9

751.5 265.2 233.4 252.9

825.7 245.7 288.6 291.4

983.8 314.5 323.5 345.8

1,089.4 353.0 349.1 387.3

1,212.9 335.3 438.5 439.1

1,318.1 379.9 454.4 483.8

(b) Millions of Constant 1981 Dollars 758.0 All 203.7 Federal 212.6 Provincial 341.7 Local

874.0 257.9 237.6 378.5

887.1 290.1 278.2 318.7

858.4 246.7 266.7 345.0

985.4 327.5 309.6 348.4

1,029.5 363.3 319.7 346.4

1,030.8 306.7 360.3 363.8

1,114.2 356.2 366.4 391.6

1,089.4 353.0 349.1 387.3

1,086.8 300.5 392.9 393.5

1,116,1 321.7 384.8 409.7

(c) Percentage of Gross General Expenditures 0.6 0.6 All 0.4 0.4 Federal 0.4 0.4 Provincial 1.4 1.3 Local

0.6 0.4 0.5 1.1

0.6 0.4 0.4 1.2

0.6 0.5 0.5 1.1

0.6 0.5 0.5 1.1

0.6 0.4 0.5 1.2

0.6 0.5 0.5 1.2

0.6 0.4 0.5 1.2

0.6 0.4 0.5 1.2

0.6 0.4 0.5 1.3

39.2 12.8 12.3 14.1

37.4 10.8 11.6 15.1

42.5 14.1 13.3 15.0

43.9 15.5 13.6 14.8

43.5 13.0 15.2 15.4

46.5 14.9 15.3 16.3

44.9 14.5 14.4 16.0

44.3 12.2 16.0 16.0

45.0 13.0 15.5 16.5

JURISDICTION

(d) Constant 1981 Dollars Per Capita 34.5 All 9.3 Federal 9.7 Provincial 15.5 Local

39.2 11.6 10.7 17.0

Source: Canada Council, The Canada Council MuW-Year Operations! Plan 1988-89 to 1990-91, Appendix 8, pp. 79-81, 83.

[Sj ηeαρ-j aq υο eunej pue eιοlj

Cultural Expenditures by Year and Jurisdiction

52/How Ottawa Spends

creation. The numerous forces and institutions—often pointing in diverse and even inconsistent directions–that affect the policy process are examined. The era covered (primarily the three years from the end of 1984 to the end of 1987) has witnessed at least two innovations (one with respect to governmental institutions, the other in governmental style and direction) which have virtually revolutionized the manner in which cultural policy is made. While these innovations are dearly evident in the domain of cultural policy, they also affect other areas of policy making, although not always to the same degree. Culture and education (which are often lumped together) are, of course, of primary concern to the provincial, rather than the federal, jurisdiction. The Ottawa government has nevertheless been of major importance in both areas. In the field of culture it has, for the most part, played a pioneering and leading role before the provinces mounted their own initiatives. The federal involvement, as Table 1 exhibits, is shown to be smaller than that of the provinces and municipalities. This is largely because libraries, which are predominantly the responsibility of the `lower" jurisdictions, are included in the table. In 1983-84, the last year for which these comparative data are available, local expenditures comprised 36.7 per cent of the total of government spending in this domain. The provinces accounted for 34.5 per cent, and Ottawa's share came to 28.8 per cent.' Primarily because of the special nature of cultural pursuits, most of the activities of the federal government in this domain are undertaken through various agencies which maintain an arm's length relationship with the government. Table 2 presents recent annual expenditures on the main federal programs. The central role of the Department of Communications (DOC) is evident, compared to the involvement of other federal departments. Nevertheless, only a relatively small proportion of the available funds is spent by the Ø and Culture sector of the DOC. The Canadian Broadcasting Corporation (CBC) consumes the lion's share of the total kitty and the rest is channelled to the Canada Council, the museums, Telefilm Canada and other such agencies. The overall cultural activities of the federal government can conveniently be grouped into three general categories: (1) operating bodies, (2) supporting institutions, and (3) policy-making and administrative institutions. The first comprises such organizations as the CBC, the National Film Board (NFB), the National Gallery and the National Arts Centre. The Canada Council is the foremost

Table 3.2 Federal Cultural Expenditures by Year and Program (in millions of current dollars) 76-77 (a)

77-78 (a)

78-79 (a)

79-80 (a)

80-81 (a)

81-82 (a)

82-83 (a)

83-84 (a)

84-85 (a)

85-86 (a)

86-87 (me)

87-88 (me)

COMM0N1CAT10N811»

703.2

805.0

942.1

915.7

1,016.2

1,163.3

1,341.7

1,488.0

1,676.2

1,666.1

1,663.0

1,796.4

Agencies Canada Council CBC CRTC ΝΑC{zt NFB N. Library Ν. Museums Corp. Public Archives Telefilm"

695.1 37.6 507.2 13.0 14.7 41.0 13.6 46.2 18.4 3.4

786.9 44.7 570.4 16.0 16.2 47.5 15.5 52.5 20.8 3.3

924.0 50.4 673.6 16.9 18.9 53.8 16.5 63.5 22.4 8.0

901.1 50.3 651.7 16.3 18.9 50.1 18.5 56.7 25.6 13.0

993.9 53.3 721.0 18.6 21.1 55.9 21.3 61.1 32.0 9.6

1,130.8 62.8 812.7 21.7 24.3 64.4 29.0 67.2 40.4 8.3

1,312.9 72.0 960.6 23.8 27.2 68.9 33.7 73.0 45.3 8.4

1.455.3 78.0 1,058.2 25.5 28.5 77.6 38.5 82.2 50.4 16.4

1,645.9 83.2 1,196.8 27.3 27.4 77.1 39.0 87.8 52.0 55.3

1,625.8 82.1 1,135.3 25.8 29.5 78.6 43.0 100.2 55.3 76.0

1,627.7 97.7 1,113.7 25.7 28.4 72.9 41.6 110.5 55.5 81.7

1,744.2 98.0 1,165.7 27.7 29.9 71.6 44.8 128.2 63.3 115.0

PROGRAMS

OTHER FED. DEPIS. GRAND TOTALt41

8.1

18.1

18.1

14.6

22.3

32.5

28.8

32.7

30.3

40.3

35.3

52.2

6.7

5.8

7.0

7.8

11.1

14.1

14.0

20.2

26.2

24.8

24.8

23.6

709.9

810.8

949.1

923.5

1,027.3

1,177.4

1,355.7

1,508.2

1,702.4

1.690.9

1,687.8

1,820.0

Figures may not add owing to rounding. Sources: Blue Book, Program by Activity Public Accounts of Canada Notes: Gross Federal Cultural Expenditure includes budgetary and non-budgetary items, and is gross of revenue, allocatable accommodation provided by Public Works and other services provided by other departments. (a) actual expenditures (me) main estimates Starting FY 1983-84 to FY 1987-88 includes Canadian Broadcast Program Development Fund. (1) Prior to FY 1980-81, all agencies and Arts & Culture excluding the CRTC were under the Secretary at State. (2) Data for FY 1984-85 are main estimates because the fiscal year ended August 31. (3) FY 1979-80 to FY 1987-88 excludes salaries of the lieutenant-governors, which remain under Secretary of State. Also excludes program costs associated with publication mailings. Starting in FY 1982-83 represents Cultural Affairs less Canada Post payments as derived from Program by Activities table less Vote 15. (4) Excludes unallocatable direct and indirect expenditures associated with other federal cultural departments and programs, e.g., External Affairs and Regional Industrial Expansion.

Floraand Faunaonthe Rideau 1 53

Department Arts & Culturet3)

541 How Ottawa Spends

supporting institution, although Telefilm Canada now spends larger sums of money, as is seen in Table 2. Among the policy-making and administrative institutions, the Canadian Radio-Television and Telecommunications Commission (CRTC) and, particularly, the DOC stand out.' The Department of Communications is, in fact, Canada's ministry of culture, although, as its name suggests, its mandate goes well beyond cultural issues and comprises an immensely wide range of communications matters as well. It nevertheless remains that the DOC is a ministry of culture, despite the fact that the idea of such a ministry fills many a Canadian breast with dismay and acute anxiety. Fears of a Big Brother engaging in thought and taste control and of federal incursions into the provincial sphere, preclude acceptance of the nomenclature of a cultural ministry, despite its existence in fact. Among the chief activities of the DOC, a recent Annual RØort identifies, inter alla, "developing national cultural policies, and developing, managing and delivering a range of support programs to benefit Canada's artistic, heritage, film, publishing and sound-recording communities.' In what follows we shall shed some light on that aspect of Canadian cultural policy currently being fashioned, either by the DOC directly or through the means of some intermediary agency. While the story is quite long and complex, it reflects only a part of the total picture of cultural policy making in Canada. We have already noted the importance of the provincial governments, virtually ignored here, and the part played by the specialized agencies, some of which have little to do with the DOC, although they do report to Parliament through the Minister of Communications. There are also important activities vital to the arts--copyright law, for instance—which are the shared responsibility of DOC and other departments, or which lie entirely outside the Department's jurisdiction—such as taxation matters—in which the DOC and its minister become deeply involved. For instance, before she became Minister of Communications, Flora MacDonald was responsible as Minister of Employment and Immigration for tripling expenditures on arts-related work experience to $52 million under the Canadian Jobs Strategy. This was a matter of great significance to the cultural sector, but one outside the purview of the DOC.8 The Department of External Affairs and other ministries also run culture-related programs for which DOC has no direct responsibility. Cultural policy in Canada has been, and to some extent continues to be, in a state of quite unusual flux (for reasons discussed

Flora and Fauna on the Rideau / 55 below) with many issues still unresolved. For instance, a new Broadcasting Act is in the process of being developed, as is a film policy. A number of other key areas are undergoing a fundamental review or are being dealt with as this chapter is being written. Under these circumstances it is impossible to present a thoroughgoing analysis of the substance and nature of Ottawa's cultural policy. While this matter is touched upon below, the major emphasis is on the factors shaping such a policy and on the processes involved. Table 1 indicates that the annual expenditures on cultural activities have not risen dramatically in the last 15 years. One of the interesting conclusions to be drawn is that the party stripe of the government in power seems to have been irrelevant to the financing of cultural projects. Although federal expenditures have risen in absolute terms, as a proportion of Gross General Expenditures (GGE) they have remained constant and are exceedingly modest. The (c) section of Table 1 tells us that in recent years Ottawa spent only 0.4 or 0.5 per cent of the GGE on culture. The most up-to-date reports indicate that the share of total government expenditures on culture have remained almost constant. But there was an absolute drop in 1985-86 of 1.3 per cent over the previous year, to $2.2 billion. A substantial increase was registered in the support οf film and video production, and a modest increase for the performing and visual arts, for crafts and for libraries. Broadcasting, heritage and what Statistics Canada calls "literary arts" all reported drops in spending. Two per cent of the total federal government's expenditure in 1985-86 was devoted to culture. That same year eight per cent of the budget went on defence, even before the construction of nuclear submarines.9 The Cultural Affairs and Broadcasting sector of the DOC is a relatively small unit. In 1987-88, it employed 117 people. This number represents only 5.7 per cent of the total DOC staff. This number jumped substantially because of the reorganization of the National Museums. The 1988-89 Estimates assign 297 person-years to the Cultural Affairs and Broadcasting component of the DOC. Its relatively small size seems remarkable when one considers that it disposes of 38.2 per cent of the Department's budget. However, almost 52 per cent ($55.1 million) of this is made up of the postal subsidy on periodicals and newspaρers.10 The organization chart (see Figure 1) simply and clearly reveals the major concerns of the section.

561 How Ottawa Spends

Figure 3.1 Cultural Affairs and Broadcasting Sector Deputy Minister ~ Assistant Deputy Minister Cultural Affairs and Broadcasting

1 Director General — Broadcasting and Cultural Industries

Director Broadcasting Policy

Director _ Film, Video and Sound Recording Policy and Programs Director Publishing Policy and Programs

ι

Director General —Policy Planning and Public Interest Director — Policy Planning Research and Special Projects Director Public Interest and Access Policy

Ι

Director General —Arts and Heritage Policy and Programs

1 Director Sector Management

Director Arts Policy

Director Cultural Initiatives Program Director Heritage Policy and Programs Director Copyright As of July 1, 1986

Each of the agencies listed in Table 2 has its own staff, which in some instances is very much larger than that of the Department. The agencies also determine their own policy quite independently of the DOC. Nonetheless, the Minister must be able to obtain advice from departmental staff when major issues arise with respect to one or another of the cultural bodies related to his or her portfolio. This happens on occasions when the Minister acts as the link between an "arm's length agency" and Parliament or when central agencies determine matters relating to agencies in the Minister's portfolio. (For example, Treasury Board becomes involved with "arm's length" boards under the Financial Administration Act.) When, as at present, major revisions are contemplated affecting the structure and mandate of some of the cultural agencies, the departmental advice is of central importance in the policy-making

F/ira and Fauna on the Rideau / 57 process. Since the government also determines the sums available to the various operating or granting bodies, the Minister requires analyses and background information with respect to their operations. Some of this material is provided by the agencies themselves but most ministers like to rely as well on their own staffs for the relevant briefings and counsel. The DOC therefore must be prepared to provide this aid, without at the same time duplicating the housekeeping and related administrative work of the agencies, and without trespassing. Recently, as we shall see, the work of parliamentary committees has added substantial new burdens to the Minister, thereby requiring further assistance from the DOC staff. THE DOC'S AGENDA These general observations on the work and policy role of the DOC can best be illustrated by referring to the Department's actual agenda. Towards the end of 1987, the issues and initiatives contemplated with varying degrees of urgency by the Cultural Affairs and Broadcasting sector of the DOC included the following. o the fundamental review of broadcasting in Canada leading towards the preparation of a new Broadcasting Act; o preparation of new legislation dealing with the Cabinet's powers to issue direction to the CRTC; o revision of legislation dealing with the accountability of the CBC; o consideration of the National Film Products Importation Acta measure critical to the distribution of foreign and domestic films in Canada; o preparation for consultations with the Minister of Finance on revisions to the existing program of subsidizing the postage on Canadian printed materials; o work related to increasing the funding of the Public Lending Rights Program—a scheme enabling authors to receive some income from their works held by public libraries; o follow-up on the Report of the Task Farce on the National Arts Centre; o consultation with the provinces and the cultural community on a new national training and marketing strategy for the performing arts; o follow-up on the Report of the Canadian Advisory Committee on the Status of the Artist;

58/ How Ottawa Spends o • o o o

• o • o • o o

o

•

▪

furthering, with the provinces and the Department of Finance, the creation of national training institutions in some of the arts; continuing collaboration with other ministries in the mounting of a national conference on tοuίism, culture and multiculturalism; consultation with the provinces and interested parties on the revision of Canada's museums policy, and related programs and legislation; preparation of legislation to create four autonomous museums, in the wake of the dismantling of the Canadian Museums Corporation; conduct of a strategic review of the Cultural Initiatives Program--a large-scale scheme whose objective it is "to promote the innovative use, development and application of new communications technologies in the operations and activities of Canadian professional cultural organizations";11 the search for additional accommodation for the National Archives and the National Library; preparation of a discussion paper on an archeology policy; data collection and consultation on the international marketing of cultural products; preparation of a draft order-in-council relating to the CBC Toronto Broadcasting Centre; a study of the plans for the Montreal Audio-Visual Production Centre; development of departmental strategy linking its activities with projects enhancing regional development; development of an appropriate departmental response to the proposal by the Minister of State for Small Business and Tourism for a major project to enhance tourism in Atlantic Canada; consultation with the Minister of Justice to convey the concerns of the Department and the cultural community with some aspects of Bill C-54, the new pornography legislation; support of the Tobacco Products Control Act, while at the same time exploring measures required to offset some of its negative consequences on private funding for the cultural community; and finally, preparation of responses to various policies being initiated by the Secretary of State in the field of multiculturalism.

Fiira and Fauna on the Rideau 159

SPATIAL AND TEMPORAL INFLUENCES So eclectic a range of policy issues necessarily touches on an almost infinite number of interests and responds to pressures and initiatives emanating from an exceedingly wide field of sources. Policy making is thus nourished by ubiquitous inspirations and occurs from within a crucible defined by numerous constraints. In mapping the complex factors which cohere into a cultural policy for Canada, it is helpful to recognize two sets of key dimensions. One distinguishes between long-term and short-term forces; the other between those which originate from within the government—particularly from within the DOC—and those which have their source at some distance from the policy machine itself. The classic parameters set by time and space are, therefore, applicable to an analysis of cultural policy making in Canada. The axes of Figure 2 reflect this approach and create four quadrants within which the major influences on cultural policy can be housed. At the top left, we note the main extrinsic, long-term items. On their right are those which, while also originating outside the government and the DOC, are of more recent and immediate origin. The lower half of Figure 2 contains the chief elements in the policy-making landscape that arise from within the world of officials and politicians. They are either of a secular nature (left) or are of recent or current origin (right). Extrinsic, Long-term Factors Half a dozen enduring realities, unrelated to what goes on within the government, determine to a greater or lesser extent what cultural policies can reasonably be devised in the country. The first of these goes to the very nature of the whole society and to the dominant values animating it. Canadians are generally a pragmatic, somewhat austere, non-ideological people whose concern with bread and butter is usually more important to them than aesthetic goals. The out-of-doors holds an important place in their leisure life and they are more likely to run off to the cottage on the week-end than to the opera. For most of their history so far they have been concerned more with physically subduing their usually rude environment than with pursuing the arts. But after the Second World War a gradual change occurred which has had a fundamental impact on lifestyles and the aesthetic quality of the environment. A growing number of people have become involved actively or passively with a great many cultural phenomena. This is reflected in the countryside and in the towns and cities,

60 'How Ottawa Spends Figure 3.2 Factors Influencing Cultural Policy TIME

S P Α C Ε

Ε Χ T R 1 Ν S Ι C

Ι Ν Τ R Ι Ν S Ι C

LONG TERM

SHORT TERM

• Societal context: valuation of culture • Growth of Canadian arts and cultural life • Party philosophies & postures

• State of economy • Take-hers

• U.S. cultural influence • Growth of arts lobbying

• Crises: publishers failing • Caucus mood • Free trade situation

• Provincial governments • State of certain industries e.g., film distribution, broadcasting • Cabinet priorities • Previous policies • Traditions of existing agencies • Traditions re. Canadian content • Growth of DOC power • Cultural bureaucracies

• Inquiries, task forces, etc. • Caplan-Sauvageau • Arts funding (Riney) • NAC (Hendry) • Status of artist (Gélinas-Siren) • Film industry (Raymond-Roth) • Non-theatrical film (Macerola, Jensen) • Committee on Communications and Culture • Strength, alliances of Minister • Central agencies (PCO. Pil)

it is also in the way people live, eat and drink, and generally spend their leisure time. While no one could claim that Canada has been converted into a country of culture vultures, there is ample proof that significant numbers of Canadians have become interested in the arts and related fields and, above all, that a vocal and self-conscious cultural community has materialized. This relatively small but articulate segment of the population has succeeded in placing its cultural concerns on the governmental agenda.

as

It is nevertheless still the case that the cultural community, while politically more effective than in the past, has not yet made serious inroads into the ranks of party activists and that it tends to be under-represented among politicians. Insofar as the three national parties are concerned, it is probably fair to argue that the Liberals, followed by the NDP, have traditionally been most hospitable to the cultural community. The Conservatives have been,

Flora and Fauna on the Rideau 161

on the whole, least captive. This traditional pattern was disturbed somewhat in the early 1980s when the Trudeau government's Bill C-24 threatened to weaken the arm's length principle that shielded some of the cultural agencies from political interference. In this controversy, David Crombie, the Conservative cultural critic, espoused the cause of the agencies and so won the plaudits of the artistic community. Still, the Conservatives have rarely been seen as a party particularly sympathetic to the arts. The reasons for the varying support for the arts of the three parties are related to their respective geographic bases; to the legacy of the one-party dominant system; to the political generations which dominate each of the party caucuses; and to the interests of the leading party players.12 The consequence is that the Mulroney government's first two Ministers of Communications, Marcel Masse and Flora MacDonald, have not always found their causes wholeheartedly supported by their backbenchers, or even by their cabinet colleagues. The small group of interested ministers constituting a cultural beachhead, visible in the Pearson and early T udeau cabinets, is not so clearly evident in the Mulroney team. An entirely different extrinsic, long-term problem also compounds the making of cultural policy. This is the massive presence in Canada of United States cultural influences. The facts are widely known and need not be repeated and elaborated on here. What must be noted is that successive governments have increasingly become aware of the need to adopt policies enabling Canadians to maintain their national identity in the face of the seemingly crushing presence of American cultural products. Broadcasting, publishing and film distribution are only some of the areas in which governments have found it necessary to initiate various countervailing policies enabling Canadians to compete reasonably with American products.13 Partly in response to this threat of American domination, and partly because of the growth and vitality of cultural activity, there has emerged an effective arts lobby in Canada. Many sectors of the arts world have established associations whose purpose it is not only to assist the creative efforts of its members but also to raise funds from both the private and public spheres. They have been effective in bringing the contributions and needs of cultural activities to the attention of the public and have made it increasingly difficult for the federal and provincial governments to ignore their requirements. The large umbrella organization—the Cana-

621 How Ottawa Spends

dían Conference of the Arts--partly funded by the federal government, has been particularly active and successful in placing issues relevant to its constituency on the government agenda. The cultural lobby has become so powerful that it can be ignored only at considerable political risk. Provincial governments have also become key players in the process of formulating and applying cultural policy. Particularly within the context of the Mulroney government's efforts to bring about what it terms "national reconciliation," the provinces have been consulted much more than previously. Important aspects of cultural policy are now subject to federal-provincial-territorial discussion. Some arts expenditures have become part of the newly established Economic Regional Development Agreements (ERDAs) and therefore are influenced by federal-provincial negotiations. Important sub-agreements within the ERDAs have so far been arranged with Manitoba, Ontario and Quebec. The degree of consultation with the provinces and territories, and the launching of numerous cooperative or joint ventures, constitutes a major departure from traditional patterns of cultural policy making. The Ø extrinsic, long-term condition impinging on the cultural policy process arises from the very nature of certain cultural activities. Most opera, ballet or theatre productions, certain kinds of publishing, and even the creation of particular kinds of films or television programs cannot materialize without substantial subsidies. In Canada this means that governments have to become involved through grants and also by means of less direct routes provided by tax laws or postal subsidies. Monarchs, aristocrats, merchant princes or robber barons have, alas, never been important patrons of the arts in the Canadian landscape. While it is growing, the tradition of corporate sponsorship and giving is still comparatively low in Canada. State support is, therefore, essential. Extrinsic, Short-term Factors Among the short-term factors that influence cultural policy and over which the Minister of Communications and the DOC have little or no control, the state of the economy looms large. It determines, at any given time, the ease or difficulty with which new initiatives can be launched and also the level of support available for various programs. Government expenditures on culture, still considered by some to be something of a frill, are particularly sensi-

Flora and Fauna on the Rideau 163

tue to fluctuations in the economy and therefore are affected by short-run changes in the business cycle. Another external economic problem lies in the ever-present threat of a take-over of a Canadian cultural enterprise by foreign (notably American) buyers. Publishers especially have been vulnerable in this respect, whether they be wholly-owned Canadian companies or branches of foreign enterprises. When Gulf and Western, a giant U.S. conglomerate, bought Prentice-Hall in 1985, Marcel Masse announced his so-called Baie Comeau policy which requires that all publishing firms acquired by foreign companies directly or indirectly must be sold to Canadian owners within two years. This policy, which was very hastily conceived, was found to have serious weaknesses.14 Paradoxically, perhaps, it is being revised and made viable as a result of the free trade negotiations. The agreement provides for the Canadian government to buy at fair prices certain Canadian publishing houses threatened by foreign take-overs. These would then be offered for sale to Canadian buyers. An extremely important element that influences the direction of cultural policy is the mindset of the governing party's parliamentary caucus. For instance, it is well-known that in the Trudeau era, a great many Liberal MPs, including key ministers, had developed a scunner against Radio Canada, concluding that the CRC's Freηchλaηguage network promoted the separatist cause in Quebec. It is generally believed that the present Conservative caucus is deeply hostile to the CRC's English-language service, believing it to display persistent bias in its public affairs coverage of the Tory party and its government. Such attitudes affect the policies ministers can propose in the broadcasting field. Other moods dominating the government caucus--such as those reflected in the proposed Bill C-51 that deals with the definition of pornography—may also affect policies of vital concern to the cultural community. No short-run matter has had so profound an effect on recent cultural policy as the negotiations on Canada-United States enhanced trade arrangements. The Minister of Communications has presumably had to persuade her cabinet colleagues to exclude the cultural domain from the talks. Early statements by the Canadian chief negotiator indicated that he failed to appreciate the sensitivity of the issue insofar as Canadian cultural life was concerned. However, his Iater actions showed that his instructions must have reflected the views of the cultural community. While the Minister was apparently able to protect the turf entrusted to her, the negotiations had some effect on a number of policy areas

64/How Ottawa Spends of concern to her. Although the government has never acknowledged the fact, most observers agree that the delay in introducing the National Film Products Importation Act was caused by the sensitivity of the issues raised by it in the context of the free trade talks. Intrinsic, Long-term Factors At the broadest and most fundamental level, the forces emanating from the government itself arise from the values, philosophies and priorities of the Cabinet. Departmental Estimates relate the expected expenditures to the government's goals, often as announced in the Speech from the Throne. The expression of the Cabinet's intentions presented to the House in 1986 was particularly important to the cultural policies of the Mulroney government. For 1987-88, the DOC's `Portfolio Priorities," as they are termed, specify that: "The Minister of Communications is responsible for Canada's national cultural policies, which seek to provide an environment that enhances the capacity of Canada's artists and creators to make available to their fellow Canadians and to the world the works which will illustrate and celebrate the distinct identity of the country."15 There is little doubt that the dimension highlighted would not have been included in an earlier era when this aspect of cultural activities was ignored or assigned a low priority. By the 1980s, however, the Cabinet accepted the fact that cultural activities are closely related to the question of national identity and that, consequently, this domain called for federal policy initiatives. Therefore it will continue to claim a good deal of attention now and for the foreseeable future. Another long-term factor imposed by the Cabinet's overall policy is related to the drive to reduce the federal deficit. Thus, after the Conservative victory of 1984, cultural policy (like most other endeavours of the government) was expected to introduce cost recovery features to all ongoing programs wherever feasible. Accordingly, the price of all government publications increased dramatically and other public services with a cultural connection were affected. Even in areas where arm's length agencies determine policy, broad cabinet preferences have affected their nature. For instance, in deciding to charge admission to the National Gallery, the board of trustees revealed its understanding that the level of government support forthcoming to them in the future would reflect the degree to which museums were seen by the politicians to be efficiently run.

Flora and Fauna on the Rideau 1 65

Most government policies, programs and activities have some of the characteristics often associated with large ocean-going vessels: they cannot quickly be turned around. Past traditions and ongoing programs thus set patterns that Ø only be disturbed with the greatest of difficulty. In the political sphere it is nearly suicidal to discontinue a service or subsidy to which its clients have become accustomed, irrespective of its current need or utility. For example, Canada's program of postal subsidies to aid the distribution of periodicals and newspapers is archaic in that it does not discriminate between commercial and financially successful publications, which do not need support, and those which could not survive without it. However, any suggestion that the program might be overhauled invariably produces wild wails of protest from the whole cultural community, despite the fact that a revised scheme might serve the country better. Α related matter concerns the ongoing policies of the various quasi-independent agencies such as the Canada Council and the CRTC. For instance, the latter's approach to the regulation of Canadian content on television and radio, and its related definition of what constitutes a Canadian program, have serious consequences for the DOC's position on these matters. The CRTC's stance also has implications for agencies such as Telefilm Canada, which carry out some of the Department's policies. The well-established positions and practices of the various cultural agencies thus provide an inescapable constraint on the posture any given government may wish to adopt with respect to the arts and related matters. No matter has so dramatically highlighted this fact as the decisions of the CRTC, announced in November 1987, to license a number of satellite-delivered specialty services, including an all-news channel (CRTC 87-904). An entirely different kind of long-term, intrinsic development affecting cultural policy arises out of the changing scope of the various agencies of the government and the power relationships among them. For a long time the Canada Council was by far the most important federal agency supporting cultural activities. More recently, however, others have arisen. More important, government departments have become directly and quite heavily involved. Previously, the Department of the Secretary of State was the dominant federal presence, but since the emergence in the 1980s of the DOC as our de facto ministry of culture, its influence has increased substantially at the expense of the other culture-related bodies. The recent establishment of the Cultural Initiatives Program of the DOC (originally financed out of lottery money) and the inclu-

661 How Ottawa Spends

sun of cultural matters in the ERDAs, illustrate the point and attest to the rise of the DOC as a major player in the formulation and effecting of cultural policies. Some of these DOC programs enable political factors to supersede or complement the customary reliance on peer evaluation in the assessment of cultural projects. Thus, very substantial federal aid to special capital projects in the arts, approved for Montreal and Vancouver when Marcel Masse was Minister of Communications or for Toronto during Flora MacDonald's reign, was decided upon without reliance on any of the customary procedures governing the awarding of such aid. The final intrinsic, long-term influence to be noted here reflects the growing need for specialization and professionalism in the evolution and application of modern policies. In Canada, there has developed a corps of cultural bureaucrats, at all three levels of government, which has had a growing effect on cultural policy. Thus, in the DOC and the specialized agencies, there are a number of interested, highly capable and extremely effective officials who have had considerable influence on emerging policies and who are in part responsible for the striking continuity evident in this domain. While regimes and ministers change (and do affect what is done), the underlying set of immutable needs and the presence of a more or less constant group of specialists ensures that dramatic deviations from a basic course are rare. Intrinsic, Short-term Factors Among the intrinsic, short-term factors that have influenced cultural policy, the most important by far is the series of studies and reports commissioned by Marcel Masse during his custodianship of the DOC. The 1987-88 Estimates note that the reports which appeared in 1986 would be addressed "to help promote national pride," again indicating how nation-building was prized as a major element in cultural policy.1s The report which attracted the most attention is the CaplanSauvageau examination of broadcasting, a long opus, buttressed by over 50 supporting studies.17 Two other inquiries dealt with the status of the artist and the related issue of funding the arts.18 Broadcasting and the role of the creator in Canadian society, the subject of the studies just mentioned, were identified in the 1987-88 Estimates as claiming major priority. But others also received considerable attention and effort from policy makers. Two

Flora and Fauna on the Rideau 167

inquiries tackled the film industry, one focused on the National Ø Centre and another on the National Museums of Canada.19 Although the task forces were a special and important source and challenge for policy making, there were other "triggers" resulting from extensive previous preparatory work. The whole question of copyright, which had not been tackled since 1920, received considerable attention and was an issue crying out for resolution. The Estimates, noting its urgency, also linked the copyright issue to the larger matter of the status of the artist. In 1985, an almost revolutionary change in the factors influencing policy making in the cultural sector resulted from the government's adoption of the recommendations of the McGrath Special Committee on Reform of the House of Commons' The Committee on Communications and Culture became extremely active, particularly under Chairman Jim Edwards. It was in almost constant session and had, by the end of 1987, produced no less than 11 reports with recommendations affecting, inter aha, the DOC's reaction to the various task force reports and, therefore, governmental policy in the field of culture and communications. It is difcult to realize fully, without actually tracing the details of the parliamentary committee's involvement in policy making, how far-reaching its involvement is in the communications and cultural field. Before the case of broadcasting is evoked as an example, we should note that not all committees have been as active and closely concerned with the fashioning of governmental policy as has that on communications and culture. This area, along with finance and external affairs, stands out as having been vitally influenced by the reforms in parliamentary procedure. Policy making in some of the other domains has remained virtually unaffected by the change in the House Rules.21 How to create and preserve a genuinely Canadian broadcasting system, particularly with respect to television, has been a question that has perennially bedevilled social and cultural policy makers in Canada. The Broadcasting Act was last revised substantially in 1968, when the Canadian Radio Television Commission (CRTC) was created. Two or three attempts at passing new comprehensive communications legislation had been made by the Trudeau and Clark governments but they came to naught. The Mulroney government succeeded in bringing the matter further than its predecessors had; but it also encountered numerous obstacles and was able to proceed only slowly, partly because of the presence of the parliamentary committee.

68 / How Ottawa Spends

The beginning of the most recent phase of the saga lies with the appointment in May 1985, by Marcel Muse, of the Task Force on Broadcasting Policy. It was headed by Gerald Caplan and Florian Sauvageau. This task force responded to its extremely broad mandate in September of the following year with a massive 731page νοlume.23 The DOC, as well as the Committee, subjected the recommendations to a searching analysis which, in the case of the Committee, involved extensive hearings. The task was so monumental that the Committee divided the job into two major parts, tackling the issues raised in stages. But even before it could produce its first report, the CBC was found to have "lost" over $50 million for which neither it, nor the Auditor General, were able to account. The Committee examined and reported on the CBC finances quite separately from its work on the Caplan-Sauvageau Task Fοrce.29 (As the new Minister of Communications, Flora MacDonald also had to deal with the matter of CBC finances, without, of course, violating the arm's length principle.) In April and May 1986, the Committee produced its interim report on the Task Force's work and also its recommendations for a new broadcasting act. The Minister and her staff, for their part, were attempting to develop an entirely new broadcasting policy which was intended to go beyond the framework of changes envisaged by Caplan-Sauvageau. In responding to the Committee's reports, the Minister therefore put some new, broad policy questions before it and in effect delayed acting on the suggestions the Committee had made in its interim report. She thought it wise to delay legislation until the Committee could give further thought to the issues at stake and until she received its final reροrt.Ø She was criticized for the delay in acting on the Caplan-Sauvageau report and a fair amount of tension developed between her and the Committee and some members of the cultural community. The Committee sent the Minister a series of questions concerning the government's thinking about broadcasting policy. The reply, sent in November 1987, was an extremely long document, on which the Committee was still working as this chapter was being drafted. All of these exchanges were, of course, punctuated by appearances before the Committee of numerous witnesses as well as the Minister and her staff. In the meantime, the CRTC was pressing ahead, making broadcasting policy on its own by awarding licences for various kinds of new services. A contretemps developed between it and the Committee when the latter requested that

Flora and Fauna on the Rideau /69

the Commission delay some of its decisions, pending the completion of the Committee's review of the Task Force report. The CRTC found that it could not, in fairness to all the parties involved, accede to such a request. However, it went a small way to meet the Committee's wishes. Thus a confrontation was avoided but no one could claim that the policy process was any too clear or orderly. Although this may be hard to believe, the foregoing is a greatly oversimplified account of the process of policy making in broadcastng. Additional working groups, advisory bodies, consultations and intensive lobbying efforts by a wide spectrum of interests were from time to time involved. In fact, three separate players, the Minister and her staff, the Committee, and the CRTC all are attempting to tackle the nearly intractable challenges presented by Canada's broadcasting world. Ιn due course the Minister will have to resolve the inevitable dissonances emanating from such a process. In addition to the fundamentally difcult problem of developing a new, realistic and long-lasting broadcasting policy, various crises perpetually arise, requiring Solomoníc solutions. The Minister and Cabinet had to respond, for instance, to appeals to 11 CRTC decisions regarding specialty television services, released in November 1987. According to the Broadcasting Act, the Governor-in-Council can set aside or refer back a CRTC broadcasting decision within 60 days of the issue of a licence. Since eight of the licences in question were not to go into effect until September 1, 1988, no formal, legal action could be taken by the Cabinet. At the same time the Cabinet had to respond to appeals on three licences whose beginning date was November 30, 1987. On January 27, 1988, the Minister of Communications announced that the three decisions on the "active" licences were upheld, that the government had no reservations about seven others, but that it had concerns about the awarding of the licence to the CBC for an all-news service? The awarding of this licence had widespread ramifications and was a political hot potato. The other applicant for the licence was from Alberta and all MPs from that province strongly urged the Cabinet to uphold the appeals. Other Tory members were also after the CRC's scalp but the Cabinet was divided. The issue pitted westerners against the rest of the country, Quebecers against Canadians in the other provinces, and supporters of public broadcasting against champions of the private sector. Not surprisingly, the Cabinet came up with an equivocal response to the appeals. Noting that it worried about the concentration in the news media

70/ How Ottawa Spends

that would follow from the provision by the CBC of the News and Information Service, Cabinet stated that the CBC could use the period until October to explore the possibility of launching a news service embracing both public and private sectors. The government also suggested that the CBC should look into providing some comparable news service in French, an undertaking the CBC excluded from its original licence application. The Cabinet further indicated that it was reviewing broadcasting policy which might redefine the role and mandate of the CBC. It concluded that it would be unwise for the CBC to undertake major expenditures or reorganization to implement the news service until a major decision is reached on the appeals. The new role assumed by the parliamentary committee raises the question of the degree of independence the Minister now enjoys in policy making. In addition to winning the consent of Cabinet, a new powerful constituency has to be won over—the Chairman and members of the Committee on Communications and Culture. In this context, Flora MacDonald has stated that the timing of the introduction of new policies is not entirely within her control. `Though it is not well understood," she said, "there are etherthings that dictate the agenda of government now, other than decisions of the executive."' A closely related factor is the place and influence enjoyed by the Minister within the party and particularly within the Cabinet. Can he or she win the needed support for preferred policies and also, how far can the Minister go in defying some views of the party caucus which may be dissonant with the policies he or she wishes to pursue? One has the impression that the caucuses of our government parties are not, as a rule, in the vanguard of enlightened and progressive thought with respect to the cultural sphere and that they have from time to time made life difficult for ministers responsible for broadcasting and culture. The individual personalities, styles, debts, credits and alliances of the respective ministers can be critical to gaining cabinet support for a policy. Information about these matters is not easy to come by; nevertheless, certain conjectures may be useful. Significant differences in style distinguish the role within the Cabinet of Marcel Masse and Flora MacDonald. The former, a one-time Union Nationale cabinet minister, was among the leading members, if not the leading Quebec member of the Cabinet, after the Prime Minister. As Minister of Communications, he was bold, almost imperious, and not known to shy away from the limelight. After a rather

Flora and Fauna on the Rideau 171

weak beginning in his portfolio, he found his ground and became an eloquent spokesman for the interests of the cultural community. One assumed that his relations with the Prime Minister were close and that the commitments he made to the cultural community enjoyed the backing of his cabinet colleagues. It appears, however, that matters were not always quite so straightforward. It seems that on more than one occasion he made promises and public pronouncements which had not been fully and explicitly cleared with the Cabinet and that he therefore occasionally committed the government to a course it had not espoused. This kind of strategy may bring immediate results but does not build up long-term trust and confidence. Flora MacDonald's position and style are quite different. A long-standing and popular party activist, she has built up considerable credit over the years. She was a stalwart of the Conservative party when in opposition and also is a much sought-after and generous orator who assisted the campaigns of many of her colleagues. She had, however, been a candidate for the party leadership when Brian Mulroney first sought it and she had subsequently become a loyal and vigorous Clark supporter. The widely noted preference of the Prime Minister for his old cronies and loyal friends suggests that the relationship between him and his Minister of Communications is not likely to be particularly cosy, a state of affairs which can also be assumed to have been caused by her red Tory and nationalist antecedents. The influence she has in Cabinet is therefore likely to be based on the mastery of her dossier, the debts many colleagues no doubt owe her, her loyalty and past contributions to the party and the reputation she has established as a team player. Whether under these circumstances she can wrest approval for her key policies from what may sometimes be reluctant colleagues, no outsider can tell. One piece of evidence is nevertheless suggestive: the government's decision to exclude the cultural sector from the free trade negotiations, after a somewhat wobbly beginning on this score, indicates that Flora MacDonald has adequate support in the Cabinet for at least some of the major areas within her jurisdiction. One assumes that with respect to cultural sovereignty she enjoys the support of the Prime Minister. She also succeeded in having a disastrous 10 per cent duty removed from imported books, which had been imposed in retaliation against the U.S. government's tax on Canadian cedar shakes and shingles.80

72/ How Ottawa Spends

However, it looks as if she cannot win all her battles. She managed to persuade the Department of Finance to modify changes in the tax provisions which would have seriously damaged investment in film and TV production, but her success was only partial. Until the end of 1987, investors could claim 100 per cent of their investment in Canadian productions as a capital cost allowance. The new rules reduce this to 30 per cent on a declining balance bass, although the Minister of Finance did make some minor concessíons.81 On the other hand, a bold policy strengthening the Canadian presence in film distribution, was delayed and presumably weakened as the result of the exigencies of the free trade negotiations and the well-known ferocious lobbying ofJack Valenti, the president of the Motion Picture Association of America. The matter is unresolved at the time of writing but whatever the outcome, there is no doubt that Flora MacDonald's timetable has been upset by those in the government unwilling to provoke U.S. retaiiatiοn.32 The final intrinsic, short-term influence on cultural policy making to be noted here concerns the key central agencies: the Privy Council Office (PCO) and the Prime Minister's Office (PMO). Their agenda-setting powers are critical, as is their ability to influence the manner in which the Cabinet and its committees deal with any issue. One would expect Dalton Camp in the PCO to be a friend at court, insofar as the interests of the cultural community go. However, too little is known about his role and power to tell us whether he is relevant in the present context. At the PMO, Derek Burney clearly is a major force. While he played an inspired Willie Loran in a college production of "Death of a Salesman," he is not seen as a chaώρiοn of the arts nor as a cultural nationalist. It is unlikely that issues of concern to the cultural community are of overriding importance in his hierarchy of priorities. EVALUATION AND CONCLUSION This review of the four principal types of factors influencing Canada's federal cultural policy makes it abundantly clear that the task is immensely complex. It must respond to strong pressures towards certain kinds of action, while at the same time being subjected to powerful constraints. These forces emanate, as we have seen, both from within and outside the government, with different factors assuming particular importance at any given time. Although virtually all of the elements identified above have had some impact on how federal cultural policy has evolved since the Conservatives

Flora and Fauna on the Rideau / 73

swept the country in September 1984, a few stand out as having been particularly telling. The general stance of the party, reflecting its history, bases of support, and personnel is important when a new team of politicians takes control, particularly after a lengthy era of one-party dominance. The Conservatives started their reign with a deepseated unease about the reliability and trustworthiness of the civil service, especially its mandarins. Marcel Masse Øe no bones about his wish to replace many Liberal appointees within his department and in the agencies within its orbit. His deputy minister was fired and he also removed the assistant deputy minister responsible for broadcasting and culture. He was reported to find it difficult to work with his new deputy minister. Α conflict with the head of the Canada Council led to the letter's dísmíssal. The ministerial (i.e., political) will was therefore a mighty determinant of what was to be done. Given the circumstances and the personalities involved, it was therefore inevitable that the Minister's preferences were unusually important. But Masse had had relatively little to do with the Conservative party during most of his life, and Quebec had very much been his oyster. There is some question, therefore, to what extent his own preferences reflected the mainstream views of the Tory caucus. Flora MacDonald, as was noted above, arrived with quite different baggage. Her own intimate and long-lasting involvement with the party provided a better pipeline linking, to some degree, the direction of the DOC with the values prevalent in the caucus. it must nevertheless be noted with some emphasis that MacDonald's views have traditionally been quite independent. Although no one has ever questioned her loyalty and commitment to the party, throughout her career as a Conservative MP she has espoused causes and policies which were unpopular with many of her colleagues. Despite this, it must be assumed that she has been more conscious of and sensitive to the prevailing winds in her caucus than was her predecessor. We can conclude that the physiognomy of the Mulroney party has been of some considerable influence in the development of cultural policy since 1984. The very creation of the various review procedures and the policy initiatives which followed would almost certainly not have occurred had there not been a change of government. Α related but quite independent factor influencing the making of cultural policy concerns the degree to which federalism has entered the picture. Α growing number of initiatives is being

74/ How Ottawa Spends

discussed and even undertaken jointly by the federal and the other levels of government. In some fields (film distribution, for instance), Ottawa seems to be compelled to enter policy areas by default. Only Quebec has tackled this difficult issue. The other provinces are either doing nothing, or complaining about what Ottawa is, or is not, doing. Nevertheless, generally inter jurisdictional collaboration has mushroomed. Even such seemingly Ottawa-focused areas like the status of the artist and the funding of the arts (which are heavily centred on tax policies) are being approached partly on a bilateral basis. Thus the government's response to the Standing Committee on Communication and Culture's report on the recommendations of the task forces on Funding of the Arts and on the Status of the Artist (Bovey and Siren-Gélínas)84 notes that: Ministers responsible for culture established a joint federal/ provincial committee of officials to identify priorities for government action, areas of joint interest and areas for coordination of policies and programs respecting recommendations made by the Bovet' and Siren-Gélinas Task Fοrces.sb The third influence which stands out is the articulate and vociferous expression of the interests of the cultural community itself. This process developed to a pretty high pitch during previous gονernments8ó but in no way abated under the post-1984 Conservatives. On any of the major issues—broadcasting, copyright, taxation, book publishing, the exclusion of culture from the free trade negotiations—well-organized campaigns were mounted, bringing the views of the interested cultural community to the attention of the government and the public. Some of these efforts no doubt strengthened the hand of the Minister and her allies in Cabinet when they put the case of the cultural community and of the cultural industries before their colleagues. The climate generated by the free trade negotiations also affected the policy-making process with respect to the arts. We have already noted its effects on the introduction of the film distribution policy but it also affected book publishing and other policy areas. Most important, the fact that cultural sovereignty became an important issue to the government, and was vigorously defended in the face of tough American challenges, represented a substantial victory for the cultural community and its friends in the Cabinet. It also coloured most ongoing discussions of policy options. Paradoxically, an American statement may have been of particular help to Canadian nationalists inside the government.

Flora and

Fauna on the Rideau 1 75

When Clayton Yeutter, the U.S. trade ambassador, responded to expressions of concern about the vulnerability of Canadian culture by saying. "In a sense, both have their cultures at stake. I am prepared to take the risk of having American culture subject to greater Canadian influence under a free trade agreement. I hope Canada is prepared to run the same risk," he dramatically advertised to all concerned, the abysmal failure of even well-informed Americans to understand the problems of Canadian culture in North America. Finally, and probably most importantly, the creation of the various task forces, and the manner in which they are being responded to by the Standing Committee on Communications and Culture and by the DOC constitutes a deeply significant and totally new aspect of the policy process. This is not the place in which to evaluate the impact and implications of the new role of House committees—much can be said for, as well as against the reforms. But there is no doubt that they have fundamentally altered policy making in Canada, and that they constitute a highly significant change in our form of cabinet government. When the five most powerful factors I have just identified as having been of particular relevance in the mid-1980s are located in Figure 2, we see that they are scattered throughout the four quadrants. This indicates that cultural policy has emerged in response to both long- and short-run forces. Furthermore, some have emanated from within the DOC and others have come from outside. If there is a tendency to cluster, it is in the bottom righthand quadrant, suggesting that intrinsic, short-run factors are particularly important at the present time. This is partly because technological and societal changes require new and strong cultural policies. It is also attributable to the fact that a new government has come to power with a wish to review and revise existing practices in the light of new conditions. At other times in our history, factors placed in some of the other quadrants were of greater relevance.

76! How Ottawa Spends Notes 1.

John Meisel, "Political Culture and the Politics of Culture," Canadian Journal of Political Science, Vol. 7 (4), 1974, pp. 601-615.

2.

Department of Communications (cited subsequently as DOC), Vital Links: Canadian Cultural Industries (Ottawa: Supply and Services Canada, (cited subsequently as Supply and Services) 1987), p. 7.

3.

DOC, Canadian Cultural Industries (Ottawa: Supply and Services, 1985), p. 1.

4.

DOC, 1987-88 Estimates, Part III, (Ottawa: Supply and Services, 1987), pp. 2-15.

5.

Canada Council, The Canada Council Multi-Year Operational Plan 1988-89 to 1990-91, Ottawa: The Canada Council, Research and Evaluation, October 20, 1987, Appendix B, p. 83. The latest Canada Council's Multi-Year Operation Plan, which uses Statistics Canada data, does not go beyond 1983-84. More recent figures, also from the federal statistical agency, give the federal expenditures on culture as higher than those of the provinces and municipalities combined. The reason for the discrepancy is not, however, any change in the respective patterns of expenditure but simply a difference in the treatment of the relevant data. The percentages given (for 1985-86) are federal 54; provincial 31; and municipal 15. Statistics Canada, Cultural Communiqué, Vol. 10, No. 5 (September 1987), pp. 1, 2.

6.

For a detailed account, see John Meisel and Jean Van Loon, "Cultivating the Bushgarden: Cultural Policy in Canada," in M.C. Cummings, Jr. and R.S. Katz (eds.), The Patron State: Government and the Arts in Europe, North America and Japan (New York: Oxford University Press, 1987), pp. 283-295.

7.

DOC, Communications Annual Report 1985-1986 (Ottawa: Supply and Services, 1987), p. 5.

8.

Government of Canada, Government Response to the Report of the Standing Committee on Communications and Culture "Taxation of Artists and the Arts," Ottawa: May 1987, p. 2.

Flora and Fauna on the Rideau ! 77 9.

Statistics. Canada, Culture Communiqué, Vol. 10, No. 5, September 1987, pp. 1, 2.

10.

DOC, 1987-88 Estimates, Part III (Ottawa: Supply and Services, 1987), p. 5; DOC, 1988-89 Estimates, Part III, (Ottawa: Supply and Services, 1988), p. 2-4. The 1988-89 Estimates provided an increase of $113 million for the Communications portfolio. By far the largest proportion of the "new" money was intended for the CBC ($26 million) and the National Museums ($24.4 million). The Archives, Canada Council, National Arts Centre, National Film Board and the CRTC were among the other beneficiaries, albeit on a relatively much more modest sae. Communications Canada, "CBC, museums share the bulk of $113 million increase in Communications Portfolio," Ottawa, News Release, February 23, 1988.

11.

DOC, A Special Program of Cultural Initiatives (Ottawa: Supply and Services, 1983), p. 5.

12.

This and some other sections of this chapter obviously contain sweeping generalizations and personal value judgements. This is inevitable, given space restrictions and the paucity of field studies yielding hard evidence. Instead of tediously qualifying many of the observations made throughout this chapter I hereby acknowledge that the only back-up I can provide for some statements is my own observation as a long-standing and politically neutral student of cultural affairs

13.

DOC, Vital Links, John Meisel, "Escaping Extinction: Cultural Defence of an Undefended Border," in D.H. Flaherty and W.R. Mckercher (eds.), Southern Exposure: Canadian Perspectives on the United States (Toronto: McGraw-Hill Ryerson Ltd., 1986), pp. 152-168.

14.

Harald Bohne, "Publishing policy unenforceable," Letter to The Globe and Mail, [Toronto], November 23, 1985.

15.

DOC, 1987-88 Estimates, Part III (Ottawa: Supply and Services, 1987), pp. 1-6.

16. Ibid.

78 /How Ottawa Spends

17. Report of the Task Force on Broadcasting Policy (Ottawa: Supply and Services, 1986). The studies are listed in Appendix E, pp. 725-27.

18. The Status of the Artist: Report of the Task Force, (SirenGélinas) (Ottawa: Supply and Services, 1986), and Funding of the Arts in Cana& to the Year 2000: The Report of the Task Force on Funding of the Arts, (Boveg) (Ottawa: Supply and Services, 1986).

19. Canadian Cinema: A Solid Base: Report of the Film Industry Task Force (Raymond-Roth) (Ottawa: Supply and Services, 1985); The Other Film Industry: Report of the NonTheatrical Film Industry Task Force (Jensen-Macerola) (Ottawa: Supply and Services, 1986); Accent on Access: Report of the Task Force on the National Arts Centre (Hendry) (Ottawa: Supply and Services, 1986); Report and Recommendations of the Task Force Charged With Examining Federal Policy Concerning Museums (Richard-Withrow), (Ottawa: Supply and Services, 1986).

20.

Report of the Special Committee on Reform of the House of Commons (Ottawa: The Queen's Printer for Canada, June 1985).

21.

Susan Delacourt, "House reform gets mixed reviews," The Globe and Mail, [Toronto], December 30, 1987, Α5.

22.

It was re-named the Canadian Radio-Television and Telecommunications Commission in the 1970s, when telecommunications were added to its mandate.

23.

Report of the Task Force on Broadcasting Policy (Ottawa: Supply and Services, 1987).

24.

Standing Committee on Communications and Culture, CBC's

Financial Management and Accountability: Review and Recommendations Arising from the 1985-86 Annual Report, Ottawa: February 1987. 25.

Standing Committee on Communications and Culture, Interim Report on the Recommendations of the Task Force on Broadcasting Policy: Specialty Programming Services and Some Proposed Legislative Amendments, Ottawa: April 1987; Idem, Recommendations for New Broadcasting Act:

Flora and Fauna on the Rideau / 79 A Revew of the Recommendations Made by the Task Force on Broadcasting Policy, Ottawa: May 1987. 26.

Government Response to the Fifth Report of the Standing Committee on Communications and Culture (Ottawa: Supply and Services, August 1987).

27.

CRTC Decision 87-904. CRTC, More Canadian Programming Choices, Ottawa: November 30, 1987, pp. 226-53; Broadcasting Act, 1967-68, C-25, S.1. Section 23(1); Communications Canada, "Flora MacDonald announces government's stance on appeals of CRTC specialty services decisions," Ottawa: News Release, January 27, 1988; Communications Canada, "Notes for a News Conference by the Honourable Flora MacDonald, MP for Kingston and the Islands, Minister of Communications, on the government's responses to the CRTC specialty services decisions." Ottawa: Information Services, January 27, 1988; Hugh Winsor, "Ailnews is bad news," The Globe and Mail, [Toronto], January 16, 1988, D. 1.8; Lise Bissonnette, "All-news is bad news in Quebec," Ibid., January 23, 1988, D2; Hugh Winsor, "'Goon squad' called winner on news TV," Ibid., January 28, 1988, Al-2.

28.

John Partridge, "Minister roasts critics on broadcasting act," The Globe and Mail, [Toronto], December 23, 1987, pp. B1, B2.

29.

Matthew Fraser, "Marcel Masse: Whatever the arts community may say or do, the Tories' brilliant young man' from Quebec is out to make the most of his new power," The Globe and Mail, [Toronto], April 20, 1985, pρ. E1-E2; Andrew Cohen, "Masse asserts his cultural credentials," Financial Post, [Toronto], August 3, 1985, p. 4; Idem, "Masse's strength will be missed," Financial Post, [Toronto], October 4, 1985.

30.

Liam Lacey, "Publishers relieved import tax dropped in Wilson's budget," The Globe and Mail, [Toronto], February 19, 1987. In this article, Serge Lavoie, a spokesman for the Canadian film industry, is quoted as having said: "We're convinced that the pressure put on by our industry, and the 130,000 postcards sent by the public were responsible for this. We're also convinced that ... Flora MacDonald should come to our aid in this."

80 / How Ottawa Spends 31.

Ellen Roseman, "Real estate, mines, films losing their tax appeal," The Globe and Mail, [Toronto], December 18,1987, p. B4. It should be noted that there were some abuses of the capital tax allowance, although they were not anything as blatant and disastrous as in the 1970s. Some reform was desirable, although the Minister of Finance probably went further than was necessary from the viewpoint of cultural, rather than financial policy.

32.

Jamie Portman, "Flora faces battle over restrictions on U.S. film industry, experts say," The Whig-Standard, [Kingston], February 14, 1987, p. 46; Sid Adilman, "Surprise, surprise, Hollywood wins distribution battle," Toronto Star, October 10, 1987, p. Dl; Hugh Winsor, "Liberal MP leaks delayed film legislation," The Globe and Mail, [Toronto], November 26, 1987; Mayor Moore, "Α torrent of intentions turns into a trickle of deed," The Globe and Mail, [Toronto], December 26, 1987, pp. Cl, C16.

33.

For an assessment of Masse's style in both the DOC and subsequently in the Energy portfolio, see Stevie Cameron, "Patience is a pivotal word for the volatile energy minister," The Globe and Mail, [Toronto], December 24, 1987, p. Α2.

34.

Taxation of Artists and the Arts: Α Report of the Standing Committee on Communications and Culture, January 1987.

35.

Government of Canada, Government Response to the Repart of the Standing Committee on Communications and Culture "Taxation of Artists and the Arts," May 1987, p. 1.

36.

Mejsel and Van Loon, pp. 307-308.

37.

"Slow trade studies," editorial in The Globe and Mail, [Toronto], September 26, 1987, p. D6.

CHAPTER 4 THE SYMBOLIC MOSAIC REAFFIRMED: MULTICULTURALISM POLICY Daiva K. Stasiulis

INTRODUCTION This chapter analyses developments within Canadian multiculturalism policy and its relationship to different clienteles. Since 1971, the major role of the policy has been to redress the absence of symbolic representation of non-dominant ethnic groups within Canadian institutions. The primarily symbolic role of the policy was recently reaffirmed in Bill C-93, the new Canadian Multiculturalism Act, tabled by the current government on December 1, 1987. This proposed legislation suggests that multiculturalism continues to be viewed by the federal government as an effective nation-building ideology, but one which requires minimal support in terms of dollars and administrative infrastructure. The majority of scholars have dismissed multiculturalism as an inconsequential policy, offering a variety of often sound criticisms of the policy's apparent failures or tokenism in its efforts to provide representation of ethnocultural and racial minorities. In this paper, I suggest that it is more useful to examine the manner in which the policy has mediated the competing claims of different constituencies—established European groups, "visible minorities," the academic community, the electorate, etc.—to arrive at a tenacious policy which is, however, strongly symbolic in character. In other words, the development of multicultural policy bears the imprint of shifting issues and demands in the ethnocultural field, while reflecting an overriding focus on status, representational and legitimacy concerns of ethnic and racial groups and the interests of the federal state in legitimation. I further argue that the salience of symbolic activities within multiculturalism reflects three major factors: a genuine state responsiveness to the status concerns of a multi-ethnic constituency which is highly differentiated in class, culture and material interests; 81

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o •

the meagre resources and support structures provided to multiculturalism; and a strategy following the path of least resistance from public and private institutions, which are generally indifferent toward if not hostile to multicultural objectives.

Since 1981, the federal policy has been amplified to provide enhanced support for non-official languages and anti-racist strategies, while attempting to broaden its appeal to "mainstream" interests such as business organizations. These trends have heightened the contradictions within multiculturalism and undermined its continued viability in securing the consent of ethnic communities across class lines. ETHNIC COMMUNAL APPROVAL, SCHOLARLY SNEER Organizations representing the roughly one third of the Canadian population of non-Anglo, non-French and non-Native origins have repeatedly confirmed their belief in the federal multiculturalism policy and its realization through the federal bureaucracy.1 Mindful of the pivotal role played by the "ethnic vote" in federal elections, the three major parties have met the policy, if not the mechanisms for its implementation, with purring assent. In contrast to the general tone of critical support provided to official multiculturalism from both ethnic spokespersons and federal and provincial parties (at least within English Canada), scholarly opinion has regarded the multicultural policy in a cynical and even dismissive fashion. While the nature of scholarly comment on official multiculturalism has been extremely varied, the repeated use of terms such as "rhetoric," "myth," "ideology," and even "hoax" and "political conspiracy" to characterize the policy and its effects confirms that the major thrust of academic analyses of multiculturalism has involved its "decoding" as deception, i.e., as evidence of the false appeal of its prescription for ethnic cultural retention, sharing and equality among ethnic populations.2 One problem with the treatment of multiculturalism as ideological indoctrination, is that it makes it difficult to account for the persistence of the policy over the past 15 years, and also the strong identification shown among ethnic group representatives with the policy and its political and administrative infrastructure. A second problem resides in the implicit conception of the state apparatus

The Symbolic Mosaic Reaffirmed l 83

as an instrument of dominant ethnic group elites or the Anglophone establishment, rather than as a complex structured totality with some degree of relative autonomy and independent concerns. A third problem with the equation of multiculturalism with ideological deception and rhetorical obfuscation is that it inhibits an understanding of the sources, directions and limits of ideological, institutional and program change within official multiculturalism. Yet even a cursory examination of the stated priorities of the current policy, such as race relations and the problems faced by immigrant women, its new advocacy role with respect to business, labour, the police and other government agencies, and its enhanced legislative and administrative visibility are evidence that the policy has indeed advanced from its popular image of "ethnics dancing in church basements." One alternative to the treatment of the multicultural policy as "ill-founded belief,' is to begin by identifying the real bases of appeal in the distinctive set of beliefs which find their expression in the multiculturalism policy. In this context, an analysis by Raymond Breton represents a perceptive and refreshing point of departure. He roots the emergence of the policy in both the central role of the state in legitimation through the creation and restructuring of the symbolic order, and the real concerns among ethnocultural minorities for institutional recognition and status.4 During the 1960s, the reνitali7ation of Quebec nationalism precipitated upheaval in the Canadian symbolic order. Subsequently, groups such as Ukrainians were less concerned, Breton argues, with material issues than with the threat posed to their sense of collective honour and prestige by an emergent identity system emphasizing "biculturalism, two-nation society, charter groups, and founding peoples."5 Breton's interpretation of multiculturalism as a key component in the Canadian state's symbolic activities, designed to quell real status anxieties among the "other" cultural communities, travels a long way in illuminating both the sources for the establishment of multiculturalism and its appeal among ethnocultural minorities. Multiculturalism was not simply an illusion foisted on the ethnic masses. It was a development that ethnic social groupings themselves assisted in bringing about and which responded to their articulated need for recognition in the nation's ethnocultural symbolic order. The new policy focussing on ethnocultural diversity was also perceived by key policy makers to provide an ideological solution

841 How Ottawa Spends

to help redress the imbalance in power between English and French. Federal Liberals, and significantly Quebec-based ones, saw the "break up" of the Anglo monolith as an antidote to Quebecois separatism and the dualism that had plagued Canadian politics since Confederation. Thus, an important motive underlying the support provided to multiculturalism and the bolstering of the "third" force by Trudeau, Pelletier and other Liberal leaders was its utility in mitigating Anglo-Franco confrontation. In contrast to bilingualism, however, the symbolic restructuring involved in multiculturalism has had a negligible impact on the linguistic and cultural rules and practices of business firms, law enforcement agencies, educational, mass media and other "mainstream" institutions. Quebec Francophones have occasionally expressed their dissatisfaction with the policy's loosening of ties between language and culture and the implication "that their culture was on a par with that of other ethnic groups.' However, symbolic multiculturalism has provided little basis for provoking status anxieties among the dominant British and French communities. This is because minority ethnic cultures, languages and special provisions have been excluded from mainstream institutions. The absence of ethnocultural diversity in Canadian institutions has recently been noted by Ernie Epp, the New Democratic Party's multiculturalism critic and a member of the Parliamentary Standing Committee on Multiculturalism: The autonomous agencies responsible for Canada's cultural and social policy have generally been allowed to ignore the policy of multiculturalism. The Canada Council restricts its limited funds to the professional artists and companies and pays little attention to ethnocultural organizations. The Canadian Broadcasting Corporation responded to a reduction in its federal grant by cancelling "Identities" and "Our Native Land." The Public Archives has reduced the staff of the National Ethnic Archives sharply and would like to get rid of this responsibility entirely. The Social Sciences and Humanities Research Council has provided limited funding for ethnic and multicultural studies.? Yet in spite of its relatively weak impact on the restructuring of Canadian institutions, the policy has undergone notable development over the past 15 years, responding to demographic change, new political pressures from ethnocultural minorities, and shifting state priorities. Although divisive issues such as racism and the oppression of immigrant women were ignored or muted in

The Symbolic Mosaic Reaffirmed! 85

the original policy formulation, these issues have increasingly been brought into the policy and reflected in bureaucratic action. The official policy objectives appearing in Trudeau's by now classic 1971 statement in the House of Commons have provided the framework for the development of mintícultarakísm.8 These initial objectives have become organizing principles for programs of assistance to ethnocultural organizations and ether activities designed to represent both the symbolic and material interests of ethnic minorities. Although the activities and programs supported through multiculturalism have gone well beyond those originally envisaged, all innovations appear to be constrained by the policy's original terms of reference, which are narrow, vague and focussed on cultural change. This is not because these objectives are engraved in stone, but because the contradictions which they express continue to persist in Canadian social relations. The four guiding principles of multiculturalism (state support for cultural retention, cultural sharing, official language acquisition and reduction of cultural barriers to equal opportunity) have thus largely structured the manner in which the multicultural ideology has been put into practice. The remainder of this chapter will examine the forces shaping the development of federal multiculturalism and the possibilities and limits of the policy's capacity to respond to the needs and demands of ethnocultural minorities. This will be done by focussing on its treatment of two controversial issues— non-official ("heritage") language maintenance and racism. This will be followed by a discussion of the structural elements (administrative infrastructure and resources) supporting federal multiculturalism and the major interest groups and clienteles seeking support for multicultural programs. The two objectives of maintaining non-omcial languages and combating racism correspond to two major areas of program development within multiculturalism. While minority language maintenance is usually associated with the cultural orientation of "established" European communities, the amelioration of racism is most often perceived to be the overriding objective of "visible minority" communities.9 NON-OFFICIAL LANGUAGE PRESERVATION AND

DEVELOPMENT The vague and contradictory nature of the policy objectives have already received mention. Some contradictions of the policy are

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rooted in the disjuncture between the policy's assumptions and the actual experience of members of ethnic communities. For example, the policy separates culture and language. Under federal policy, official recognition is provided only to the linguistic rights of English and French. This implies linguistic assimilation of members of all other groups into one or other of the two official language communities. The policy's assumption that multiculturalism is a viable reality without multilingualism was explicitly denied by the findings of the Royal Commission on Bilingualism and Biculturalism in 1969. The Commission stated that "culture and language that serves as its vehicle cannot be dissociated," and strongly recommended the teaching of languages other than English and French.' The policy's initial blatant disregard of the intimate connection of language with culture for several of the largest and best organized communities in Canada has been one of the most hotly contested features of official multiculturalism." One implication for the initial administration of the policy was the tendency to provide funds for activities displaying and fostering folkloric aspects of culture. Multicultural grants, rarely exceeding a few thousand dollars, were given to ethnic and multiethnic organizations to support folk dance groups, choirs, pipe bands, handicraft workshops and theatrical productions. During the early years of the policy, only three to four per cent of multicultural grants were awarded for the purpose of non-omcial language retentiοn.1z The severance of culture and language, and the narrow interpretation of "culture" reflected in the early programming, were products of the historical compromise by the Trudeau government. The priorities of this government in the ethnocultural fields were shaped first and foremost by the specific and serious threat which political developments in Quebec posed to Canadian federalism. The failure to provide multiculturalism with a linguistic base was meant to ameliorate Francophone fears that the policy would be a threat to their own aspirations. At the same time, "support to folkloric activities and written materials such as ethnic histories and studies offered the advantages of easy implementation and high visibility, and served to meet the immediately expressed concerns of the ethnocultural communities."13 By the mid-1970s, officials in the Multiculturalism Directorate perceived that "the traditionally funded ethnocultural communities, while still concerned with cultural retention, had come to regard folkloric support as tokenism."14 Organizations repre-

The Symbolic Mosaic Reaffirmed! 87

senting communities such as the Ukrainian and Germans in the Prairie provinces had aggressively lobbied for federal support for instruction in "heritage languages." By the 19808, multicultural administrators openly acknowledged the importance of heritage language retention for many communities' cultural maintenance and for the unification of otherwise highly differentiated groups.16 The growing support for non-official language training is signified by the increase in proportion of the multiculturalism grants and contributions budget allocated to heritage languages-close to 20 per cent for 1981 to 1984, compared with approximately 3 per cent from 1973 to 1975.11 During the 1986-87 school year, the Department of the Secretary of State provided $3.37 million to 863 schools across Canada to teach 58 different heritage languages to approximately 128,000 students.18 In addition, detailed recommendations are currently being prepared for the establishment in Edmonton of a Heritage Language Institute for Western Canada, which would engage in curriculum development, foster the development of Canadian materials, and stimulate applied research on heritage languages. Notwithstanding the increased financial support and legitimacy given to non-official languages by multiculturalism, there are enormous pressures working against the institutionalization of third-language teaching. Language education, like education in general, falls within the jurisdiction of the provinces. Thus far, only Alberta, Saskatchewan and Manitoba have enabling legislation to teach heritage languages in the public school system. Consequently, the federally-supported heritage language classes are held outside school systems and do not form part of the normal school day. As several linguists have pointed out, "(t]he maintenance of multilingualism through programs which support many different pairs of bi]ingualisms would be a costly proposition if it were feasible.»19 That feasibility is itself a questionable matter, especially given that the integration of bilingual education in both American and Canadian schools most often reveals an overriding civic objective among educators of making newcomers into good law-abiding citizens, rather than retaining their ancestral languages.20 The fact remains that successive federal governments have never thrown their resources, legislation, nor the prestige of the Prime Minister's Office behind multilingualísm (or, for that matter, multiculturalism) in the way that the Trudeau government obviously did for bilingualiem.21

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Nothing demonstrates better the lop-sided relationship between the federal government's support of official and non-official language instruction than the disparity in financial support for multilingualísm and bílingualísm.22 During 1986-87, $3.83 million was spent on heritage and modern (third) language training, while over $218 million was allocated to "Official Languages in Education."23 This apparent resistance to the support of non-official languages is also reflected in the fact that the public broadcasting system, the Canadian Broadcasting Corporation, has thus far opposed the inclusion of non-official language broadcasting. The almost non-existent commitment to non-official languages in federal cultural agencies can be contrasted to the far more extensive institutionalization of multilingualism in Australia, where independent television and radio stations have existed for the non-Englishspeaking population since the early 1980x.25 The recent modest enhancement of support for activities related to non-official language retention within multiculturalism is thus indicative of a more general tendency of the treatment of ethnocultural concerns with the policy. That is, the fact that several ethnic communities have for several years pressed upon the federal government their belief that heritage language retention is a cornerstone in maintaining their cultural distinctiveness has gradually led to an increase in multiculturalism's resources and activities geared to that end. Yet the continued meagre nature of such support, especially in comparison with the federal government's support of bilingualism, reinforces the view of multiculturalism as a symbolic policy which responds to the status concerns of ethnocultural minorities. However, it does so in a manner which offers clear evidence of the non-receptive nature of the larger society, the political and administrative subordination of multiculturalism, and its relative powerlessness to bring about fundamental change in Canadian institutions. CONFRONTING RACISM Other aspects of multiculturalism policy reflect a discrepancy between implicit goals and stated strategies. This is most apparent with respect to the aim of securing equality of opportunity for ethnocultural communities in all spheres of Canadian society. The promotion of cultural as well as social, economic and political equality is often cited as the policy's paramount goa1.Ø However, what

The Symbolic Mosaic Reaffirmed /89

is explicitly offered in the original policy objectives is support for overcoming cultural barriers, as if all that is required for minorities to pass into "mainstream Canada" is the acquisition of official languages,? and in Trudeau's words, the reduction of "discrimii natory attitudes and cultural jealousies."' In the initial stages of implementing race relations programs in the Multiculturalism Directorate, the emphasis was placed on "inter-group activities and inter-culturallcross-cultural relationships.. .The assumption being that if people got to know each other better and understand their respective culture, traditions, background, they would get along better."29 The framing of issues of inequality in cultural terms was, at one level, the simple reflection of policy makers' responsiveness to pressures from white European groups prior to the influx of large numbers of non-white immigrants from the Third World. However, the tenacity of cultural prescriptions for structural problems is not easily understood in light of the shift to non-European countries as the major source of Canadian immigrants and the strengthened demands from visible minority groups for more effective anti-discrimination reforms. One would think that increased pressure from minority groups would prompt a change in the government's approach. The persistence of the policy's treatment of issues of inequality as matters in need of cultural change can best be understood as the policy's pursuit of the path of least resistance.BÓ By addressing questions of racism and the special disadvantages faced by visible minorities in cryptic terms—such as "the elimination of cross-cultural misunderstandings," the Multiculturalism Directorate did not pursue the considerably more disruptive and costly route of altering the practices and system of privileges engrained in business, labour and state institutions which serve to reproduce the class structure in an ethnically, racially stratified, and gendered form. Α discourse focussed on "cultural misunderstanding," the need for greater tolerance and harmony, and sharing of knowledge was considerably less likely to ruffle authorities in public institutions and private corporations than one which questioned systems of class inequality, managerial prerogatives and the material interests that stood to be gained from perpetuating racial and ethnic inequities. Beginning in 1984, the federal government has moved to adopt a more direct set of strategies to combat racism. Initiatives include taking preliminary steps to extend a weak form of affirmative action for visible minorities in federally regulated businesses,

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among federal contractors and in the federal public service.$' Nonetheless, the race relations programs of the multiculturalism sector continue to be imbued by cultural and attitudinal prescriptions. These are an essential underpinning of the multicultura]ism policy, not because all parties invariably agree with them, but because the resistance to framing anti-racist work in different terms has been strong. Also, state resources, particularly those allocated to the Multiculturalism Directorate to break this resistance have been weak. This point is sufficiently important to warrant elaboration by tracing the development of the most recent federal race relations initiatives. In 1981, the federal government announced that it would initiate a national anti-racist program: $1.7 million was earmarked for race relations and a Race Relations Unit was established within the Multiculturalism Directorate. The new Race Relations Unit subsidized research to determine the nature and extent of racism in Canada and initiated a public education campaign to "inform and correct misinformation about minority groups and their contributions to Canadian society." A major source for these initiatives was pressure from the now more numerous visible minority groups who began to voice their anxieties over the symbolism of a multicultural Canada which was not also conceived as multiracial. Visible minorities sought a policy which accorded them status and confronted their invisibility in Canadian official history, political institutions, corporate boardrooms, mass media and educational institutions. A second catalyst was the anticipation of a federal election to be held some time in 1984. Still in power, the Liberals saw a need to engage in a highpriSle activity which would garner the support of the growing visible minority electorate. A third factor was the commitment by then Minister of Multiculturalism, James Fleming, to address the apparent upsurge. in racial attacks, scapegoating and bigotry in Canada, whose most sensational manifestation was the reappearance of the white-sheeted, cross-burning Ku Klux Klan in Ontario and British Columbia. Fleming feared that unless appropriate measures were taken, Canada might face the type of explosive race relations witnessed in several British cities in the eruption of major confrontations between members of black communities and police during the summer of 1981. The results of a March 1982 Gallup poll commissioned by Fleming, reported that 31 per cent of Canadians "would support organizations that worked toward preserving Canada for whites only. "a° This provided additional fuel for official anxieties.

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By May of 1983, the focus of the federal government's antiracist campaign had moved to Parliament where the Special Committee on Participation of Visible Minorities was established, consisting of seven members of Parliament. The crisis tone of Fleming's speeches of the day was expunged from the Committee's terms of reference. Its task was "to identify and investigate positive examples of models of the promotion of harmonious relations between visible minority Canadians and other Canadians." During a one-month period in autumn 1983, the Commons Committee engaged in a process of consultation_ with the public. It received approximately 300 briefs and met with 130 race relations, immigrant service, visible minority, and other community groups in 10 cities across Canada. The Committee's final report was named Equality Now! It conveys the image that "Canada has, when compared with other countries, an enviable record in the area of race relations, [but one that is] flawed."85 The 80 recommendations contained in the report were grouped under six headings—social integration, employment, public policy, justice, media and education. They were presented as "one blueprint for the realization of the long-standing ideal that the circle of Canadian life should embrace all Canadians equally."36 The sheer number of recommendations contained in the report conveys the impression that a thorough overhaul of social structures is warranted and should be promoted. This illusion is soon undercut by the weak or general nature of most recommended reforms, which elude any objectively measurable evaluation. The notion that the report advocates a bold new direction for the federal government is further diluted by the listing as "recommendations" of federal programs that were ongoing and the inclusion of initiatives outside the federal government's jurisdiction or influence. The chief significance of Equality Now! is thus the envisaged change in the symbolic rather than material condition of visible minorities and the incorporation of these groups into a harmonious framework of multiculturalism within a bilingual setting. The federal government's response to Equality Now! coordinated by then Minister of Multiculturalism, David Collenette, was tabled June 20, 1984. Both the general and specific responses to the Parliamentary Committee's recommendations by the Liberal government were characterized by an emphasis on "persuasion" and "cooperation" based on a belief "in the goodwill inherent in Canadian surety."a7

92/ How Ottawa Spends The establishment and work of the Special Committee has more symbolic importance than subsequent substantive impact. Nonetheless, the Committee and its report played a stimulative role in bringing into being new employment equity programs for visible minorities within federal jurisdíctiοη.38 These programs were initiated by the Liberals but have since been implemented by the Progressive Conservatives. Equality Now! had a catalytic effect chiefly because its recommendations for such programs coincided with those made by other royal commissions and parliamentary committees and the coming into force in April 1985 of section 15 on equality rights of the Charter of Rights artd Freedoms 89 A detailed analysis of the new federal employment equity policy is beyond the scope of this chapter. However, it is important to see this policy, with its weak or non-existent provisions for enfοrcement,40 as part of the parcel of symbolic measures which give the Tory government an image of being a party of liberal conscience on race and ethnic issues without encumbering the free trade and market-driven strategies that have become its hallmark in economic policy. The primary focus of the Multicultural Sector Race Relations Directorate on education and information-sharing is also consistent with this approach to race relations. Since 1981, the Directorate (then a "unit" subsequently elevated by the Tories to a "directorate") has sponsored several conferences targetting race relations in the areas of law, mass media and municipal government. The official recognition for the need to alter public images to better accord with the multiracial nature of Canada's population is also evident in its work with the Treasury Board in preparing guidelines for the depiction of racial and ethnic minorities in government communications. In this manner, multiculturalism is responding to real concerns voiced by visible minorities about their "invisibility" in public institutions. The Directorate has also supported the efforts of organized labour in Ontario and Quebec to develop educational campaigns on racism in the workplace. It has assisted in developing cross-cultural training programs for the staff of the Toronto Children's Aid Society, police forces in Vancouver and Ottawa and immigration officers. In addition, it has provided financial support for research, audio-visual and other resource materials on race relations topics. In the latter area, there has been a decided upgrading in the quality and complexity of policy-oriented analyses of issues involving racism supported by the Multiculturalism Sector. Partic-

The Symbolic Mosaic Reaffirmed /93

ularly notable in this regard are two Toronto-based studies which provide compelling evidence of widespread systemic racial discrimination in employment.41 The policy implications of this research lent support to arguments for mandatory programs to improve employment equity. Studies of this sort represent a significant departure from the flurry of Directorate-commissioned attitudinal surveys regarding visible minorities produced during the 1970s and early 1980s. The epistemological assumptions of the earlier research located the primary source for discrimination and racial inequality in individual prejudice and cultural differences. In contrast, the more recent wave of research highlights the role of institutionalized practices in creating and perpetuating inequities among people of different racial and ethnic backgrounds. A parallel development, under the aegis of the Performing and Visual Arts (PIA) program, has been the financial assistance provided for films involving social criticism. As Dick observes, `l'he Multicultural Policy has stimulated and supported an impressive number of films that have tried to illuminate complex problems to which earlier "celebratory" films on immigration were largely oblivious."42 The research and resource material catalyzed and supported by the Multicultural Sector calls attention to ethnic and racial inequality as products of seemingly neutral institutional practices, in addition to biased attitudes. In addition, it begins to suggest the necessity for examining contradictory or conilictual interests and adversarial relationships that exist between employers and employees, established and minority workers, police and minority communities, etc. It also offers persuasive grounds for legislated and mandatory programs in order to alter patterns of racism, rather than reliance on the marshalling of "good will." In contrast, the strategies pursued by the Sector to promote institutional change aimed at eliminating rase and ethnic discrimination have not kept pace with this paradigmatic shift in understanding. Such highly vaunted projects as the police sensitivity training workshops, developed through liaison with the Canadian Association of Chiefs of Police, operate under the illusion of harmony of interests, and equality of power and influence between the police and visible minority communities. An evaluative study of these projects found that the workshops neither increased empathy nor changed the attitudes held by the two parties regarding the other,

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although they were successful in developing an understanding of cultural diversity.43 The race relations strategies pursued through multiculturalism are chiefly directed at attitudinal change backed by moral suasion rather than at the revamping of organizational practices backed by legislative authority, which a more direct assault on discrimination and inequality would entail. This weak route of courting institutional access for racial and ethnic minorities reflects the real limits of representation conceded within the state to minority groups. While immigration has bolstered the demographic and electoral weight of visible and ethnocultural minorities, the diversity of these groups in class, political and other terms hinder their capacity to mobilize and serve as a political force. The limits to the actual and potential political efficacy of the "third force" of ethnocultural minorities are reflected in the modest resources and administrative infrastructure that all federal governments, including the current one, have consistently allocated to multiculturalism. INFRASTRUCTURE AND INTEREST GROUPS In 1982, Lupul succinctly summarized the subordinate position of the federal multiculturalism bureaucracy. To him, it was captured in departmental organization charts which portrayed the Minister of State for Multiculturalism "floating like a loosely connected dirigible to one side of the Secretary of State, while the Directorate is well hidden beneath the Under Secretary of State, five assistant under secretaries and layers of other bureaucrats... With a staff of between 37 and 45 the Directorate is barely visible in a department with 3,214 members. In these circumstances, neither the Directorate nor its minister can expect to carry much clout..." The low priority assigned to multiculturalism is also evident in the modest sums allocated to the program—approximately $25 million for the 1987-88 fiscal year, or about one dollar per capita, seven cents of which is spent on bilingualism (see Table 1). Given the sawed-off support structures and insubstantial resources for program development, the 10 successive Ministers of State for Multiculturalism have understandably made little headway in realizing policy objectives in other state or mainstream

The Symbolic Mosaic Reaffirmed 1 95

Table 4.1 Budget for Mulliculturalísm and Bilingualism, Secretary of State, Government of Canada 1971-1988 (in millions of dollars) Fiscal Year 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89

(1) Total Cost of Multiculturalism

(2) Total Cost of Bilingualism

(1) As a % of (2)

1,828 3,147 6,928 6,706 7,005 5,172 6,130 7,640 9,011 11,375 14,143 13,785 20,241 26,163 22,683 23.615 25,038 24,798

78,642 73,154 92,883 114,527 93,640 166,104 234,005 224,074 190,384 191,633 195,976 267,046 290,972 321,575 333,232 327,588 376,334

2 4 7 6 7 3 3 3 5 6 7 5 7 8 7 7 7

Source: Expenditures. Public Accounts, Government o1 Canada, 1971-1987. For 1987-88.1988.89: Main Estimates, Government of Canada.

institutions. Cross-governmental impact has been forestalled by

two additional factors. With the exception of two ministers (James Fleming and the current Minister, David Crombie), ministers responsible for the policy have not been members 0f central agencies such as the Priorities and Planning Committee, situated at the apex of the cabinet structure.46 This has weakened their overall influence in the government policy process. In addition, ministers responsible for multiculturalism have often been handicapped by additional cabinet responsibilities (the Labour Ministry for John Munro, Communications for James Fleming, Amateur Sport for two Conservative ministers, Steve Paproski and Otto Jelínek, and Secretary of State for the present Minister, David Crοmbie).46 The 1980s have seen a number of developments which have increased the political and administrative visibility of multiculturalism. The concept of multiculturalism became entrenched in the 1982 Canadian Charter of Rights and Freedoms whose Section 27 reads, "This Charter shall be interpreted in a manner consistent with the preservation and enhancement of the multicultural heritage of Canadians." As the president of the Ethnocultural Council

961 How Ottawa Spends of Canada cautioned, however, "without status in government and publicly appointed bodies (multicultm·alism) Ø degenerate to mere window dressing."47 In January 1985, the Multicultural Directorate was upgraded to a "Sector." It was reorganized into a Policy, Research and Analysis Unit and a Programming Branch and provided with an additional person in senior management through the appointment of an Assistant Under Secretary of State. In June 1985, a sevenperson Standing Committee on Multiculturalism was created in the House of Commons with a mandate to "ensure that existing and new programs of federal departments and agencies reflect sensitivity to multicultural concerns and the multiculturalImultiracial reality of the nation." In June 1987, the Standing Committee submitted its first report to Parliament, entitled Multiculturalism: Building the Canadian Mosaic. The central concern voiced in Building the Canadian Mosaic is the peripheral acceptance of multiculturalism in government policies and institutions. The Standing Committee's report is farreaching. It recommends the advancement of a two-pronged focus for multiculturalism on the amelioration of inequality and recognition of diverse ethnocultures in the mainstream Canadian institutions. These goals would be promoted through the provision of a legislative base for multiculturalism and the creation of new and strengthened infrastructure. The Standing Committee urged creation of a separate department, providing a clearer line of authority for coordinating policy. It recommended that the new Department of Multiculturalism have jurisdiction over a wide range of programs and responsibilities currently administered under the Secretary of State, Employment and Immigration, and the Department of Communications. The latter recommendation is the most extensive in the report in that it would transfer responsibility for the major Canadian cultural agencies, including the Canada Council, to the new Department of Multiculturalism. In terms of resources, the implementation of this recommendation would also provide the proposed Department with an overall budget of $332 million, in comparison with the current $25 million. The Standing Committee report also recommended the establishment of a commissioner of multiculturalism, with powers similar to those of the Commissioner of Official Languages and with an arm's length relationship with government, who could monitor the implementation of programs and delivery of services by departments. The Commissioner would provide the needed continuity to a policy arena through which ministers are circulated with light-

The Symbolic Mosaic Reaffirmed 1 97

ring speed. These proposals and others recommended by the Standing Committee (such as a cabinet committee on multiculturalism, the appointment of an advisor to the Prime Minister, the appointment of a parliamentary secretary to the Minister of State for Multiculturalism, and a 25 per cent annual increase in budget) could collectively indicate the federal government's firm commitment to multiculturalism and allow Multicultural Sector officials to communicate with officials from other departments from a position of greater strength than is currently possible. In responding to the Standing Committee's report, the government rejected the proposal to establish a separate Department of Multiculturalism on the grounds that "the creation of such a department would lead to the `ghettoization' of multiculturalism issues in one part of government." The government also did not accept the Standing Committee's recommendation for the creation of a commissioner for multiculturalism, arguing that the creation of such a commissioner would duplicate the role currently played by the Canadian Human Rights Commission in dealing with issues of discrimination. The government's response to the report is significantly silent on the recommendations urging the transfer to multiculturalism of responsibility for cultural agencies and programs concerned with social and economic integration, currently administered by other departments and agencies. While rejecting most of the structural reforms which would provide added muscle in incorporating representation of ethnocultural interests in federal institutions, the current government has responded to pressures from ethnocultural interests by introducing Rill C-93, the Multiculturalism Act. Α similar bill (Βí11 C48) had been introduced in June of 1984 by then Liberal Minister David Collenette. It died on the order paper soon after and was then the subject of fairly extensive consultations by the first Tory Minster, Jack Murta, in 1984. The significance of the proposed legislation is that it provides for the first time a legislated basis for the existing multiculturalism policy and programs. However, there is no provision for new support or implementation structures in the Act beyond a proposed secretariat within the Multiculturalism Sector. The absence of such structures have been criticized by ethnic community spokespersons. The latter have generally greeted Rill C-93 as a glittering symbolic gesture. Through it, the government is seen as acknowledging ethnocultural diversity but also as confirming the status of multiculturalism as a marginal state policy.49

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For the current Minister, David Crombie, who also serves as Secretary of State, the Canadian Multiculturalism Act is one of a trinity of acts he is introducing (joining an amended Citizenship Act and an amended Official Languages Act), to provide a renewed sense of Canadian identity based on "equality, diversity and community." Although some ministers have championed causes (such as human rights in the Soviet Union for Norman Cafik, and racism in Canada for James Fleming), the chief role traditionally played by the Minister has been as spokesperson for the minority ethnocultural communities. This role has been confirmed by the large number of speaking engagements ministers are expected to fulfil in honouring different communities' national holidays, independence days, and other occasions of political or cultural significance. According to James Fleming, a former Liberal Minister: The top never gave multiculturalism a chance to develop as a coherent policy. They either used it as a cabinet position while asking you to focus on other responsibilities or wanted the revolving door of ministers simply to act as PR, types and cheque-givers to organized ethnic grουρs.Ø While formidable obstacles have hindered the adoption of an advocacy role by either the Minister or the Multiculturalism Sector, the latter has supported ethnic (and particularly umbrella) organizations in their advocacy or service delivery activities. In 1986-87, fmancíal support was provided for sustaining the operations of approximately 50 organizations, with priority given to organizations representing visible minorities. As case studies have documented, however, the control exercised in the administration of grants has frequently served to depoliticize and constrain the activities of funded organizations. Funding through multiculturalism has also bolstered community factions that enjoyed little popular support in their communities, yet have been perceived as moderate, responsible and therefore acceptable to the funding agency.b1 In this context, a welcome funding reform for community-based and immigrant service agencies was announced by David Crombie in September 1987. The Citizenship and Community Participation Program offers a multi-year funding formula which should allow community groups to expend more energy in the delivery of services and less in the garnering and accounting for resources. While the multiculturalism policy itself was the product of popular pressure from ethnocultural communities, this pressure

The Symbolic Mosaic Reaffirmed / 99

has since become organized by the state to an unusual degree. Since 1973, the formal advisory body to the Minister representing ethnocultural communities has been the Canadian Consultative Council on Multiculturalism (CCCM). The number of council members has recently been reduced from 100 to 30, and the Council renamed the Canadian Multicultural Council (CMC). As a past member of the CCCM acknowledged, the major criterion for appointment to this body has been political partisanship rather than awareness of the issues and concerns of ethnocultural communities or involvement in community and race relatíοns. The Council has consequently long been regarded with scepticism by both multiculturalism administrators and ethnocultural bodies. It is seen as a poor mechanism for liaison between government and ethnic groups and appears to have had a negligible impact on the direction of policy and programming. Nevertheless, the proposed Multiculturalism Act recognizes the reality of the Council, while ignoring recent recommendations made by the Standing Committee which would aid in increasing the CMC's credibility and accountability to ethnocultural communities. Since 1981, the Multiculturalism Sector has provided ongoing operational support to the Ethnocultural Council of Canada. It is a remarkable federation in the sense that its 30Ød member organization represent both established European communities and more recent visible minority communities. The Council has usurped the CMC's role in advising the Minister on the views of ethnocultural groups. Its influence stems from the Council's stable resources, its legitimacy based on direct representation from national organizations and the serious and sustained attention it has given to multicultural policy and programs. An increasingly politicized grouping sharing distinct economic and political objectives is composed of those immigrant and visible minority women who are disproportionately found in low-paying, sex-segregated jobs in the service sector and garment trades, and who are barred from access to subsidies for government language training and skills upgrading programs. Groups such as the National Organization of Immigrant and Visible Minority Women are increasingly vocal, requesting support and action from state agencies, including the Multicultural Sector. One of the more easily defined constituencies for multicultural programs is that made up by scholars working in the general area of ethnic (and increasingly, race relations) studies. Two of the government's three multicultural advisory bodies—the Canadian

100 / How Ottawa Spends Ethnic Studies Advisory Committee, and the Ethnic History Advisory Panel, are composed of academics. In recent years, the quantity of historical and social scientific work in ethnic studies has been prodigious. This is a result of the stimulative role played by these committees and the legitimacy and ØØ support provided by the policy to a previously marginal area of study. The infusion of financial and administrative resources into ethnic studies has been so substantial as to prompt one historian to refer to this field of scholarship as "the child of the federal government's official multículturalíst policy."5θ The opportunities for scholarly exchange and publishing in the area have been greatly assisted through federal support of the Canadian Ethnic Studies Association and its official journal, Canadian Ethnic Studies, as well as 15 academic chairs in ethnic studies in universities across the country. Multiculturalism has affected not only the level of scholarly activity in ethnic studies, but also the guiding concepts, themes and concerns of this work. The integrative underpinnings of multiculturalism, the attempt to project an ordered and harmonious mosaic, are clearly discernible in the `official fib-pietism of the.. .Canadian Family Tree volume"54 and within the guiding problematic of more scholarly commissioned works such as Cultural Boundaries and the Cohesion of Canα α.55 The most visible and direct contribution of the Ethnic History Advisory Panel is the Generations series of immigrant group histories. It projects a vision of immigrants as standard-bearers of formal and ossified national cultures, rather than participants in and shapers of popular culture.δδ Social scientific research on ethnicity has primarily involved descriptive, single-community studies, divorced from a comparative framework or larger theoretical questions. Celebratory themes have predominated and there is a dearth of work on racism, labour issues, the political economy of immigration, exploitation within communities and the experiences of ethnic and immigrant women. The avoidance of controversial themes and the static depiction of culture as the sum total of family, religion, formal organizations and language can readily be seen to dovetail with the emphasis in official multiculturalism on the positive contributions of immigrant groups to Canadian society. A symbiotic relationship has developed between the "ethnic academy" and the Multiculturalism Sector, with each serving to legitimate the other. Major policy documents such as the Equality Now! report have been undertaken in the virtual absence of independent and systematic research. The need for sound and critical research to

The Symbolic Mosaic Reaffirmed 1101

guide policy and program development is heightened by the programmatic shift in the policy's focus from that of cultural retention to a growing number of social and economic objectives. A deliberate effort is being made, both organizationally and in the symbolic realm, to "mainstream multiculturalism," so as to broaden its relevance and appeal beyond the one-third of Canadians who come from non-French, non-English, non-Native backgrounds to Canadian society as a whole. The federal-provincial conference of ministers involved in multiculturalism held in May 1985 marked the first concerted federal effort to establish horizontal networks which would facilitate coordinated institutional change. Similarly, the Sector has provided seed money to assist the Federation of Canadian Municipalities in holding meetings on multiculturalism and developing race relations guidelines for municipalities. The Multicultural Sector's lead role in federal race relations strategies and its provision of assistance to immigrant women and organized labour are signs of a move towards a greater advocacy role in both state institutions and the larger society. The shift from themes and strategies which ignored or sublimated divisive social issues such as ethnic inequality and racism, to ones which incorporate them, provides evidence of both the policy's ability to adapt and be responsive to a shifting constellation of ethnocultural concerns and its conditional and unstable legitimacy. In this sense, the role of official multiculturalism in the ideolοgical realm is not that of mere indoctrination by ruling elites of a false ethnocultural reality.57 In fact, the conceptualization of multiculturalism as the dominant ideology does not appear to be an accurate one, especially in light of the aggressive efforts made by multiculturalism ministers during the 1980s to sell multiculturalism to the dominant class. Activities which fall under this rubric include the submission to the Macdonald Commission of a brief identifying the economic benefits of multiculturalism and multilingualism in international trade and maiden consultations with business associations such as the Canadian Chamber of Commerce and the Canadian Manufacturers' Association. These consultations led to a slick conference in April 1986 with the theme, "Multiculturalism Means Business," where a keynote address was given by Prime Minister Mulroney. The most aggressive pro-business proposals made by a minister were those of Otto Jelinek, Crombie's predecessor. Under Jelinek's direction, a feasibility study was prepared for the establishment of a "Multicultural Institute for Business Management,"

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whose purpose would be to develop "the human resources readily available within the Canadian multicultural milieu to strengthen Canada's presence in international finance, trade and marketing relations." Jelinek's bold-faced attempts to explicitly wed multiculturalism to capitalist morality, combined with his threat to fund only those groups whose activities showed an "investment in Canada," upset immigrant service and community groups, already struggling on shoestring budgets and facing increased demands for their servíces.59 It has also been suggested that proposals to turn culture and language into a commodity for foreign markets could sell to the profit-minded, yet would fail to mobilize the sort of sentiments that have sustained support for the multiculturalism policy.59 The new focus on the economy and concerns of ethnic small business has, however, won the enthusiastic support of the most organized segment of ethnic communities—namely, that composed of professionals and entrepreneurs. For instance, the Ethnocultural Council of Canada has thrown its full support behind the new business-oriented aρρroach.δD The emergent theme in multiculturalism which affirms the positive nexus between ethnicity and profit and favours the material interests of more privileged class segments of ethnic communities sits uneasily beside current federal efforts to reduce ethnic inequality and racism. Concerned minorities might legitimately inquire whether federal officials will be willing to jettison the policy's role in combatting racism, particularly that type of racism fostered by the exploitation of cheap immigrant and minority labour, in order to win the support of business for multiculturalism. Stated otherwise, should the Multiculturalism Sector, in its new advocacy role, be asking how ethnicity makes business practices more emdent or how business practices could best be altered to reduce ethnic and racial inequality? In the process 0f abandoning the older, more familiar multicultural formula for national unity (through cultural retention and sharing) and articulating the new formula (cultural diversity as both good business and the means for reducing ethnic inequality), the heterogeneity and contradictions in class interests within the policy become increasingly salient. Directions taken by David Crombie show some sensitivity to the need to balance programs which are geared to different and conflicting class segments of ethnocultural communities. Thus, while abandoning the proposal to establish a Multiculturalism Institute for Business, he has worked with the Minister of State for Small Business and Tourism and the Federal Business Development Bank

The Symbolic Mosaic Reaffirmed 1103

in the promotion of "Small Business Week." He has taken other steps to highlight the contributions of ethnic entrepreneurs and improve their access to services of government and the larger business community. At the same time, he has responded to the needs of the most economically and socially disadvantaged ethnic constituencies by doubling the funding to projects addressing particular needs and concerns of immigrant women—e.g., integration, orientation counselling, institutional access. Funding for such projects has gone from almost $1 million in 1984-85 to $2.3 million in 198687. Far greater political will and resources are required to support immigrant, and especially female immigrant workers, given the highly adverse impact that free trade is projected to have in terms of job loss for this segment of the labour force. One possibility in reconciling conflicting interests within ethnic communities would involve tying enhanced support to ethnic-owned small business to language and skills-upgrading programs in the workplace. THE TORY RECORD WITHIN MULTICULTURALISM— CAUTIOUS CONTINUITY Multiculturalism as a Canadian state policy was initiated by the Trudeau government and became closely identified with the Liberal party. The fear shared by many ethnocultural minority groups that the Progressive Conservatives, a party with a strong traditional base of Anglo-Celtic support, would abandon the policy has been allayed by the Tory record of backing multiculturalism since they took federal office in 1984. In fact, one striking feature of multiculturalism under the Tories is that its status and structural aspects have been strengthened. Although most innovations (for example, the new MuIticuIturaYism Act, the upgrading of the Multiculturalism Directorate to a Sector, and the creation of the Parliamentary Standing Committee on Multiculturalism and the Race Relations Directorate) can be rooted in the initiatives taken by the preceding Liberal government, the fact remains that it was the Progressive Conservatives who have implemented these reforms. Most of the developments in multicultural policy under the Tories have been relatively modest in scope and expenditure of resources. More drastic structural reforms designed to "multiculturalize" Canadian state and private institutions, such as the Standing Committee's recommendation to place the major Canadian cultural agencies under the jurisdiction of a proposed new Multiculturalism Department, have been summarily rejected by the Tories. This has confirmed the view of multiculturalism as a policy serving chiefly to affirm the existence and contributions of ethnocultural minorities to Canadian society in the symbolic realm.

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Organizations such as the Ethnocultural Council of Canada have repeatedly pressed for such symbolic gestures as the appointment of a greater number of "ethnics" to government boards and commissions, which would convey that members of non-British, non-French, non-Native communities are equally entitled to power and influence within Canadian institutions. This demonstrates that such symbolic challenges to the "two nation" and "charter group" imagery of Canada are of major importance to the small wellinformed publics which have represented ethnocultural minority interests, and whose efforts at diplomatic persuasion have in large part served to bring about the recent changes in multiculturalism policy and infrastructure. Given the variegated nature of ethnic communal interests within Canada and the meagre resources provided to multiculturalism, the policy has never responded to the material interests of ethnic communities in Canada, except in a piecemeal fashion. Indeed, it is incapable of responding except in such a manner. Given the low price tag of symbolic reforms, it is likely that the policy will continue to redress the absence of symbolic representation of ethnocultural and visible minorities within public and private institutions, which is the one concern shared by such otherwise diverse groups. Yet ethnocultural community spokespersons and organizations are increasingly impatient with a policy that offers declarations of principle with few material provisions. This is most apparent in the lack of resolution to the issue of redress for Japanese Canadians for their wartime internment, dispossession and repatriation by the Canadian government. A protracted process of discussions and negotiations between the Minister of Multiculturalism and the National Association of Japanese Canadians has as yet failed to agree over what would constitute a fair redress package si It is important to acknowledge that broader structural limits exist for the augmentation of ØØ and administrative resources for Multiculturalism. The Mulroney government's economic policy of free trade with the U.S. threatens to "harmonize" Canada's social programs with those of the U.S. Furthermore, the government's commitment to reduction of the deficit sets limits to the capacity of multiculturalism to expand and to bring about fundamental change in responding to ethnocultural concerns. Within these limits, any Minister of Multiculturalism must marshal legislation and resources carefully in order to forge a policy which is both coherent and capable of being sustained by ethnic consent which cuts across class lines.

The Symbolic Mosaic Reaffirmed l 105 Notes *

The author gratefully acknowledges the fmαηcial assistance provided by the Faculty of Graduate Studies and Research at Carleton University and the research assistance provided by Gillian Creese. This paper benefited from discussions with Frances Abele, Stephen Brathwaite, Laverne Lewycky, Robert Storey and Judy Young. I am also grateful for the cooperation of the Multiculturalism Sector in making information readily available. An earlier version of this paper was read at the International Symposium on Cultural Pluralism, Montreal, October 19-20, 1985.

1.

Monica Armour, "Participants' Report on the Participation of Visible Minorities in Canadian Society," Currents, Vol. 2, No. 1, 1984, pp. 14-15; Canadian Ethnocultural Council, "Getting Our Act Together: Options For Comprehensive Multiculturalism," January 1988.

2.

Evelyn Kallen, "Multiculturalism: Ideology, Policy and Reality,"Journal of Canadian Studies, Vol. 17, Nο.1,1982, pp. 51-63; Ronald Wardhaugh, Language and Nationhood (Vancouver: New Star Books, 1984), pp. 198-218; Karl Peter, "The Myth of Multiculturalism and Other Political Fables," in J. Dahlie and T. Fernando (eds.), Ethnicity, Power and Politics in Canada (Toronto: Methuen, 1981), pp. 56-67; Kogila Moodley, "Canadian Multiculturalism as Ideology," Ethnic and Racial Studies, Vol. 6, Nο. 3, 1983, pp. 320331; Brian M. Bullivant, "Multiculturalism—Pluralist Orthodoxy or Ethnic Hegemony," Canadian Ethnic Studies, Vol. 13, No. 2, 1981, pp. 1-22; "Searching for an Ideology of Pluralism: Some Results of a Cross-national Survey," Ethnic and Racial Studies, Vol. 3, No. 2, 1980, pp. 465474; Howard Brotz, "Multiculturalism in Canada: A Muddle," Canadian Public Policy, Vol. 6, No. 1, 1980, pp. 41-46; Lance W. Roberts and Rodney A. Clifton, "Exploring the Ideology of Canadian Multiculturalism," Canadian Public Policy, Vol. 8, No. 1, 1982, pp. 88-94.

3.

Roberts and Clifton, op. cit., p. 54.

4.

Raymond Breton, "The Production and Allocation of Symbolic Resources: An Analysis of the Linguistic and Ethnocultural Fields in Canada," Canadian Review of Sociology and Anthropology, Vol. 21, No. 2, 1984, pp. 123-144.

106 / How Ottawa Spends 5.

Breton, Ibid., p. 134.

6.

Manly R. Lupul, "The Political Implementation of Multiculturalism," Journal of Canadian Studies, Vol. 17, Nο. 1, 1982, pp. 93-102; Guy Rocher, "Multiculturalism: The Doubts of a Francophone," in Multiculturalism As State Policy: Conference Report (Ottawa: Supply and Services Canada, 1976), pp. 47-53. Such expressed concerns among Francophones ought not to be exaggerated given the protections afforded to the French language by Bill 101 in Quebec, and the Official Languages Act nation-wide, as well as their real political power in overall numbers and in their province.

7.

Ernie Epp, "A Living Diversity: Multiculturalism for All. The New Democratic program to achieve a Multicultural Canada," the New Democratic Party's response to the report of the Standing Committee on multiculturalism, June 1987.

8.

House of Commons Debates, Official Report, Vol. 115, No. 187, 3rd Session, 28th Parliament, October 8, 1971.

9.

In its first report to the House of Commons, the Standing Committee on Multiculturalism argued on the basis of briefs received from several ethnocultural and multicultural organizations, that relating the two orientations—equality and culture—to an assumed division between "visible" and "nonvisible" minority groups, is far too simplistic. It argued that these two orientations are of shared concern among both visible and European minorities and compatible within one policy. Standing Committee on Multiculturalism, Multiculturalism: Building the Canadian Mosaic (Ottawa: Queen's Printer, June 1987).

10.

Royal Commission on Bilingualism and Biculturalism, Book IV: The Cultural Contribution of the Other Ethnic Groups (Ottawa: Information Canada, 1970), pp. 137-145.

11.

See Kallen, op. cit., p. 55, and Lupul, op. cit., p. 98.

12.

The percentage of funds administered through the multicultural grants programs allocated to language retention was calculated from the Minister of State for Multiculturalism News Releases. For 1973 and 1974, three per cent of multiculturalism grants went to language retention. For 1975, the figure was four per cent.

The Symbolic Mosaic Reaffirmed /107

13.

Multiculturalism Directorate, Internal Document, September 1984.

14.

Multiculturalism Directorate, IØ.

15.

"Heritage languages" is the term given to languages other than the official languages and aboriginal languages. They are also referred to as ancestral languages.

16.

Multiculturalism Directorate, IØ. The relationship among language, cultural maintenance and group identity is a matter of debate among social scientists. In a recent book [Language, Society and Identity (Don Mills: Oxford University Press, 1985)], John Edwards argues that ethnocultural groups have demonstrated capacity to survive language loss.

17.

The Secretary of State Annual Reports indicate that the proportions of Multiculturalism grants and contributions allocated to the teaching of heritage languages for 1981-1984 are as follows: 1981 - 19 per cent, 1982 - 18 per cent, 1983 - 17 per cent, 1984 - 23 per cent.

18.

Canadian Ethnocultural Council, "The Other Canadian Languages: A Report on the Status of Heritage Languages Across Canada," January 1988, p. 4.

19.

Wardhaugh, op. cit., p. 206.

20.

Wardhaugh, op. cit., pp. 207-208.

21.

Lupul, op. cit., p. 96.

22.

Lupul, op. cit., p. 98.

23.

Canada, Secretary of State, Main Estimates, 1987-1988.

24.

An exception exists in the Northwest Territories and Yukon, where CBC radio includes a considerable (and increasing) amount of broadcasting in Inuktitut. The federal government, through the Department of Communications and the Secretary of State also funds the Inuit Broadcasting Corporation, which produces and airs (using CBC hardware) 10 hours of television in Inuktitut a week. During the last few years, there has been a struggle over official language status for French in the NWT. Native Peoples want their languages,

1081 How Ottawa Spends not French, to have official status, and they are making headway. I would like to thank Frances Abele for bringing this information to my attention. 25.

James Jupp, "The Politics of Multiculturalism," Australian Quarterly, Vol. 58, No. 1, Autumn 1986, p. 97.

26.

See Jean Burnet, "The Policy of Multiculturalism within a Bilingual Framework: A Stock-taking," Canadian Ethnw Studies, Vol. 10, No. 2, 1978, p. 110, and Standing Committee on Multiculturalism, op. cit., p. 22.

27.

Peter, op. cit., p. 65.

28.

House of Commons, October 8, 1971.

29.

Gilbert Η. Scott, Director-General, Multiculturalism, "Race Relations and Public Policy—Uncharted Course," Notes for an address, Hamilton, June 8, 1987.

30.

Peter J. Usher, "Are We Defending a Culture or a Mode of Production?" Paper presented to the Canadian Sociology and Anthropology Association meetings, Ottawa, June 1982, p. 10.

31.

Multiculturalism Canada, Equality Now! Progress Report, March 1986, pp. 7-9.

32.

Canada, Minister of State, Multiculturalism, "Race Relations and the Law," Report of a Symposium held in Vancouver, April 1982 (Supply and Services Canada, 1983).

33.

Monica Armour, op. cit., p. 11.

34.

Globe and Mail, [Toronto], July 13, 1982.

35.

Special Parliamentary Committee on Visible Minorities in Canadian Society (heretofore SPCVM), Equality Now! House of Commons, Issue No. 4, March 8, 1984.

36.

SPCVM, op. cit., p. 2

37.

Government of Canada, "Response of the Government of Canada to Equality Now! (Supply and Services Canada, 1984). In the preface to the federal government's response,

The Symbolic Mosaic Reaffirmed! 109 David Cοllenette writes, "Firmly believing in the goodwill inherent in Canadian society and mindful of the experiences of other countries, the federal response has, as its central theme, a persuasive rather than a coercive approach," p. v. 38.

In 1984, visible minorities were added to the list of target groups which are beneficiaries of the Treasury Board Guidelines on Affirmative Action in the Public Service. And in June 1986 Bill C-62, the Employment Equity Act, became law. It provides for the establishment of employment equity programs for four designated groups, including visible minorities, in corporations under federal jurisdiction.

39.

The Royal Commission on Equality in Employment (the Abella Commission), established in the summer of 1983, reported in October 1984 soon after the Tories took power. Its recommendations for employment equity for racial and ethnic groups, women, Native Peoples and the disabled resulted in Bill C-62. The Parliamentary Committee on Equality Rights, struck to investigate the implications of equality rights under the new Charter, also called on the government to strengthen its employment equity provisions.

40.

The employment equity legislation lacks specific goals and timetables, systematic monitoring mechanisms, or sanctions for non-compliance. In response to the announcement of the Employment Equity Program on March 8, 1985, the Canadian Ethnocultural Council remarked: The principles.., enunciated by the government.. .are laudable, but the programs do not sufficiently back up the intentions...To go ahead with the programs as they are currently proposed can result in a situation where, by 1988 or 1989, the Employment Equity Program will be deemed to be a failure. The promises of the government in this regard will be unkept. Canadian Ethnocultural Council, "Towards Employment Equity: An Economic Benefit to Canada," Brief to the Legislative Committee on Bill C-62, December 17, 1985.

41.

Frances Henry and Effie Ginzberg, Who Gets the Work? (Toronto: The Urban Alliance on Race Relations and the Social Planning Council of Metropolitan Toronto, January 1985); Brenda Billingsley and Leon Muszynslá, No Discrimination Here? (Toronto: The Urban Alliance on Race Rela-

1101 How Ottawa Spends lions and the Social Planning Council of Metropolitan Toronto, May 1985). 42.

Ronald S. Dick, "Minorítíes and the Canadian Visual Media," in N. Nevitte and A. Kornberg (eds.), Minorities and the Canadian State (Oakville: Mosaic Press, 1985).

43.

Charles S. Ungerleider, "Police Intercultural Education: Promoting Understanding and Empathy Between Police and Ethnic Communities," Canadian Ethnic Studies, Vol. 17, No. 1, 1985, pp. 51-66.

44.

Lupul, op. cit., p. 95.

45.

Lupul, op. cit., p. 96.

46.

Lupul, op. cit., p. 95. (Editor's note: David Crombie retired from federal politics in late winter 1988. He was replaced as Minister by Lucien Bouchard.)

47.

Council Newsletter, "President's Message," Vol. 2, Nο. 3, September 1982, p. 1.

48.

Department of the Secretary of State, "Response to the Standing Committee on Multiculturalism," December 1987.

49.

"Multiculturalism Bill Gets Cool Welcome," Globe and Mail, [Toronto], December 2, 1987.

50.

Toronto Star, August 13, 1985.

51.

Moore, op. cit.; Stasiulis, op. cit., pp. 278-300.

52.

Lupul, op. cit., p. 101.

53.

Bruno Ramírez, "Ethnic Studies and Working-Class History," Labour/Le Travail, Vol. 19, Spring 1987, p. 45.

55.

R. Breton, J.G. Reitz and V.F. Valentine, (eds.), Cultural Boundaries and the Cohesion of Canada (Montreal: Institute for Research on Public Policy, 1980).

56.

Robert Perin, "Clio as an Ethnic: The Third Force in Canadian Historiography," Canadian Historical Review, Vol. 44, No. 4,1983, pp. 441-467. Robert Harney similarly observes,

The Symbolic Mosaic Reaffirmed /111

"The government has seen the (Generations) series since the late 1960s as a linchpin of the effort to justify and make popular a federal multicultural policy. It is a very heavy civic burden to place on 20 books and their authors." Harney, op. cit., p. 86. 57.

Bullivant, op. cit., p. 16.

58.

"Multicultural Groups Feel Threatened," Globe and Mail, [Toronto], April 11, 1986.

59.

Moodley, op. cit., pp. 329-330.

60.

"CEC Responds to Throne Speech and Economic Statement," Ethno Canada (Formerly Council Newsletter), Vol. 4, No. 2, December 1984, p. 2.

61.

In March 1987, the National Association of Japanese Canadians rejected the latest offer made by David Crombie. The proposed redress package included an official acknowledgement of the mistreatment accorded to the Japanese in Canada, and a willingness to discuss the federal government's endowment of a $12 million foundation to assist and redress legitimate moral claims of the Japanese Canadians and their communities. During the fall of 1987, the Tories also tabled Bill C-77, a new Emergencies Act, which would replace the War Measures Act and whose intent is to safeguard against the recurrence of the kind of mistreatment suffered by Japanese Canadians during and following World War II.

CHAPTER 5 PLUS QUE ÇA CHANGE ... NORTHERN AND NATIVE POLICY Frances Abele and Katherine A. Graham

INTRODUCTION This is the final chapter in a trilogy. In two previous issues of How Ottawa Spends, we have analysed the Progressive Conservative government record in the fields of northern and Native policy.1 In this chapter, we use our earlier reviews of government initiatives since 1984 and our assessment of developments since last year's How Ottawa Spends went to press, as a starting point to examine the challenges and prerequisites associated with effecting real change in this policy field. Our intention is not to rehash previous analysis but to move the debate forward as the next federal election approaches. The massive Conservative majority elected in 1984 represented a unique opportunity for a committed government to use its strength in Parliament and its initial leverage with provincial governments to resolve long-standing problems in northern and Native policy. This would be reasonable to expect even given the generally low ranking of these issues in the overall government agenda. A government highlighting `big picture" issues, such as free trade and tax reform, could presumably slide significant changes in northern and Native policies and programs through as good works, using its large majority. In the early years of the Conservative government, there were strong indications that the Tories had recognized the opportunity for a fresh start and the need (in fairness and in the interests of long-term economy) for a radical realignment of federal policy towards both the territorial north and Native peoples. There has been progress in northern affairs, but on the whole, early expectations have not been fulfilled. Most seriously, the federal Cabinet has abrogated responsibility for leadership in Aboriginal affairs. Since the conclusion of the First Ministers' Conferences (FMC) on Constitutional Aborig113

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final Matters in April 1987, it has been clear that traditional, assimílationist views dominate Cabinet's stance and that possibilities for change will be constrained in the name of cutting costs. Progress towards more democratic government for the citizens 0f Canada's two territories has been possible in this situation fir a variety of practical reasons which we detail below. The most dramatic development in this regard has been the adoption of a new northern policy by Cabinet. Even with respect to northern policy, however, Cabinet's perspective on Aboriginal matters may in the end undercut the process of political development. Our central purpose is to demonstrate that opportunities for meaningful change are still present, despite many constraints. To develop any agenda for change, it is necessary to understand the key outstanding issues pertaining to northern and Native policy. It is equally important to identify the needs and interests of different actors inside and outside government as they confront the issues. The next two sections of this chapter deal with these two questions as a prelude to consideration of an agenda for change and a possible new approach which would permit the federal government to sustain progress in this policy area by exerting leadership. Before moving to this discussion, it is important to highlight the ways in which northern and Native policy are related. The most obvious connection between the two policy fields is that both are the primary responsibility of the Minister of Indian Affairs and Northern Development. The contradictions in the Minister's double mandate have long been evident: federal interest in northern development has frequently collided with the Minister's so-called "trust relationship" with Aboriginal Peoples, in the north and elsewhere in the country. For the current Minister, William McKnight, the contradictions are heightened by his additional responsibility for the Western Economic Diversification Fund.2 Within the Department of Indian Affairs and Northern Development (DIAND), the contradiction has been given institutional expression. Under different names, DIAND has always had an Indian Affairs and a Northern Development branch, with each operating somewhat autonomously. There is also, now, a division of responsibility in Cabinet, with the appointment of a new Minister of State for Indian Affairs, Bernard Valcourt. Mr. Valcourt has been assigned day-to-day responsibility for "routine" Indian affairs policy, with Mr. McKnight retaining overall authority for

Plus Que Ça Change/115

major policy questions with respect to both northern and Native policy. Two other kinds of connections between northern and Native policy should be noted. First, constitutional development and political change for Canada's two northern territories are inextricably bound up with questions of aboriginal rights and Native land claims. In the Yukon, Native people make up approximately 30 per cent of the permanent population, while in the NWT the balance ranges from nearly 50 per cent Native in the west to 85-90 per cent in the Inuit lands of the east. For demographic reasons alone, the Minister cannot promote the political and economic development of the territorial north without taking aboriginal interests consistently into account. Finally, in both policy areas, there are similar constraints. Progress towards self-determination for Native Peoples in the North and in southern Canada depends upon the capacity of the federal government to persuade provincial governments to change their procedures and to make concessions, while all federal departments with the capacity to impinge upon this policy field must be organized to meet consistent policy objectives. In terms of practical politics, what is required from these other actors to achieve change is somewhat different for Aboriginal affairs and northern political development; but there is also a significant degree of overlap. THE KEY ISSUES In broad terms, three major sets of issues are central to the development of both northern and Native policy in Canada. The first set concerns federal government obligations to Canada's northern and Native Peoples and the government's apparent incapacity to meet some of these obligations. The second set relates to the general question of governance: determination of the appropriate authority, responsibilities and the process of governing in the northern territories and among Native Peoples. The issue of governance concerns what kind of role will be negotiated for northern and Native governments and also the capacity or resources that they will have to carry out their responsibilities. The final cluster of issues are those arising in "national" policy fields—defence, the environment, and particularly non-renewable resource development—which affect northerners or Native Peoples profoundly but which are often resolved without consideration of their impact upon either Native Peoples or the North. Each of these three broad issue areas will be discussed in turn.

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Federal Obligations Historically and in law, the federal government has a variety of obligations to provide services and support to the two northern territories and to Canada's Native Peoples. Treaties and comprehensive claims agreements, the Indian Act, federal legislation respecting the Northwest Territories and Yukon Territory, and more specific acts of Parliament, such as that which establishes self-government for the Cree of northern Quebec, are the basis for federal commitments. The federal record in meeting these commitments since 1984 has been uneven at best. For example, an independent auditor's report found that DIAND employed questionable accounting practices and underfunded Manitoba Indian bands in the mid-1980s.3 The Cree-Naskapi Commission, reporting its findings in 1986, was highly critical of the federal government's failure to live up to its obligations under the James Bay and Northern Quebec Agreement and the Cree self-government legislation pertaining to the Cree of northern Quebec. Despite a creative political struggle by the Lubicon Cree, and a thorough review by Crombie-appointee Davie Fulton, federal treaty obligations have not been honoured and a bloody-minded Alberta government has been permitted to preside over the destruction of the land upon which the 450Ød Lubicon depend for their survival.4 Similarly, there has been no resolution of several other outstanding disputes over Native rights in southern Canada. Finally, 1987 saw shock and dismay in the Indian community as the federal government announced that it was capping expenditures for support of Indian post-secondary education.5 There is ample evidence of a failure of the federal government to ensure the well-being of Native societies in Canada, and general evidence recently of federal incapacity to discharge existing responsibilities which has increased Native Peoples' mistrust of federal motivations. This, in turn, has had a detrimental influence on progress towards dealing with broader issues of governance. Unresolved Questions of Governance The challenge of reaching consensus on the authority, responsibilities, structures and process of governing the two northern territories and communities of Native Peoples elsewhere in Canada is formidable, to say the least. Early in its mandate, the Conservative government opened a number of avenues for change in this area.

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With respect specifically to Indian peoples, there was the possibility of overhauling the India= Act. Indeed, the government did move quickly to alter the Act to remove discriminatory provisions affecting those who lost status through marriage or for various other reasons. However, the notion of using a complete overhaul of the Indian Act as a basis for resolving issues of governance has taken a back seat to other initiatives in this area. There are some good reasons for this. There are differences of opinion among Indians themselves about the benefits and shortcomings of the existing Act. Also, since 1982 the federal, provincial and territorial governments and northern and Native Peoples were engaged in constitutional negotiations which promised to resolve some of the big issues of northern and Native governance. While constitutional reform was possible, legislative change was reasonably suspended. Questions of entrenchment of the right to Aboriginal selfgovernment in the Constitution, the possibility of dividing the Northwest Territories and the achievement of provincial status for all northern territories have assumed considerable prominence at the federal-provincial bargalning table since 1984. In part, this was because of the need to live up to the requirement of the Constitution Act (1982) that there must be a series of First Ministers' conferences on Aboriginal matters. The detailed history of these meetings has been dealt with extensively elsewhere.s The most important event to note for the purposes of this analysis is the failure of the final First Ministers' Conference in 1987 to reach agreement on the entrenchment in the Constitution of the right to Aboriginal self-government. If the federal government was committed to entrenching this right, it was unable or unwilling to mediate differences among provincial premiers and Aboriginal leaders to reach a resolution. Ironically, just one month after the collapse of the First Ministers' process for dealing with Aboriginal matters, the Prime Minister and premiers met at leech Lake to reach an accord which committed Quebec to supporting the Constitution. The leech Lake agreement demonstrated to Aboriginal leaders that the federal government, when motivated, was capable of exercising considerable leverage with recalcitrant premiers; for Native Peoples in Canada, the leech Lake Accord symbolized federal determination to ignore their own existence as "distinct societies." Further, the agreement ignores the constitutional needs of Canada's two territories. It appears that if the Accord is ratified, provinces will be able to alter territorial boundaries or veto either territory's achievement of provincial status without consultation with or

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agreement from northern residents. As a result of these developments, the avenue of resolving northern and Native governance issues through constitutional reform seems blocked. At the First Ministers' level, discussion about changing the terms of governance for Native societies is very difficult. Discussion founders on two different conceptions of what is to be achieved. For Native Peoples the goal seems to be co-existence with other Canadian governments and, indeed, with Canadian society. In the minds of non-Native First Ministers and their officials, the rationale for changing Native and northern systems of governance seems to be conceived as something which should bring about, ultimately, assimilation of Native People into some idealized vision of "mainstream" Canadian society. Until these differing conceptions of the goals of change in the arena of governance are made explicit and explored, there is no ground for real díalogue.7 The First Ministers' decision to ignore the long-term interests of Canada's two territories, on the other hand, appears to arise less from philosophical issues of principle and more from situational political calculation. With other fish to fry, the Prime Minister chose not to remember his responsibility for citizens living north of 60° at the time of the Meech Lake negotiations. The second avenue for dealing with governance issues that the Conservative government followed early in its mandate was to negotiate and resolve Native aspirations for reform on a piecemeal basis. Accordingly, in 1986 Parliament passed the Sechelt Ιndian Band Self-Government Act, which permits the Sechelt Indian Band of British Columbia to write its own constitution and, thereby, take unto itself various powers as a legal entity. An ensuing series of similar agreements were anticipated. Perhaps the most breathtaking prospect for widespread change using a caseby-case approach, however, was held out in December 1986, when the Minister of Indian Affairs and Northern Develpment announced revised government policy concerning comprehensive Aboriginal claims.$ This general policy statement ostensibly removed many of the barriers to successful negotiation of governance issues as part of the settlement of the comprehensive claims that are outstanding in the Northwest and Yukon territories, as well as in various provinces, where treaties have never been signed or have been abandoned. The third avenue to deal specifically with Indian governance issues is much more limited. It is the so-called "third stream," through which the federal government concludes agreements with

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individual Indian bands to provide them with block funding on an annual basis under the terms of the Indian Act. Such an arrangement is intended to give bands more flexibility in meeting their own priorities for service delivery. In a statement made in December 1986, the Minister announced a target of reaching block funding agreements with about 40 Indian communities by the fiscal year 1988-89.8

Despite these brave beginnings, on most fronts there has been little real progress. The Sechelt remain the only Indian band with enabling self-government legislation. Not forty, but five, block funding agreements with bands were concluded by fiscal year 198889. In theory, another avenue remains for Indians to resolve governance issues—litigation. However, the potential of using the courts to resolve issues of Aboriginal rights and governance is extremely limited. Regardless of any trend of past judgements to regard Native Peoples' petitions with some sympathy, the high cost of litigation, coupled with the very limited resources of Native organizations, virtually precludes use of the litigation route. For its part, the federal government has severely limited the amount of funding available to Indian bands to take court action on test cases. In the absence of financial resources to use court action to broaden their range of options, Indian bands will find themselves increasingly compelled to accept the status quo or change only on the basis of terms offered by the federal government. The Minister's general policy statement on comprehensive claims was followed by Cabinet approval of a fresh mandate for each claim currently under negotiation. None of the outstanding comprehensive claims agreements have reached the agreement-inprinciple stage, however, and it is not clear that any will do so before the next federal election. While there is not the air of finality that accompanied the collapse of the constitutional stream of discussions on governance issues, the lack of real progress in reaching specific governance agreements with an independent legislative base is puzzling in light of apparent early progress. With respect to comprehensive claims negotiations in the two territories, the absence of much progress may be related to the Minister's curious decision not to make public a new northern policy framework approved by Cabinet in mid-1987. Approval of a new framework was certainly overdue (Cabinet's last policy statement, Canada's North 1970-1980, was released in 1972)and in the new policy statement there are some newsworthy changes, as well as some clues about current Cabinet priorities.

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The policy commits Cabinet to: o transfer the remaining provincial-type programs to the territorial governments, including responsibility for managing natural resources and resource revenue sharing; • pursue the early settlement of land claims; o ensure that there is a full debate in the Northwest Territories on the political, economic and fiscal implications of division should a northern consensus on a boundary emerge; o work with territorial governments through joint federalterritorial mechanisms such as economic development agreements to develop sound and stable economies by encouraging economic diversification with special emphasis on renewable resource development and tourism; • improve the business climate for investors and entrepreneurs through joint federal-territorial implementation of the Northern Mineral Policy and the development of specific proposals for a Northern Oil and Gas Accord in accordance with the objectives of the Frontier Energy Policy; ▪ thoroughly examine the role and activity of government in the North and the relationship of this activity to the northern dimension of Canadian foreign policy and the strengthening of Canadian-Arctic sovereignty. 10 The first element of the new policy endorses the long-standing federal commitment to devolve federally-held province-like responsibilities to the two territorial governments. This process was begun under the Liberals and received new impetus in the early years of the Conservative government.11 Devolution has been proceeding on a function by function basis under separate federalterritorial agreements for each territory. Since the Conservatives took office, responsibility for the Northern Canada Power Commission has been transferred to the Yukon, while administration of forestry, health care, some northern airports and three northern science centres have been devolved to the NWT government. The new northern policy statement contains the first formal federal commitment to devolve responsibility for management of non-renewable resources and to negotiate with the territorial governments resource revenue sharing. A Northern Oil and Gas Accord is being negotiated with the Government of the Northwest Territories to provide the framework for transfer of this significant

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responsibility. Although revenues from oil and gas will be relatively small for the foreseeable future (amounting to less than 12 per cent of the territory's annual budget), the transfer has great symbolic value in a territory where major political struggles have focussed on the issue of oil and gas deνelορment.12 The new northern policy has the potential to conflict with both comprehensive claims negotiations and the objectives of the federal Minister of Energy. (We deal with this second problem later.) Federal comprehensive claims policy also admits the possibility of negotiating management of natural resources and resource revenue sharing. For some claims—for example, the Inuit claim being negotiated by the Tungavík Federation of Nunavut (TFN).shared resources management has been a major focus. The federal Cabinet's decision to devolve this responsibility to the territorial governments throws into question the status of clauses of the TFN agreement-in-principle already initialled by both sides. The fate of the Inuit claim is clouded further by the new northern policy's lukewarm statement about division of the NWT, since TFN acceptance of the joint resources management schema which have been negotiated is probably conditional upon their implementation in a new, predominantly Inuit, eastern territory. Overall, despite the ritualistic endorsement of "the early settlement of land claims," the new federal policy presages political development in the two territories very much along the lines followed by Alberta and Saskatchewan when they were carved out of the old North-West Territory. In this vision, land claims agreements will not provide part of the basis for new governing arrangements which ensure the survival of distinct Native societies, but rather will offer Native collectivities cash and land in exchange for their acceptance of southern-style regional governing arrangements. It is not at all clear that Native organizations or their allies in territorial government will acquiesce in this process, giving up the principles for which they have struggled over the last two decades. The Minister's interest in avoiding a direct public confrontation on these issues may account for his decision not to announce the new policy, but rather to use it to guide internal departmental and interdepartmental decisions. Impinging National Imperatives Despite the overriding importance of governance issues, they tend to be overwhelmed by issues in other policy fields, such as defence

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and the environment. There are three major policy fields which have a suppressing impact on the resolution of governance issues related to the North and Canada's Native Peoples. Issues in the fields of resource development, the environment and defence have a tendency to take centre stage away from governance issues. Further, resolution of particular issues in each of these fields, through the prism of national resource development needs, defence needs, etc., tends to close off options for the resolution of governance issues. For example, it is rather difficult to achieve greater control of the terms of economic development by Native or northern governments when a federal or provincial agency removed from major responsibility for northern or Native matters is responsible for developing and implementing specific development projects. Beyond the diverting effect of these other policy issues, concerns about economic development, the environment and defence pose real conundrums in and of themselves for northerners and Native Peoples. Perhaps most problematic is the issue of economic development. Here, there are two main aspirations that northern and Native Peoples share. The first is to obtain enhanced control over the terms of economic development, particularly in the resource sector. For example, the history of northern non-renewable resource development has been characterized by boom and bust cycles that have reflected the needs and conditions of southern Canada and the international marketplace. Northerners have had to adjust to these cycles with few resources for mitigating their impact. The second aspiration that is crucial to northern and Native communities is to achieve sustained economic development. Creation of any economic activity in isolated northern and Native communities is a task that has often frustrated Native people and government officials alike. Ultimately, the question of sustaining economic development relates to the capacity of local people themselves to conduct whatever enterprise is undertaken. Once again, the question of governance arises. In facing environmental issues, northerners and Native Peoples are caught in a painful dilemma, between protecting their capacity to use renewable resources and garnering benefits from non-renewable resource development. Further jeopardizing Native access to economic alternatives has been the activity of various environmentalist pressure groups, such as the anti-sealing and antifur lobbies which attack directly many Native Peoples' livelihoods. Thus, environmental preservation is an issue in and of itself; but it is also inextricably linked to the issue of economic development.

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Defence issues are particularly important for northerners. It is an open question what impact Canada's assertion of Arctic sovereignty will have on northern Native claims, but certainly Native occupancy of the Arctic has been instrumental in federal assertions of sovereignty. The environmental consequences of defence initiatives, such as missile testing and new defence warning systems are also of concern. Finally, there is the confounding question of how northerners can share in the benefits of an increased commitment to northern defence. The new northern policy identifies sovereignty and security issues as important but does not resolve them. Resolution of governance issues affecting Native Peoples and northerners is crucial in order for these issues in other sectors to be dealt with in a way which takes full account of Native and northern needs and interests. Looking at the federal government in the second half of its current mandate, the direction is clear. For Native Peoples across the country, there has been a withdrawal of federal interest in addressing the root problem of governance. This was demonstrated in the Prime Minister's handling of the First Ministers' Conferences and Meech Lake, and in the general withdrawal of funding necessary to work out political solutions below the macro-level of constitutional agreements. For northerners—both Native and non-Native—Cabinet has arrived at a political and economic framework which emphasizes evolution towards "normal" provincial status and veers away from innovative constitutional arrangements in the two territories. There is considerable attention to economic development in the new northern policy, but no commitment to new expenditures in support of economic diversífiØtion, and in particular, no comment with respect to measures to defend the international market for fur. THE MAΙΝ ACTORS: NEEDS AND INTERESTS In considering how to move the federal behemoth foreward to deal with northern and Native policy issues, one must look far beyond the Minster and Department of Indian Affairs and Northern Development. In formal terms, this Minister and his/her Department do occupy a central position. However, the departments of Health and Welfare, Regional Industrial Expansion, Secretary of State, the Solicitor General and the Canada Employment and Immigration Commission among others all deliver services directly to northerners and Native Peoples. Other very powerful federal departments, such as Energy, Justice and Defence have policy and

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program responsibilities which directly affect the possibility of change in this policy field. For example, the view of legal advisors in the Department of Justice on what powers might be assigned to Native self-governments may have a strong impact on the course of discussions on governance issues even within the limited context of revisions to the Indian Act. Negotiations for the Northern Oil and Gas Accord mentioned in the new northern policy framework have been stalled by the reluctance of the Department of Energy to give up any ground. In theory, central agencies, such as the Privy Council Office and the Federal-Provincial Relations Office serve a coordinating function at the bureaucratic level that buttresses the collective will of Cabinet and makes the leadership of the Prime Minister felt. At present, both of these central agencies seem to devote little attention to the northern and Native policy field. The reality at this stage in the Conservative mandate is that in the northern and Native policy field there seems to be more inertia than interest in change on the part of the Prime Minister and his Cabinet. This reflects the apparent needs and interests of the federal government at the present time. These needs and interests warrant closer examination, if one is to consider how to bring about positive change; so, too, do the needs and interests of key actors outside the federal government. In addition to the federal government, one must consider the needs and interests of the provincial governments, the governments of the Northwest Territories and Yukon Territory and Native organizations in the context of developing any agenda for change. However, the starting point for such an assessment must be the federal government because the powers and responsibilities crucial to resolving most questions important to the north and Native Peoples still lie with that government. The federal situation must be considered at two levels. First, what are the apparent needs and interests of the Prime Minister and Cabinet as a group? Second, what are the apparent interests of the Minister of Indian Affairs and Northern Development? The central role of the Prime Minister and Cabinet in bringing about change in the northern and Native policy field cannot be underestimated. This is particularly the case for the current government. With its massive Parliamentary majority, the Prime Minister and Cabinet could have moved Native and northern issues much higher up the political agenda with a greater degree of safety

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than any other government since the first Trudeau regime. In fact, the Mulroney Cabinet did use its political clout to score points on a few highly symbolic issues early in its tenure. The passage of Bill C-31 removing some discriminatory provisions from the Indian Act and the announcement of the new Native claims policy are two oses in point. However, particularly for Native affairs, early winds of change have died down and traditional views with respect to the resolution of the key questions have reasserted themselves. There are a number of possible reasons for these outcomes. First, it is obvious that the federal government has other major issues on its agenda—free trade, tax reform and the like. However, the parliamentary order paper has never been totally dominated by these major items. One must then ask if the apparent lack of movement is attributable to the particularly controversial nature of the issues themselves? Although the Mulroney government is likely tying its agenda to the betterment of its political fates increasingly as time goes on, it has not shied away from controversial legislation, even in the lower strata of political issues such as the patenting of drugs. One is then left with the discomforting sense that the basic reason for lack of cabinet action is lack of cabinet interest in contemplating major changes. Native Peoples and northerners are a tiny minority of the Canadian electorate and the immediate need for northern resources is at a low ebb. No matter how great the need for leadership and innovation at the most senior political level might be, political innovation in this field might bring only paltry rewards. There might also be associated ØØ costs which would disturb the government's efforts at containing the costs of northern and Native programs.13 The cumulative effect is to allow other items on the cabinet agenda, such as the diversification of regional economies in the West and Atlantic and free trade to move ahead without considering fully their impact on the North and Native Peoples. In addition, in the absence of a commitment to resolve fundamental questions of governance, individual ministers have maximum freedom to set agendas in their own portfolios without any particular reference to Native and northern concerns.14 The two Ministers of Indian Affairs and Northern Development in the Mulroney government have had sharply different political styles and agendas. David Crombie, as the first Minister, took a populist approach to the job. He spent considerable time in Native and northern communities and vocally promoted new directions in federal policy which would be responsive to the basic needs

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of northerners and Native Peoples while being sensitive to the diversity of their needs and interests. Mr. Crombie also jolted his Department out of its traditional lethargy by setting up a variety of task forces and other initiatives to deal with outstanding policy and organizational issues. The current Minister, William McKnight, has held the portfolio since 1986. His first priority seems to be management, both financial management and issue management. Mr. McKnight has overseen the design and implementation of a restraint program for his Department. The implication of this program is that fewer funds are available to meet the government's responsibilities to provide services and development assistance to Canada's northern and Native Peoples. As a manager of issues, Mr. McKnight has had to stickhandle the results of David Crombie's initiatives. These include the need to respond to the report of the Task Force to Review Comprehensive Claims Policy and to cope with the proposed northern policy put forward by a revitalized departmental bureaucracy. His style in dealing with these and other issues has been to keep an extremely low profile and indicate his preferences through action (or inaction) rather than words. This has made it difficult, if not impossible, for those with interests in this policy arena to fathom what is going on within the federal government. To all appearances, there is a policy vacuum. In fact, there are policies being developed (as the new northern policy statement illustrates) but neither the Prime Minister nor Mr. McKnight, as the Minister responsible, have told anyone about them. Although the federal government is central, it is also important to assess the needs and interests of provincial governments when determining how to approach change in Native and northern policy. The main characteristic of provincial stances on northern and Native issues is their diversity. Aside from the apparent increased provincial say in the future political development of the territorial north resulting from the Meech Lake Accord, the main areas of provincial involvement in this policy field have been in constitutional discussions about the entrenchment of Aboriginal rights in the Constitution, the negotiation of Native claims and the provision of particular services, such as health care and education, to Native Peoples through fee-for-service agreements with the federal government. The varying receptivity of provincial governments to the entrenchment of an Aboriginal right to self-government in the Constitution and to the legitimacy of Native claims makes it difficult to predict any unified position on Native and northern issues at the First Ministers' table and elsewhere. For

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example, Ontario has been very active in the negotiation of Native claims within its boundaries; while British Columbia (BC) persists in denying the legitimacy of Native claims altogether. The report of the federal task force on comprehensive claims, established early in this government's mandate, recommended that the federal government exert strong leadership in bringing the provinces into a more uniform stance on claims issues, at least. Perhaps its strongest recommendation in this regard was that the federal government should compel the BC government to recognize Native claims.15 To date, the federal government shows no sign of acting on this recommendation. Indeed, any attempt by the federal government to play a leadership role νis-à-vis the provinces in this policy area seems to have died with the 1987 First Ministers' Conference on Aboriginal Matters. The two territorial governments are crucial players in the evolution of northern and Native policy. They are the elected representatives of the entire population of Canada's territorial North and have a signifiØt population of Aboriginal Peoples within their boundaries. Given this situation, it is unfortunate that the Government of the Northwest Territories and the Government of the Yukon Territory did not have full voting status at the First Ministers' Conferences on Aboriginal Matters and were not even present at the negotiations which produced the leech Lake Accord. Recent developments within the two territorial governments point to some specific needs when the future direction of northern and Native policy is discussed. At one level, the political landscapes in the Northwest and Yukon territories are very different. For example, the Yukon Territory has a well-established system of political parties, while party politics are not a feature of territorial elections in the NWT. Despite the variolιs differences in the way the governments of the two territories are structured and operate, they share two important trends in their development. The first trend is a growing recognition of the importance of the Native population in the political life of each territory. Native People comprise a comfortable majority of the electorate in the NWT, while they make up approximately one third of the permanent Yukon population. Since 1979, the majority of seats in the NWT Legislative Assembly have been held by Native People, while Natives have played prominent roles as members of the Territorial Executive (Cabinet). In the Yukon Territory, the current New Democratic Party (NDP) government attracted a number of Native People as candidates in the last election and received significant

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electoral support from the Native population at large. These two developments have moved both territorial governments into the forefront as advocates of Native interests, as well as being main points of political reference on northern issues. The second trend is the extension of power of the two territorial governments, both in terms of informal political legitimacy and in terms of jurisdiction, as functions have been devolved from the federal to the territorial level. While the preparedness of the federal government to devolve more responsibilities to the territorial governments is generally welcomed in the North, there are a couple of outstanding questions. The first concerns the extent to which the federal government sees devolution as a way to reduce its financial commitment to the provision of services to northerners. The federal stance after devolution may well be: "You run it; you pay for it." The second concerns the impact of devolution of powers to the Government of the Northwest Territories on the character of the clams settlements described earlier. Claims are also important to the two existing territorial governments in the sense that resolution of one or more claims will likely bring a much needed infusion of capital into the territories as a result of the financial component of any settlement. Thus, the resolution of claims will also have an impact on creating sustained economic development in the North. However, there are other considerations related to the territories' need for sustained economic development. Perhaps foremost among these is the need for federal government assistance in creating a policy environment which will allow the territorial governments more leverage and opportunities for supporting indigenous enterprises and maximizing domestic return from any large-scale resource development projects that occur in the North. Here the Northern Oil and Gas Accord is of some importance, because it will make oil and gas revenues available directly to the NWT government. At the most basic level of support to indigenous enterprises, there are at least two current areas of concern to the territorial governments. The first relates to the proposed free trade agreement with the United States. The agreement may effectively eliminate the ability of territorial governments to stimulate their local economies by giving preference to northern suppliers of goods and services. The territorial governments have been assured that the Øe trade agreement will not have this effect. The Government of the Northwest Territories has accepted federal assurances, while the Government of the Yukon remains skeptical. Interference with

Plus Que Ca Change / 129 either territory's purchasing policy would be a serious handicap because government expenditures form the largest and most stable source of economic stimulus. Some sensitivity to the fragile nature of the secondary and tertiary sectors of the northern economy may have to be the subject of further negotiations between the federal government and the United States government. Similarly, federal commitments with respect to energy policy in the free trade agreement have the potential to undercut territorial control of the pace of energy development, if control is devolved. The second concerns the ongoing plight of the fur trade. The two territorial governments have been active in the lobbying effort to ease international restrictions and general criticism of fur and seal harvesting. They have received support from the federal Department of Indian Affairs and Northern Development in this effort. However, the Department of External Affairs appears to be less responsive in dealing with the problems of the fur trade and in gaining international markets for other renewable northern resources, such as fish. Within the federal government, the tradition has been to see development of northern resources as a matter of national interest. To some extent, the Department of Indian Affairs and Northern Development has tried to act as a voice for northern concerns within the federal milieu. However, DIAND emerges consistently as the weaker department as the Department of Energy, Mines and Resources (EMR) takes the initiative in energy development in the North. The lack of understanding in EMR and other federal departments with economic mandates of the complexities and sensitivities of the North leads to developments that kneecap territorial government plans for economic development and ignore northern aspirations. From this review, one can see that the territorial governments hold few of the Øs needed to protect the interests of the citizens of the territorial north in the ways that provincial governments protect provincial interests. Changing this circumstance requires the exercise of federal leadership, and sustained Cabinet support for innovation. Any review of the needs and interests of major actors would be incomplete without consideration of Canada's Native organizations. In a strict sense, they are not governmental actors. However, they attempt to represent the needs and interests of their particular constituency through a variety of means. Native organizations in Canada focus on different levels of government as they carry out their representative functions. At

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the national level are Native organizations such as the Assembly of First Nations and the Native Council of Canada. There are also organizations within each province and the Yukon Territory. Within the NWT, there are regional organizations. Finally, the Inuit Circumpolar Conference deals with the interests of the Inuit across international boundaries. In areas where treaties have never been signed (for example, in the territorial north, British Columbia and Labrador) Native organizations are negotiating comprehensive claims agreements. Native organizations at all levels undertake important work in areas such as cultural and economic development as well as attempting to represent their constituents' interests on political issues. In many cases, areas other than political representation are those which their Native membership would like to emphasize. However, the effectiveness of Native organizations is hampered by the fact that questions of the jurisdiction and governance of Native communities are unresolved. The importance of their political representation function is further enhanced by the necessity to do battle with the federal government and some provinces over the fulfillment of obligations and the provision of services to the people they represent. The diverse economic and legal situations of Native organizations frequently make it difficult for them to develop a common front on issues that are of mutual concern. Just as other Canadians living in different circumstances in different regions of the country have differing needs, capacities and interests, so do Native Peoples, for similar reasons. The diversity was illustrated in starkest relief by the First Ministers' Conferences on Aboriginal Matters. Throughout, it proved difficult and sometimes impossible for the leaders of the various Native organizations at the negotiating table to agree on a universally suitable definition of the right to Aborigine self-government.1s The diversity among Canada's Native Peoples that is reflected in their organizations can be considered a fact of life. The failure of the approach of trying to settle such important issues as the right to self-government by finding a single solution at the constitutional bargaining table points to the improbability of success given the different needs and interests of all participants. Indeed, one might suggest that success was impossible in such an environment. At the final First Ministers' Conference in 1987, Canada's Native, provincial, territorial and federal leaders were put in a public hotbox. The pressures of time, high stakes (at least for Native and territorial government leaders) and the glare of publicity

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through the television camera which existed at the 1987 FMC contrast significantly with the private negotiations that resulted in the leech Lake Accord and the Free Trade Agreement with the United States. The question remains why the First Ministers' process was not accompanied by more continuity in negotiations between the four conferences and by more of the private negotiations that traditionally are associated with our inter-governmental process. If any party was in a position to sustain leadership in ongoing negotiations it was the federal government. However, sustained ministerial attention sympathetic to Native concerns seems to have been lacking. Furthermore, assignment of responsibility for the negotiations to the Minister of Justice seems to have resulted in the more conservative views of officials from within the Department of Justice achieving prominence in the federal camp. The result was to minimize the possibility of federal leadership to achieve a real breakthrough. The failure of the First Ministers' process does not reduce the importance to Native Peoples and their organizations of resolving governance issues. The question becomes how best to do this. Across the board, Native organizations are facing additional challenges that make the task of moving forward on the question of governance even more difficult. First, Native organizations have had their financial support from the federal government cut back sharply.l' Federal funding for participation in constitutional negotiations was eliminated following collapse of the First Ministers' process. This has resulted in Native organizations releasing staff members equipped to deal with governance issues. The second challenge for Native organizations is to resuscitate public awareness of, and interest in, the situation of Canada's Native Peoples and their aspirations. In the vacuum following the collapse of the First Ministers' process and in the absence of funding, this is no small task. Finally, Native organizations face the challenge of regenerating interest in dealing with governance issues within the federal government and among the provinces. There are other approaches to dealing with governance issues than placing all emphasis on constitutional change. The issue for Native organizations is how to bring about the type of movement required to implement these approaches. A few Native communities have taken the opportunity to enter into new arrangements with the Department of Indian Affairs

132 / How Ottawa Spends

and Northern Development. New governing responsibilities have been transferred gradually to the territorial governments, and there is the prospect in the territorial north of enhanced control of regional economic development. However, the fundamental issue of governance remains unresolved. In our view, the recent failure of the First Ministers' process does not indicate that the issue of governance is unresolvable. Rather, this can be seen as a failure born out of the use of a particular approach, namely, negotiations in a series of highly pressured and highly publicized settings. The question remains what other approaches to dealing with northern and Native issues might make movement possible? Northern and Native leaders have demonstrated their interest in change. The key actor in moving the process forward is the federal government. The federal government is the one actor with over-arching responsibilities for northern and Native issues and with the considerable power needed to promote solutions on a national basis. Assuming there was federal interest in taking on this challenge, how might it be done? An Agenda For Change To move the debate forward, it is necessary to understand the rationale for federal activism, and to take into account existing obstacles to change and other basic pre-conditions to resolving outstanding issues. These are somewhat different for northern and Native policy. The two policy fields are connected, however, by the need for sustained attention to resolving questions of governance. We have argued that the Conservative government opened the prospect for a major realignment of federal policy with respect to governance issues early in its mandate, but that during the rest of its term it has been foreclosing opportunities for change and reverting to older patterns directed towards political and economic assimilation of Native societies. In this general setting, responsibilities have been gradually devolved to the territorial governments in a way which does not necessarily subvert the fundamental goals of the claims process (so far), and some few Indian bands in southern Canada have achieved more self-government. In general, however, there is still a need for the federal government to resolve the key issue of political governance. Resolution of this issue, while respecting the diversity of northern and Native interests, is a precondition for dealing with all other major outstanding issues in this policy field. It is incumbent on the federal government to seek a

Plus Que Ça Change / 133

middle-ground solution between using the "grand design" of the Constitution and unannounced steps towards assimilation. In our view, there is such a middle ground. To achieve this middle ground, three obstacles to change need to be overcome. The first obstacle is the leech Lake Accord. It appears that one effect of the leech Lake agreement is to give the federal government and the provinces the joint power to restrict the powers of the territorial governments. This makes it particularly likely that southern imperatives will drive territorial affairs. Unless changes are made, one is thus faced with the ironic prospect that the leech Lake Accord, which appears to decentralize federal power to the provinces, will have the opposite effect for the territories. The ongoing and overriding power of federal departments, which have neither a direct mandate to take northern and Native interests into account nor effective mechanisms in place for working with northern and Native interests, still have the power to take actions which affect profoundly these interests. Aside from EMR, we would include the Department of Justice and the Canada Employment and ommigration Commission in this category. This trend seems to be exacerbated by the Prime Minister's approach of giving more autonomy to individual ministers to set the agenda for their portfolio and run their own departments. These two impediments to change are structural in nature, requiring changes in the structure of decision making. The final obstacle to change is the result of the policy decision to remove funding to Native organizations to deal with governance issues. For some organizations, the effect of this was made more severe by general cutbacks in federal funding. This decision ignores the continuing need for Native Peoples to have the capacity to make proposals and to make their views known on governance issues. Removing all these obstacles is the first pre-condition for change. There is a second, and equally important, pre-condition; namely, the existence of sustained leadership among all parties involved with this policy field. Two important areas where substantive steps can be taken to achieve this relate to leadership of Canada's northern and Native Peoples and to leadership at the federal level. Both call for a more activist federal stance. Some specific steps can be taken to ensure the capacity of Canada's northern and Native leaders to deal with the issues at

134 / How Οtiawa Spends

hand. The most obvious need is for various Native groups to be assured adequate funding to maintain their leadership, to consolidate knowledge among their constituents regarding governance issues and to build public understanding of Native and northern aspirations and interests. This implies the need for more than funds to help pay the salaries of northern and Native leaders. It also suggests the need for a concerted effort to broaden knowledge and understanding of northern and Native traditions and culture. Political development consists of more than arranging high-visibility conferences. It entails a much broader social process involving education, training, research and dissemination of knowledge in the North, among Native communities and throughout Canada generally. The second aspect of the need for leadership relates solely to the federal government. There is a need to put in place a Minister of Indian Affairs and Northern Development who is committed to accomplishing more than asserting financial control over his/her department, cutting costs and handling short-term problems. The Minister must also be committed to work with all the major interests in this policy field, to keep northern and Native governance issues on the cabinet agenda, and to develop innovative solutions in dealing with those issues. At the same time, the Minister has to ensure that other ministers and departments take full account of their responsibility to be sensitive to northern and Native interests and aspirations and do not act in ways that foreclose options for the north and Native Peoples. This is a tall order for any minister. It is particularly difficult for a minister faced with a traditionally weak and beseiged department and a cabinet increasingly committed to an agenda driven by the prospect of an election. Despite these inherent difficulties, the challenge is not impossible for a committed individual who has the support of the Prime Minister. Ø WAY FORWARD In the North, resolution of outstanding Native claims is more important than ever before. As devolution proceeds, the room for innovation in territorial claims settlements is being gradually reduced. The second item on the northern agenda is to clarify the implications of the Meech Lake Accord as it relates to the achievement of provincial status by northern territories. The Accord has created considerable anxiety in the North. All parties need to have

Plus Que Ça Change /135

a fuller understanding of the implications of this agreement as it affects the political and economic development of the North. If it proves extremely ínimicable to northern interests, the federal government will be required to initiate some remedial steps. Federal leadership is also required to deal with the Native side of the policy area. The constitutional process failed to resolve Native aspirations related to governance. In the wake of the failure of the FØC process, the federal government has become extremely passive in bringing about change in the area of Native governance and in dealing with related concerns. In our view, the federal government must play a catalytic role by posing alternative approaches to dealing with governance issues and encouraging Native Peoples to consider their interests regarding governance more specifically. Federal leadership is required to bring some internal coherence to the interaction of federal ministers and departments with Native Peoples. The problem of the lack of attention to the situation of Native Peoples and their aspirations by federal ministers and departments outside of the Indian Affairs portfolio has already been discussed at length. So, too, has the impact of some of the government's initiatives in areas such as resource development and employment generation when the circumstances of Native Peoples have been misunderstood or given short shrift. The Minister of Indian Affairs and Northern Development should play a greater leadership role in having his/her Cabinet colleagues give more appropriate attention to the needs of Native Peoples. Almost certainly, structural changes are required to reinforce this commitment. One model would be for Cabinet to establish some fundamental principles relating to the overall direction of change in the area of Native governance. This would entail an effort similar to that associated with development of the comprehensive claims policy or the new northern policy framework. In this case, Cabinet would establish principles relating to the fundamental direction and pace of change in the form of Native governance and also to the behaviour of individual federal departments as these principles are enacted. Ideally, these principles would be given a legislative base. Their implementation would be monitored by an independent Commissioner who would make an annual report to Parliament. Departmental compliance with the findings of the Commissioner could be enforced by requiring departments to respond to the Commissioner's report to the Standing Committee on Aboriginal Affairs and Northern Development.

1361 How Ottawa Spends

Elements of this approach are not unique. There are the precedents of the Commissioner of Official Languages and the Privacy Commissioner. In addition, the federal task force on comprehensive claims made a similar recommendation for the establishment of a Commissioner to monitor claim agreements. A major advantage of this approach is that it elevates responsibility for effecting change beyond any one department or minister. This is especially apropos, given DIAND's historically weak performance in intra-governmental bargaining. The Minister of Indian Affairs and Northern Development would carry responsibility for proposing the principles to be adopted. However, once Cabinet agreement was reached, responsibility for monitoring, encouraging and coercing implementation would move to the Parliamentary Commissioner. The second major advantage of this approach is that it institutionalizes regular public review of federal performance in the area of Native policy and creates an environment which will prompt the federal government to act as the positive catalyst it should be. This model does not guarantee that recalcitrant provinces will be brought into line. However, the demonstration effect of renewed federal leadership and some of the substantive changes which might result from this approach may well yield positive results in terms of provincial policies affecting Native Peoples. CONCLUDING REMARKS Perhaps the most prominent characteristic of this chapter is its prescriptive nature. This is intentional. Our earlier commentaries variously termed the Conservative record as "an astute political strategy" and "a successful balancing act between cost containment and the promotion of social justice."17 Regrettably, the earlier promise of Conservative initiatives in northern and Native policy has been only unevenly sustained. This warrants an attempt to take a fresh view of the issues and suggest how things might be put back on track. Pessimism resulting from the recent federal record can be offset by the fact that it is possible to identify new approaches to bring about positive change.

Plus Que Ça Change 1137

Notes 1.

Frances Abele, "Conservative Northern Development Policy: A New Broom In An Old Bottleneck" in Michael J. Prince (ed.), How Ottawa Spends, 1986 (Toronto: Methuen, 1986), pp. 149-178; and Katherine Graham, "Ιηdían Policy and the Tories: Cleaning Up After the Buffalo Jump" in Michael J. Prince (ed.), How Ottawa Spends, 1987-88 (Toronto: Methuen, 1987), pp. 237- 266.

2.

The problem here was illustrated in almost Kafka-esque fashion in February 1988. As the Minister of Indian Affairs and Northern Development, Mr. McKnight carries respong treaty obligations to the Lubicon Cree sibility for in northern Alberta. In this capacity, he pronounced "unnecessary and unhelpful" the government of Alberta decision to permit development of a Japanese-owned pulp mill on Lubicon land, while as the Minister responsible for the Western Economic Diversrncation Fund, he authorized a contribution of $9.5 million to the pulp mill project. "Forestry deal upsets Lubicons," The Citizen, [Ottawa], February 10, 1988; Graham Fraser, "McKnight condemns Alberta on land claimed by Lubicons," Globe and Mail, [Toronto], February 11, 1988. The Minister has stated that he was unaware that Alberta planned to give the company, Daishowa, cutting rights in the disputed area until after the deal was announced. "Lubicon Land Claim," letter to The Globe and Mail, February 22, 1988.

3.

See Graham, "Indian Policy and the Tories," p. 242.

4.

See note 2, above, and John Goddard, "Forked Tongues," Saturday Night, 103(2) February 1988, pp. 38-45.

5.

Indian and Northern Affairs Canada, Communiqué, "McKnight Announces Budget and Program Changes for Indian Post-Secondary Education," Ottawa, May 14, 1987.

6.

See, for example, Graham, 1987, and David C. Hawkes, Negotiating Aboriginal Self-government (Kingston: Institute of Inter-Governmental Relations, 1985).

7.

We are indebted to our colleague, David Hawkes, for suggesting this line of thought.

138 Ι How Ottawa Spends 8.

Indian and Northern Affairs Canada, Communiqué, "Federal Comprehensive Land Claims Policy Announced," Ottawa, December 18, 1986.

9.

See Graham, p. 254, and statement by the Minister of Indian Affairs and Northern Development to the Standing Committee on Aboriginal Affairs and Northern Development, Ottawa, December 17, 1986, p. 6.

10.

Canada, A New Political and Economic Framework for the North. Unpublished internal ms. n.d. A copy was received "informally" by the authors in the fall of 1987.

11.

See Abele, pp. 168-170.

12.

From A New Political and Economic Framework, note 10, above.

13.

The government's efforts to contain the costs of northern and Native programs are documented in Graham, 1987. In October 1987, the Minister of Indian Affairs and Northern Development confirmed that instructions had been given to DIAND officials that no new Indian bands or reserves were to be created if there was any resulting Øt to the federal government.

14.

Besides the problems with Energy mentioned earlier, there is the additional example of the Minister of Employment's Canadian Job Strategy which has been widely criticized by Native organizations for ignoring the lack of a private sector to hire in many Native communities.

15.

Living Treaties: Lasting Agreements, Report of the Task Force to Review Comprehensive Claims Policy, Ottawa: Minister of Indian Affairs and Northern Development, December 1985.

16.

For a more detailed discussion of these differences, see Hawkes, 1985 and Graham, 1987.

17.

See Abele, 1986, p. 176 and Graham, 1987, p. 260.

CHAPTER 6 FISHERIES AND OCEANS: 1977-1987 Susan McCorquodale

It has been ten years since Canada negotiated the 200-mile zone of exclusive fisheries jurisdiction. Ten years seems long enough to assess the effects of this extension principally on the federal Department of Fisheries and Oceans (DFO). Accordingly, this chapter will examine recent developments in government maritime and fisheries policy in terms of the mandate and organization of that Department. Consistent with the intent of How Ottawa Spends, it will also assess the consequences on the public purse. Additionally, there have been significant effects on the Canadian fishing industry, both processors and fishermen. The mere fact that we know the numbers of full-time, part-time and recreational fishermen and fisherwomen in Canada today is itself an important change. Furthermore, the fact that they are "licensed" primary producers is a really historic change from the days when almost any individual could prosecute the common property fishery resources in Canada's three oceans. Amongst the most visible changes in the Department is the enhancement of the "international" element. Negotiators working on extended jurisdiction might have argued that a new legal regime would bring, in the years ahead, reduced foreign entanglements over fishing matters. In the 10 years since 1977, however, the fishery seems to have been continually in the public press. First it was the controversy with the United States about the MaineNova Scotia boundary and the rich scallop fishery off the Georges Bank; then it was the on-again, off-again negotiations with the United States over Pacific salmon. On the Atlantic coast if it was not the seals, it was EEC markets, and lately the issue of French rights to fish or Spanish overfishing on the "nose" and "tail" of the Grand Banks. The simple descriptive word "enforcement" carries with it today the picture of armed Fisheries officers chasing foreign vessels out of Canadian waters in full view of the world's press. As a matter of fact, in 1986, 21 foreign vessels were arrested and 139

1401 How Ottawa Spends

close to $1 million in fines were assessed in Atlantic Canada for either unauthorized entry or unauthorized fishing in Canadian fishing zones.l Domestically, we have had the gradual enlargement of a system of fisheries management. This has meant, in addition to licensing fishermen, a system of allocating a total harvest amongst the competing offshore enterprises on Canada's east coast. These changes are regarded as positive proof that economic theory could successfully be put into practice. The industry, however, has had several periods of adjustment in 10 years. The 1980-81 decline in fish prices in Canada's chief export market, the United States, was reminiscent of the terrible year of 1974, which nearly saw the end of the east coast industry. In 1974, when the price of fuel and the price of fish went in opposite directions, the consequence was a $20 million infusion of public money. In 1981-82 when the major processing companies in both Nova Scotia and Newfoundland were hit by falling prices and rising interest rates, there was the real possibility of bankruptcy. Neither level of government could afford to watch unconcerned when so many communities and voters were dependent on the income and jobs associated with the fishing industry. The result this time, however, was not a bailout. It was a task force headed by that experienced and politically sensitive federal civil servant, Michael Kirby (now Senator Kirby). The consequence of his report,2 released in early 1983, was a "restructuring" of the industry. In Nova Scotia it meant a public-private refinancing of National Sea Products and in Newfoundland it meant the creation of a large new public corporation, Fishery Products International (FPI). Initially, FPI had seats on its board of directors for the federal government, the Newfoundland government, the Bank of Nova Scotia and the Newfoundland Fish, Food and Allied Workers Union (NFFAWU). It began life as a unique variant of the Crown corporation model. In 1987 the company was successfully privatized. Aside from the impact on DFO of the changes resulting from the vagaries of the fishing economy, the Department has also been in the eye of the political storm. There have been five Ministers of Fisheries in ten years, (LeBlanc, DeBané, McGrath, Fraser and Siddon) and four deputy ministers (Seaborn, Tansley, May and Mayboom). Romeo LeBlanc, appointed in 1976 as Minister of State for Fisheries in the umbrella Department of the Environment, gradually reasserted the historic organizational autonomy of the fisheries department. But more important, he gradually asserted a different policy approach. In policy terms LeBlanc recognized

Fisheries and Oceans 1141

the imbalanced power relations between the producers and the fishermen and used his office to try to redress that balance. McGrath, the first Newfoundlander as Minster of Fisheries had to face a public fight with the Premier of Newfoundland over the offshore-inshore allocation of northern cod.$ Fraser, the first fisheries minister in the new Mulroney government had the misfortune to publicly contradict the Prime Minister over the tuna affair and became the first Minister of the Crown in modern Canadian public administration history to resign his office at least partly because he accepted the doctrine of ministerial responsibility. Provincial governments in spite of having no constitutional jurisdiction over fisheries, have, in these 10 years achieved enhanced influence and importance. The provincial departments have acted aggressively in terms of economic development policy, provided new levels of infrastructural support for the industry, and introduced new legislation to permit collective bargaining for fishermen, thereby ending a "co-adventurer" status that was centuries old. More publicly, during the 1980-82 constitutional crises fisheries became one more issue on the minds of First Ministers.° At leech Lake the First Ministers agreed that fisheries would be an annual agenda item—surely some sort of recognition of new strength and political visibility. Today, no Canadian Ø be unaware of the 1987 public quarrels between the Canadian Prime Minister, his Newfoundland cabinet colleague, John Crosbie, and the Premier of Newfoundland over French fishing rights around St. Pierre and Miquelon. I would not be the first to point out, however, that the administrative reality is often quite other than what is portrayed in newspaper headlines. Some provinces have been less than chauvinistic about the fishery. Quebec, for instance, is not noted as a province which readily gives up jurisdiction to the federal government. Yet in 1985 DFO took back control over that province's seacoast fisheries, thereby reversing Ø years of provincial administration. In fact with respect to six provinces (Quebec, Ontario, the Prairie provinces and British Columbia) various forms of administrative delegation mean that the provincial fishery officers administer federal regulations. There is no provincial body of fisheries regulation, as such. The central thesis of this chapter is that the complexity hinted at in the paragraphs above—federal/provincial disputes marching side by side with federal/provincial accommodation—is the characteristic outcome of 10 years of the new regime. Moreover, the

142 / How Ottawa Spends

players in the policy arena are mutually dependent and one is not sure which factors are the dominant ones. This is not surprising. International or domestic changes, for instance, a 200-mile limit or free trade, demand responses from the society in terms of new interest groups which in turn become increasingly politicized and need to be fitted into the federal policy structures. Likewise, new foreign investment in or establishment of a new large fish processing organization can produce change at the community level. Such changes may eventually create a local demand for or otherwise warrant new government regulation. All of this is probably true for any policy field. What makes fisheries different is that this is one of the few, if not the only, policy areas wherein the federal government is a direct deliverer of services, and where the economic consequences of policy hit the policy community immediately. To allocate fish is to allocate wealth (or more exactly, to allocate the opportunity for wealth). ESTIMATES, DEPARTMENT OF FISHERIES, 1977-1987. It is useful to discuss budgets before examining policy responses in a changing economic environment. The 200-mile limit had very obvious consequences, both immediate and long-term, for the budget of the federal department. In November 1976, Minister LeBlanc appeared before the House of Commons Standing Committee on Fisheries and Forestry to discuss SuØ1ementary Estimates for his department. The immediate request was for a doubling of sea and airborne surveillance. The extra costs to all government departments, he stated, was about $8 million yearly.s At the time, the total budget expenditures of the Fisheries and Marine division of the Department of the Environment was about $255 million. Table 6.1 Expenditures, Fisheries and Marine/Department of Fisheries and Oceans 1976 & 1986 (in millions of dollars) 1976-77

1986

$152.6

$440.4

Capital

55.9

127.5

Grants/loans

38.5

28.1

$255.6

$634.4

Operations

Totals Source: Public Accounts, 1977 & 1986.

Fisheries and Oceans /143 For comparison's sake, it is worth noting that between 1978 and 1988 the total estimated expenditures for the Government of Canada rose about 260 per cent, from $41 billion to $110 billion. The total for DFO rose about 200 per cent. In the same global way we might look at the budget change for the Department of Agriculture, another resource department with national responsibilities. For Agriculture the 10-year change was an increase in the departmental budget of about 255 per cent. On the surface, therefore, it would appear that DFO has not been keeping up with the Joneses. Changing staffing levels in the 10-year period are another measure of change. In terms of authorized person-years, DFO saw an increase of about 20 per cent between 1978 and 1988, that is, from 4,976 to 5,980. Comparatively, Agriculture's authorized staffing levels increased from 11,242 to 12,686—about a 13 per cent rise in 10 years. The 1986 Annυαl Report of the Public Service Commission noted that Fisheries and Oceans is not amongst the top ten in terms of employment and we might assume that this has been true for the past 10 years. Additionally, one should note that headquarters personnel represent less than 10 per cent of the total departmental person-years (allegedly the smallest proportion in the Government of Canada). As with other departments in the first full budget year of the new PC government in 1985, there was an actual reduction in the total Estimates from $720 million in 1985 to $634 million in 1986. This meant that over 300 regional employees and about 140 headquarters personnel were declared surplus in 1986. Most of the individuals involved were redeployed; but about 40 employees were laid off.6 Interestingly, the Estimates for 1988-89 show both a budget increase to $579.2 million (up some 23 per cent, driven largely by increases in the Small Craft Harbours program, increased scientific effort in Quebec and salary increases). Personnel gains and losses appear to balance out at a modest 0.5 per cent increase in person-years, a positive change from recent years.

CHANGING POLICY, CHANGING STRUCTURES The 1986 Report of the Auditor General reviewed the Pacific and freshwater operations of DFO. There is a promise of a report on the Atlantic fisheries for 1988. The 1986 Report did have two interesting diagrams which are reproduced here. Figure 1 shows how the budget of $110.7 million is distributed on departmental programs.

144 /How Ottawa Spends Figure 6.1 Fisheries and Oceans Pacific and Freshwater Fisheries How Resources are Spent

Other 16% $17.8 m1Co=

Smell Craft RaØrs 8% Science $8.4 12% míiton $14.0 million

Salmonid Enhancement 32% $35.3 million

Field Services 32% $35.2 minim

Source; 1986 Report of the Auditor General of Canada.

Figure 2 gives an overview of the "operational context" in which the Pacific region operates. These figures confirm two points made above. First, the Department is very decentralized with one third of the total budget being spent in the Pacific region. Second, the direct service responsibilities of the Department necessitate a very broad range of contacts which must be maintained in the field. The range is remarkable: from membership on international fisheries commissions directly dealing with Washington, to working with the provincial government on Native and other fishing issues, to encouraging volunteers to work on habitat improvement with the Salmon Enhancement Program. What is true for the West Coast is equally true for the East Coast. Fully 80 per cent of the Department's budget is spent in these two areas. Today DFO policy must do more than concern itself with essentially negative decisions about the preservation of the fish. Ø Figure 2 graphically points out, the Department is involved in an interconnected network, making decisions which affect both individual and corporate incomes and involve Canada's interna-

Fisheries and Oceans /145 Figure 6.2 Operational Context Department of Fisheries and Oceans Pacific Region

Cities or Communities

Industry

Forestry Mining Agriculture

Employment

Departmental Headquarters (Ottawa)

Public

Participation Habitat Salmon Enhancement

Budget and Policies

International Commissions USA & Japan

~---~

Pacific Region Fisheries & Oceans

Halibut Commission International North Pacific Fisheries Commission

I

—

Other Federal Departments

1

Provincial Government/Territory British Columbia/Yukon

U.S. Governments (Washington & Alaska) Oregon Pacific Salmon Commission U.S./Canada Treaty

Recreational Fishery

Indian Communities

Commercial Fishing Industry

Recreational Fishermen Tourism Small Business

Indian Fishermen Food Fishery Band By-Laws

Commercial Fishermen Fishing Groups & Processors Advisory Committees

Source: 1986 Report of the Auditor General of Canada.

1461 How Ottawa Spends

tional relations. Ø individual fisheries come increasingly under management, the competition amongst groups wanting to affect the outcome of decisions becomes greater and greater, especially, as in many cases, if the size of the resource pie is either stable or decreasing. The structural response pulls in opposite directions: on the one hand it makes organizational and political sense to decentralize, to put decision making where the local expert knowledge of the Department can best deal with the day-to-day management of conflict. On the other hand, there is an equally strong pressure to centralize. The Minister is responsible, constitutionally and politically. Fisheries issues easily flare up in the House of Commons on the minute details of what happened last night on the dock in Prince Rupert. The so-called "cod war" between McGrath and Peckford illustrated the need for headquarters and the Minister to maintain a national perspective. Years ago the late Donald Gow pointed out that only a very determined minister could establish regional or territorial policy outcomes against what has been called "the pervasive pan-Canadian disposition" of the national government.7 Gow had argued that because the national government is organized either by distinct functions (agriculture) or clients (veterans), policy does not easily focus on localized interests. In the DFO case, this situation is augmented by the requirement that it coordinate with other federal departments such as DRIE and External Affairs and by the requirement that it devise stategic planning and policy perspectives for central agencies. Thus, you have a strong pressure for centralized decision making. Despite these pressures to centralize, the requirement for physical deconcentration of personnel and other resources for a department having to deal with the enforcement of fisheries regulation is obvious. The next question is equally obvious. In the case of DFO, does this deconcentration make for the disbursement of personnel or decentralized decision making? This is an important question, not only because it may allow us to say something about power, but also because it may give a concrete illustration, albeit in miniature, of recent issues related to decentralization raised by Richard Simeon. He was dealing primarily with the larger issues of Canadian federalism and with the possible future impact on intergovernmental relations of the forces for centralization and decentralization which play on the whole Canadian state. In Simeon's view, the only way to deal with such broad issues is through the prism of specific cases:

Fisheries and Oceans /147

...to deal sensibly with choices about decentralization, theorizing in the abstract is unlikely to get us very far. The inevitability or the desirability of centralization or decentralization has meaning only in relation to specific systems, in specific contexts with particular social and economic traditions, political cultures and political institutions.$ The Department of Fisheries and Oceans case provides an excellent opportunity in the federal government context to explore one specific system, with its own political and departmental values. One of the most important forces Simeon identifies, is what might be called the politicization of society, something which is both cause and result of the expansion of the activities of governments. This means both a proliferation of the number and variety of organized interests, as well as their tendency to become increasingly mobilized, asserting their claims on the state.9 No one familiar with DFO can fail to see the changes in the "interests environment" which 10 years has wrought. In two papers, R.D.S. Macdonald has outlined the proliferation and fragmentation of the Atlantic fishermen's organizations.10 On the Pacific coast consider, as an example only, the proliferation of Native organizations. There, 55,000 status Indians have formal tribal councils, district councils and band councils; plus the Native Brotherhood, the Aboriginal Council of British Columbia, the Aboriginal Peoples' Fisheries Commission and the Union of B.C. Indian Chiefs. All of these groups apparently want to be heard and wish to influence fisheries ροlicy.11 The administrative impulse which attempts to deal with all this flows, as Simeon suggests, in two directions. On the one hand there is pressure to bring order out of this chaos and centralize decision making. On the other hand, there is pressure to decentralize, to multiply the points of access to the system. Ι should like to test the proposition that DFO has pursued both these impulses, sometimes simultaneously. THE ATLANTIC AND PACIFIC REGIONAL COUNCILS Over the last 10 years it is easy to demonstrate the multiplication of access points to decision making within DFO. What is less easy to judge is the effectiveness of the consultation. One can only say that since the inauguration of the first Groundfish Management Plan in 1977, the search has gone on for the perfect consultative mechanism. In 1985 and 1986 there has been a major restructuring

1481 How Ottawa Spends

of the Department, partly associated with budget reductions. What has also been restructured is the Department's "external" relations with its various domestic client groups by way of newly established Atlantic and Pacific Regional Councils. Since 1977 management plans for fisheries have consisted of two important elements. First have come scientific information which establishes the relative health of a "stock" of fish and allows the scientists to recommend a certain level of harvest called the Total Allowable Catch (TAC). The second element has been the allocation of the TAC amongst a variety of users. In Atlantic Canada for instance, the managers have imposed quotas on some 43 stocks of groundfish and 17 stocks of pelagic fish, shellfish and marine mammals. For groundfish alone this means over 700 individual quota having to do with the allowable size of fish or gear to be used.1z Consultation, detailed local consultation about the allocation of the TAC, has been a feature of the system for many years. Consultation has been described as a "stepwise" process.13 It starts with fishermen and moves to fishery associations and processor associations. Then there are discussions between the regional federal officials and their provincial counterparts and between the federal Minister and his provincial colleagues. There are advisory committees for shellfish, pelagic and anadromous species, each probably with its own acronym. The most important of these latter is probably the AGAC meetings, the Atlantic Groundfish Advisory Committee. On the one hand, Minister Siddon described all this, at least on the East Coast, as "one of the best consultative systems anywhere in the world.s14 But on the other hand, the numbers of committees and their size alone, surely slow down and thereby weaken the system. In the Gulf region for instance, there are currently some 59 consultative committees.1s As early as 1977 the Lobster Fisheries Management Committee in Atlantic Canada had over 40 members, and the same was reported to be true for the Herring Management Committee.16 On the Pacific coast there are today organization charts for the consultation process which match the charts for the Department itself. At each level some issues are solved, and others are pushed upwards, eventually to Ottawa and the Minister's desk. Also in Ottawa there is a briefing for the political regional caucus, which, in the Atlantic region, currently turns out to be the Atlantic caucus of the Conservative Party. Undoubtedly throughout this long process, some consultations are more important than others. The latest response of the Department, in terms of structured advice to the Minister, has been a redesign of the regional

Fisheries and Oceans / 149 advisory system. As of April 1987, on the Pacific coast there is a new Pacific Regional Council (PARC) to match the 1985 establishment of the Atlantic Regional Council (ARC). These councils are "autonomous groups with a mandate to advise the Minister and DFO senior officials on recommended policy, and to address longterm issues."17 The choice of the name "regional council" should not be seen as a move on the part of Canadians to copy the United States system. In 1977 the legislation which enacted the American 200-mile limit endowed 11 regional councils with the legal authority to actually manage the fisheries of their regions.18 The Canadian bodies are consultative only. On the Pacific coast the effectiveness of the previous stepwise process, developed by managers in a willing but ad hoc fashion, was "distressingly" often criticized by individuals appearing in 1982 before a major Commission on Pacific Fisheries Policy chaired by Dr. Peter Pearse of the Economics Department of the University of British Columbia.19 Many witnesses apparently thought the process lacked direction and was in general an exercise in public relations. Pearse, citing the value of democratic consultation, the growing complexity of governmental regulation and the importance of the interpersonal and legal relationships resulting from consultation, recommended a whole new prοcess.20 It apparently took five years and a change of government to bring these proposals to fruition. The Pacific Regional Council (PARC), with a membership chosen to get away from "sectoral representation," formal terms of reference and a mandate of long-term issues to address, (e.g., the Pacific Consultation Process itself) must be seen as the start of a new era. Minister Siddon has provided PARC with a recognized place in his advice network and an initial budget of $80,000, sufficient to provide per diems and travel expenses for the members.21 Here we have at least one change which 10 years has wrought. "Management" of a fishery sounds simpler than it is. Consider for example, the issues of management and consultation associated with the Pacific herring industry. In the first place, this is a resource which is remarkably "volatile." The annual value of landings can vary from $20 million to $200 million and a "fishery" which lasts 45 minutes, can result in a catch of 850 tonnes, worth $2 million. In the 1960s with the stock in a state of collapse the Department attempted to reduce the harvest by reducing the number of fishermen through the creation of restricted licenses. The Department also hoped for attrition. As any economist could have predicted, however, as the stocks rebuilt a scarce resource (a licence to fish)

150 Ι How Ottawa Spends

became increasingly valuable. The licences were not transferable, that is, not to be bought and sold like taxi licences because the Department had, as a second objective, the prevention of vertical integration. As any lawyer would have predicted, however, there is a way around most regulations. Eventually widows learned to lease a herring licence either to local processors or foreign capitalists. Originally a lease went for $15,000 to $20,000 a year. But in 1987 it could apparently cost $300,000, $400,000 or even $500,000 for a long-term lease.' One might expect the Herring Industry Advisory Board to help reach a decision on this and other issues. But there is a membership problem. Witnesses before the 1987 House of Commons Standing Committee on Fisheries and Oceans pointed out the anomaly of both a union with 7,000 members and a Vessel Owners Guild with 26 members each being entitled to one vote at Advisory Committee meetings. Five years ago Pearse recommended that consultative bodies that require the balancing of conflicting interests should not include delegates [sic] who are answerable to the interested groups. Multiply the problems and issues associated with one fishery across the management of the whole Pacific industry, and you get some idea of the complexity. These recent attempts to bring order to Pacific coast management appear to parallel what happened earlier on the Atlantic coast. Given the unstable nature of both the resource and the industry, the initial efforts by officials to bring order were first oriented toward the large processing companies. During this period it was assumed that the independent fishermen and small processors would communicate adequately through political parties and provincial governments. This assumption became more problematic, however, as PØSs has pointed out, as the resource was depleted and markets became problematic. On both coasts this meant first that the "unorganized" fishermen had to get organized and second, that the Department had to devise ways, at first ad hoc but now increasingly formal, for all members of the policy community to be heard. In 10 years on both coasts we have been watching a "sub-government" develop around the Department of Fisheries and Oceans." Management, program delivery and enforcement all cost money. At some point, auditors and managers must ask, measuring in dollar terms alone, whether costs outweigh value. On the Atlantic coast one knowledgeable commentator, R.D.S. Macdonald, suggested in 1980 that the P.E.I. fishery might be getting close

Fisheries and Oceans /151

to that ροint. Considering the whole industry on the Pacific coast, the Auditor General said in his 1986 Report: ...the total processing and harvesting costs (boats, fuel, employees, plants and equipment) and the government costs of the fishery are approximately equal to the value the fishery produces. Thus, under the current management and regulatory framework, the average fisherman, the government and the taxpayer are barely breaking even with this valuable resource.' Measuring value, however, involves more than one "account." Consider the management, for instance, of the Pacific salmon. The first problem is the protection and enhancement of the species and its environment. Starting in 1977 an experimental Salmon Enhancement Program (SEP) was designed. The unspoken aim was to increase, by human effort, the size of the resource pie, thereby achieving a variety of social goods, but also easing the problems of allocation. About $250 million has been spent, and the program has now become part of the "A" budget of the Department. There is a promise to spend $200 million more between now and 1991. The question is, how does one evaluate effectiveness? The Auditor General has his values and these are expressed very publicly. In his 1986 Report, he criticized the Department's scientific evaluation processes. In its response the Department pointed out that this very specific criticism could be overcome by an infusion of $250,000 in contract wοrk.29 Likewise, in terms of cost/benefit analysis, the Auditor's1981 Report noted that research and enforcement costs in the Maritime region amounted to about $0.29 for every $1.00 of fish landed. But for salmon research and enhancement, the amount spent was at least $12.60 for every $1.00 of fish landed!80 For fisheries managers, however, while national income is one measure, other equally valid "measures" come into play, viz., regional development, Native interests, employment, and resource and environmental preservation. Projects which emphasize social objectives have to be traded off against implicit costs in dollars foregone or benefits achieved in "distributional" or quality of life benefits. This we all recognize is a matter for political, not analytical judgement.' In terms of the centripetal and centrifugal forces being considered here, however, the dominant pressure is probably for

152/ How Ottawa Spends

regional evaluation; partly because of local knowledge, partly to achieve small local tradeoffs for local political support, and partly because managers in Ottawa have national concerns. In Simeon's terms, from the point of view of DFO's political culture, wide consultation is valued, and the post-1977 traditions of the Department support a search for consensus. To a marked degree this can only be achieved at a local level where those affected by policy decisions can influence or try to influence outcomes. REGIONAL ECONOMIC DEVELOPMENT Ten years has changed the structure of the industry, widened consultation and altered the policy direction of the Department. To illustrate this latter point, we might look at the evolution of programs designed to improve the income of fishermen. Between the early post-war era and the first Atlantic fisheries crisis of 1974, the policies of the Department exhibited a remarkable consensus and were what Macdonald has called "fairly simple." Policy was focused on the fish. The Department was not of course without its interest in fishermen, although this was by no means a dominant concern for the biology-trained senior administrators. It was the working level engineers of the Industrial Development Branch who wanted to modernize the Canadian fleet by using subsidies or easy loans to induce investment in new boats, improved gear or a switch from salt fish marketed in Europe to frozen fish marketed in the United States.Ø In the mid-1970s, however, a number of things began to focus attention more fully on the income and position of the fishermen. The new Minister, Romeo LeBlanc (now Senator LeBlanc), spoke of himself as the Minister of Fishermen as well as Minister of Fisheries. The pre-1977 negotiations with the international community had built a case for extended jurisdiction partly on the degree of local dependence on the fishery. Moreover, a new body of academic specialization, fisheries economics, had gradually gained acceptance within DFO. There were new tools to study the economic consequences of dependency. Domestic policy makers could not ignore these insights. In Ottawa the government had decided to integrate a number of economic development programs under one head and had created the Department of Regional Economic Expansion (DREE). One of its chief concerns was to be the economic disparity of Atlantic Canada. Last but not !east, by 1979 a powerful union, the Newfoundland Fish Food and Allied Workers

Fisheries and Oceans / 153

(NFFAWU) had gathered together members from all sectors of the industry and was making demands, economic and social, on the decision makers in Ottawa." The Department of Fisheries worked hard to control the expanding programs of DREE.8° But successful declaration of administrative autonomy did not mean that the Department wanted to or could keep itself out of a variety of federal-provincial schemes aimed at improving the income of fishermen or the viability of the industry. Today to a quite remarkable degree the DFO is involved in regional economic development. The programs have quite a range. On the Atlantic coast there are formal intergovernmental agreements. Ιn 1984 the Government of Prince Edward Island and the Department of Fisheries and Oceans signed an Economic and Regional Development Agreement (ERDA) which will run until 1989. The program transfers about $10 million in federal and provincial funding to fisheries development. Among the areas supported by the ERDA are new ice facilities and support for aquaculture. There are similar sorts of programs for New Brunswick, about $45 million of which $25 million comes from the federal government; and coastal Labrador, about $13.5 minim." Department-wide there are a variety of income support programs whereby, for instance, the Fisheries Prices Support Board or the Canadian International Development Agency (CIDA) will buy fish. The Board holds fish until processors have a demand whereas CIDA uses the fish it buys for international aid. Finally, there are guaranteed loans to fishermen, government insurance and, until it was recently cancelled, support for the shipbuilding industry by way of fishing vessel construction subsidies. A first requirement for the implementation of these sorts of social-economic programs is a great deal of local knowledge by field administrators endowed with wide discretionary power. Does this mean the increased decentralization of the Department? On the other hand, what Ottawa-centred concerns are pulling administration to the centre? Can anything sensible be said about the overall balance of the Department over the last 10 years? Pulling to the regions are the familiar reasons of local expertise, local consensus-building and local demands. Pulling to headquarters are the pressures for central control over new programs, the need to develop policy capacity and the need for interdepart-

154 / How Οtiawa Spends mental coordination at their mutual centre, the Cabinet. Functional relationships within the broad framework of a civil service department are, as Dr. Pearse has noted, difficult issues for an external examiner to deal with.36 Overall, however, it would appear that power has shifted to the centre. In the first place, significant changes in both policy and structures followed the release of the Pearse and Kirby reports. Presumably, much of this had to be driven from the centre. Second, the Nielsen Task Force, coming at the beginning of the new Progressive Conservative era had a centralizing impact. Nielsen identified ways to cut back, and even before the Task Force Report was released, maybe half of the recommendations had been implemented. Third, at about this same time the Privy Council Office had indicated the need of the Department for strengthened capacity in strategic planning. Following the 1984 demise of the Ministry of State for Economic and Social Development there were talented people available for recruitment to the Policy and Planning section of the Department. Within two years, this section, aware of the Tory government's interest in Arctic sovereignty and increased naval capability, had produced for the Minister and Cabinet two new statements on oceans policy. The Department would take up the second half of its official title, Fisheries and Oceans. The Minister, Tom Siddon, in his 1987 remarks to the Standing Committee on Fisheries and Oceans spoke of "new priorities" in the study of Canada's "oldest yet newest frontier."40 Less clear in impact, however, has been the changes wrought by new responsibilities, new priorities and a new government on the management of science, the Department's first responsibility.

THE MANAGEMENT OF SCIENCE: SPECIALIZATION BY REGION OR SPECIALIZATION BY FUNCTION Any overview of the last 10 years cannot leave untouched the changes which have been wrought on what is the Department's oldest function, and the one in which it probably takes its greatest pride: scientific research. The Department's original mandate back in the 1860s was the conservation of fish. Through the Fisheries Research Board of Canada and the world class scientists who worked there, the Department built and has maintained a tradition of excellence. From the point of view of fisheries managers, however, the need is for applied science and it would appear that over the years, the Board had concentrated on long-term research. Thor-

Fisheries and Oceans 1155

ough answers ready 10 years hence were not what day-to-day managers needed. After the Board was disbanded in 1979, the first working solution for the organization of science was to make each Regional Director-General responsible for fisheries research. Paralleling this regional organization however was an odd sort of arrangement, which left two specialist fields—Oceans Research and Hydrography—reporting to Ottawa with their Estimates carried on the headquarters budget. Biological problems were dealt with through the Regional Directors-General, while physical and chemical research personnel reported to an Ottawa-based assistant deputy minister of Ocean Science and Surveys. Clearly it was an imperfect structure. It separated into two parts a scientific effort which should have been one. In operational terms questions of growing importance, such as environmental impact or the toxicology of water, had to be addressed in two laboratories. Even the Department's fleet seemed to have three "masters": patrol vessels, biological research vessels and ocean research vessels, each with its own personnel and support services, all working for one department. In September 1986, Minister Siddon took the opportunity of correcting all this by making a four-fold change. First, there was to be a reduction of 312 person-years in the total regional staff of the Department. Second, there was to be regional consolidation. The four science and seven fisheries regions were combined into six fisheries and oceans regions. Third, there was to be a reallocation of 89 person-years to the "high priority" areas such as surveillance, enforcement and fish inspection. In terms of regional staff it meant a reduction of four per cent, or 223 person-years. Six months earlier there had been a 23 per cent reduction in headquarters staff 41 What seemed to be a clear-cut Departmental preference for organization according to place, was to some degree countered by the fourth element in the announcement: the designation of six "Centres of Disciplinary Expertise." In practice, this meant the Northwest Atlantic Centre in St. John's, Newfoundland, would specialize in resource assessment and survey methodology; the Bedford Institute of Oceanography (ΒΙO) in Dartmouth, Nova Scotia, would specialize in oceanography, marine contaminants and toxicology, and so on across the country. The objectives were twofold: to shorten the chain of command and to consolidate each region's work under one individual designated as Regional Director for Science.

156 / How Ottawa Spends

The re-organization was not done without some public controversy. Professional scientists at the Bedford Institute of Oceanography objected in public to a transfer to St. John's or to the Gulf region. The Deputy Minister, in reply to questions from the Parliamentary Committee, explained to the MPs that there had been an "enormous misunderstanding" and it was not true that the BOO was being threatened. Headquarters was transferring some scientists to Newfoundland, especially biologists and hydrographers because the stocks were in trouble there and additional "firepower" (to use an MP's terminology) was needed. Once the dust had settled it appears that the personnel transfer was done without difficulty. In terms of the centralization/decentralization issues we have raised above, what is to be made of all these changes? On the face of the record it would appear that the new organization has as its aim an integrated scientific effort in each region, that is, specialization according to place, with at the same time, a bow in the direction of functional specialization. Every organizational structure has its problems, of course, and speaking with the caution appropriate to the layman, one can see weaknesses in the current approach. First, at headquarters, will the ADM-Science have sufficient budget control to knock heads together at the research lab level to prevent competition between regions and the possible development of overlap? Second, the Regional Directors-General (RDGs) are classified at either the EX-3 or EX-4 level and report directly to the Deputy Minister (DM). At a time of tight budgets, they might have spending objectives different from those of the scientists and a direct route to the DM through which to express them. As might be expected, the Department has worked out a "protocol" which sets out the responsibilities and authorities of the ADM-Science vis-à-vis the RDGs. The document states for instance that the science budget (which in 1988-89 will amount to 1,059 PYs and $185.6 million dollars) can be redirected between regions by the ADM-Science. Furthermore, his approval must be obtained for any change in the science "work plan" for any given budget year. It will be interesting to see how it works out. The problem with trying to assess the direction of these changes is that they are still too recent. Moreover, what may be appropriate for the Atlantic coast, may not apply to the Pacific coast, let alone the Central region. This latter region has received scant attention so far in this review. This is not to suggest it is unimportant. A reading of the Minutes of the Parliamentary Committee on Fisheries and Oceans makes abundantly clear the

Fisheries and Oceans 1157

Øs are interested. Although this region's budget is comparatively small, there is still an important freshwater fishery and, very important politically, a lot of small craft harbours very much in need of infusions of federal money. CONCLUSIONS Throughout this paper we have said nothing about the economic value or the export value of the product which DFO helps to see into the market. As both Canadian and American per capita consumption of fish rises, and as stocks of fish are depleted elsewhere in the world, the relative competitive position of Canada is enhanced. In the last two years there has been a very considerable rise in the landed price of fish. In 1985 the total value of exports was about $2.5 billion. Economically and socially the fishery is important to Canada and therefore we all have a stake in effective management of a renewable resource. The Department of Fisheries and Oceans is deeply embedded in a bewildering array of "publics." There are formal organizations, informal personal and professional influences and values coming at the Department from commercial, recreational and native fisheries, provincial governments, U.S. state and national governments and from international agencies. Given this policy environment, good management might be enhanced by a fairly stable departmental organization. It would allow the build-up of trust amongst individuals worldng with known policy objectives. Such, however, has not been the recent lot of the Department of Fisheries and Oceans. Overall, recent Canadian experience, for both ministers and deputies, has been anything but stable. We have already noted that 10 years has seen five ministers and four deputy ministers and many, many directors-general. In 19864 there has been significant change in the organization and responsibilities of the regional offices. In 1982 the report on the Pacific fisheries spoke bluntly about administrative "turmoil," as "successive waves" of structural change apparently preoccupied local officials. In this particular case it was not only relations between Ottawa and the regional headquarters which were affected; it worked down to the organization within the region as centralization and decentralization oscillated back and forth between Prince Rupert, Nanaimo, New Westminster and Vancouver."

1581 How Ottawa Spends

Perhaps tension between headquarters and field, between line departments and staff agencies, and between different professional orientations is a fact of organizational life that just has to be tolerated. Additionally, perhaps the nature of the resource being managed itself brings a kind of natural instability. The fishery, after all, is subject to inexplicable natural phenomena and to national and international market phenomena just as inexplicable. But enough is enough. There are operational and policy concerns which need attention. One can only echo Dr. Pearse in pointing out that if policy and administration lack consistency and vigour, if policy decisions are pliable in the face of lobbyíng,45 then between fishermen, local οm' ials and Ottawa the necessary confidence is broken. It seems that decentralized administration must have trust as the basis for authority. If local decisions are overridden from Ottawa, it weakens the position of the Regional Directors-General. Equally, however, even knowledgeable local people can make a wrong decision, and when there is trouble, it is the Minister who must answer in Parliament. Ten years is not a long time in the life of a Department which pre-dates Confederation. These 10 years have probably been however, the most momentous in that long history. The policy community has seen the emergence of powerful new members. At the centre of government the lead department has had to share status with powerful new agencies. The Department's responsibilities and activities have grown and continue to grow. Fisheries management does not come cheap. Overall we are left with some uncertainty about costs. The extension of the 200mile limit was hailed as a significant achievement for Canadian sovereignty. But what have been the costs and benefits to the Canadian taxpayer of the extension of the 200-mile jurisdiction? Is this a question for which an answer should even be attempted? Who can measure the value of an end to foreign overfishing? Who can measure the value of the preservation of the lifestyles and incomes of whole communities? Accepting these points without reservation, one must still ask, are we getting value for money? Is it an isolated case, or more general, that the expenditures on fisheries can be more than the total value of the landings? Not every government service can be or should be self-sustaining. But as the economists might argue, the political decision should be accompanied by some public knowledge of costs and trade-offs. A second concern about costs involves the administrative and psychological costs of consultation. Can consultation and the

Fisheries and Oceans /159

search for consensus really work? Can a federal department under pressure take the time, and pay the price, for effective popular involvement in policy making? On the one hand there is evidence that officials have been attempting popular involvement for more than 10 years, and there are no hints that they want to cease to do so. Something of a departmental tradition, supported by sheer political necessity, might carry the process further. But unless order and direction can be brought about at the top, and clearly made to work at the bottom, the tendency may be to go through the motions without ever engendering confidence that public participation is effective.

160 ! How Ottawa Spends Notes 1.

Canada's Oceans, Department of Fisheries and Oceans, DFO/3419, (Ottawa: Supply and Services Canada, 1987), p. 13.

2.

Canada. Task Force on Atlantic Fisheries, Navigating Troubled Waters: A New Policy for the Atlantic Fisheries (Ottawa: Supply and Services Canada, 1983).

3.

A. Paul Pross and Susan McCorquodale, Economw Resurg-

ence and the Constitutional Agenda: The Case of the East Coast Fisheries, Queen's Studies on the Future of the Canadian Constitution, Institute of Intergovernmental Relations (Kingston: Queen's University, 1987), pp. 110-112.

4.

Ιbid., pp. 96-109.

5.

Canada. House of Commons, Standing Committee on Fisheries and Oceans, Minutes, 4 November, 1976.

6.

Canada. House of Commons, Standing Committee on Fisheries and Oceans, Minutes, Vol. 12:7, 31 March, 1987.

7.

Donald Smiley, The Federal Condition in Canada (Toronto: McGraw-Hill Ryerson, 1987), p. 192.

8.

Richard Simeon, "Considerations on Centralization and Decentralization," Canadian Public Administration, Vol. 29:3, Fall 1986, p. 447.

9.

Ιbid., p. 454.

10.

R.D.S. Macdonald, 1979, 1984.

11.

Canada. House of Commons Standing Committee on Fisheries and Oceans, 1984-85, Vol. 31:17.

12.

Interview, Department of Fisheries and Oceans, October 29, 1987.

13.

Canada. House of Commons Standing Committee on Fisheries and Oceans. Testimony of Peter Mayboom, 7 April, 1987, Vol. 13:9.

14. Ιbid., Testimony of T. Siddon, 31 March, 1987, Vol. 12:7.

Fisheries and Oceans /161 15.

Ibid., 1987, Vol. 14:21.

16.

Canada. House of Commons Standing Committee on Fisheries and Forestry, 12 May, 1977.

17.

Pacific Regional Council (PARC), Terms of Reference, Department of Fisheries and Oceans, Pacific Region. Unpublished document dated 13 April, 1987.

18.

Susan McCorquodale, "Fisheries Regulation in a Federal State." Paper presented to the Atlantic Provinces Political Science Association meetings, Halifax, October 1983.

19.

Commission on Pacific Fisheries Policy, Turning the Tide: Α New Policy for Canada's Pacific Fisheries, (Peter H. Pearse, Commissioner), (Ottawa: Supply and Services Canada, 1982), p. 220.

20.

Ibid.

21.

Pacific Regional Council (PARC) Terms of Reference, Department of Fisheries and Oceans, typescript, dated April 13, 1988.

22.

Canada. House of Commons Standing Committee on Fisheries and Oceans, 23 June, 1987, Vol. 23:24.

23.

Ibid.

24.

Pearse Report op. cit., p. 221.

25.

A. Paul Pross, Group Politics and Public Policy (Toronto: Oxford University Press, 1986), p. 91.

26.

Ibid., pp. 145-149.

27.

R.D.S. Macdonald, "Fishermen's Income, and Inputs and Outputs in the Fisheries Sector: The P.E.I. Case," Canadian Issues, Vol. 3, No. 1, Spring 1980, pp. 25-35.

28.

Auditor General of Canada. Annual Report, Year Ending 31 March, 1986, Para. 10.30.

29.

Ibid., para. 10:60 and Response, ff.

162/How Ottawa Spends 30.

Auditor General of Canada, Annual Report, Year Ending 31 March, 1981, p. 219.

31.

Department of Fisheries and Oceans, "Objectives of the Salmon Enhancement Program" Annex I, The Five Account Planning and Evaluation System, Salmon Enhancement Program Green Book, Annual Report, undated.

32.

R.D.S. Macdonald, "Canadian Fisheries Policy and the Development of the Atlantic Coast Groundfisheries Management Plan," in Cynthia Lamson and Arthur J. Hanson (eds.), Atlantic Fisheries and Coastal Communities, Dalhousie Ocean Studies Program, 1984, pp. 15-75, p. 28.

33.

Prosa and IcCorquodale op. cit., p. 92. See also Gordon Inglis, "Lawyers, Priests, and Gangsters from Chicago: Factors in the Development of the Newfoundland Fishermen, Food and Allied Workers' Union," in Contrary Winds: Essays on Newfoundland Society in Crisis, Rex Clark (ed.), (St. John's: Breakwater Books, 1986), pp. 56-75.

34.

Donald Savoie, Federal-Provincial Collaboration: The Case of the New Brunswick General Development Agreement, Institute of Public Administration of Canada, (Montreal: McGill Queen's Press, 1981), pp. 85-88, 132-136.

35.

House of Commons Standing Committee on Fisheries and Oceans, Proceedings, 11 December, 1986, Vol. 4:4.

36.

Pearse Report, 1982, p. 235.

37.

Task Force on Program Review, (Erik Nielsen, Chairman), "Regulatory Programs," (Ottawa: Supply and Services Canada, 1986), pp. 269-287.

38.

Interview, Dr. A. May, former Deputy Minister of the Department of Fisheries and Oceans. Ottawa, 30 October, 1987.

39.

(1) Department of Fisheries and Oceans. Oceans Policy for Canada: A Strategy to Meet the Challenges and Opportunities on the Oceans Frontier, Publications Branch, Ottawa, 1987.

Fisheries and Oceans /163

(2) Department of Fisheries and Oceans. Canada's Oceans: An Economic Overview and a Guide to Federal Government Activities, Publications Branch, Ottawa, 1987. 40.

House of Commons Standing Committee on Fisheries and Oceans, Proceedings, 31 March, 1987, Vol. 12:19.

41.

Department of Fisheries and Oceans, News Release, NRHQ-86-72Ε, dated September 24, 1986.

42.

Canada. House of Commons Standing Committee on Fisheries and Oceans, Proceedings, 7 April, 1987, Vol. 13:35.

43.

Canada. Report of the Royal Commission on Financial Management and Accountability, (Chairman, Allen Lambert), (Ottawa: Supply and Services Canada, 1979), pp. 191-204.

44.

Pearse Report, 1982, p. 234.

45.

Ibid., p. 237.

CHAPTER 7 THE DEPARTMENT OF NATIONAL DEFENCE: THE STEADY DRUMMER Edgar J. Dosman

INTRODUCTION Brian Mulroney promised to make defence a priority in Canadian public policy. During the 1984 campaign, the Prime Minister had trumpeted the East-West threat and his determination, if elected, to "honour the commitment." There would be a White Paper; the "shabby and demoralizing treatment" of our Armed Forces by the Liberals would cease; and there would be more money. After the long years of neglect, the Department of National Defence (DID) would now go "first class" with the Tortes—ín pay, training, weapons and equípment.1 The first steps were unpromising, but by the fourth budget more has been accomplished than anticipated, considering Mulroney's penchant for overstatement. A much-needed White Paper was indeed produced in June, 1987 under a new and dynamic Minister; defence and security issues have become more politically salient areas of public policy debate; the interdepartmental status of Defence has risen appreciably. Within National Defence, senior ministerial interest and leadership on a level which has not been seen since the early 1950s has fashioned a solid consensus. Beyond the declaratory level, however, the Mulroney record is less positive, and even here the very traditional 1lolicy directions outlined in the White Paper have been critically received by various Canadian constituencies. More important, there have been steps backward, particularly at the resource and expenditure management levels—factors beyond the control of National Defence. Some advances since September 1984 merely reflect evolutionary changes generated in the Trudeau years. In all, however, the portfolio with its substantial $11.2 billion budget, consuming half of all overall federal capital outlays and some 40 per cent of discretionary funding has developed credibility. Re-equipment programs have become 165

166/ How Ottawa Spends very big business. It is no longer a loser department and merits detailed attention, beginning with DΝD's overall policy orientation during the Mulroney years and closing with the implications for Canadian defence policy raised by the current budget. The framework of analysis employed in this chapter is straightforward. The defence challenge faced by the Mulroney government following the 1984 general election had been clearly articulated by numerous Canadian specialists since the early 1970s: bridging the so-called "commitments-capabilities gap." Since the 1960s, Canada had assumed more post-war defence commitments than defence budgets could credibly deliver. The options in dealing with this problem were clear: either the commitments must be reduced or the resources for defence increased. With the previous Defence White Paper long since moribund—it had been produced in 1971, but not in fact implemented—policy direction had to be the first step. This the subsequent Trudeau governments had failed to produce, although after initially savaging DID (continuing the Hellger neglect), Trudeau belatedly rediscovered NATO after 1975 and had substantially increased defence spending to address the most critical equipment needs. The Mulroney team therefore inherited an agenda, but it was also apparent that a coherent strategy would be required to surmount the exceptionally strong internal and external obstacles confronting any Canadian government seeking major changes in defence policy and spending in order to bridge the commitmentcapabilities gap.2 In fact a distinctive Conservative approach did take shape, with five principal elements: o o o o o

the raising of DΝD's interdepartmental and Cabinet profile; a new policy framework to streamline commitments; a determination to deliver the resources required for their effective implementation; a long-term procurement strategy for ensuring a militarily credible force structure; and finally the nurturing of a defence constituency in Canada for sustaining defence policy in the long haul.

Taken together the five elements permit a tentative evaluation of the Mulroney record.

The Department of National Defence 1167

Ministerial Change For 25 years the DID portfolio had witnessed a rapid circulation of ministers. The Conservative government of Brian Mulroney reaffirmed this unhappy tradition following its decisive victory in September 1984. So far from "honouring the commitment" of the election campaign, the first Minister, the Honourable Robert Coates, had immediately to swallow a $154 million reduction. He was fortunate enough to get new uniforms. The cynicism within DID mounted as officers and officials recalled all the previous government promises and the endless succession of forgettable ministers. The circumstances surrounding Coates' early resignation, on February 12, 1985, seemed to climax the long leadership void with its lack of influence, poor judgement and even want of efficacy. He had ventured far enough into a dubious establishment in West Germany to be dismissed from Cabinet, but was denied even the minimal satisfaction of being caught in the act. His surprise successor (representing a return to the earlier two-minister format) was of tougher mettle, but the Honourable Erik Nielsen was also Deputy Prime Minister and coordinator of a major government task force. He certainly had far more influence in Cabinet than Coates, and identified with the commitment to strengthen Canada's defences. But he had not wanted the portfolio (unlike his colleague, Harvíe Andre) and was already over-committed. The secretive spectre-like Deputy Prime Minister would have required a different temperament, time, more amicable relations with External Affairs and greater clout with Finance to fill the leadership vacuum in DND. Perrin Beatty, promoted to the defence portfolio on June 30, 1986, provided the right mix of skills and style. Here was a rising rather than a falling star, a young and outgoing politician, aggressively upward bound in the Conservative Party, and a good public communicator. For DID it was the change of ministers rather than the change of government in 1984 that proved decisive. The Cabinet overhaul of June 30, 1986 finally opened the new and dynamic period for DID promised in the general election. Beatty joined Joe Clark on the Cabinet Priorities and Planning Committee—a startling innovation, leap in confidence and signal from the Prime Minister's Office that Mulroney wanted a White Paper to see the light of day. Under Beatty, DID finally had a leader with the imagination and drive to re-design a longterm defence strategy for Canada, fulfilling the dreams of his pred-

168 / How Ottawa Spends

ecessor, Mr. Alan McKinnon, who as the Minister of Defence in the Clark government had been frustrated by the abrupt termination of the Clark minority government in 1979. Cabinet Decision Making DID had acquired new status, but how far could the young defence minister take his portfolio in Cabinet? Mulroney's personal style and approach to government contrasted sharply with Trudeau. Trudeau dominated his Cabinets; government decision making reflected his orderly mind, with specific fulcrums for managing foreign and defence policy. Mulroney's brokerage, pork-barrelling style and dislike of formal planning instruments signalled the opening of a very different period. He abolished the Cabinet Standing Committee on Foreign Affairs and Defence, until he found that the business of government could not do without it. The pervasiveness of Mulroney's last-minute political and regional trade-offs meshed poorly with the requirements of defence spending which, to be effective, must be long-term and consistent3 An initial problem concerned relations with External Affairs. Under Trudeau the latter department had grown accustomed to so dominant a lead role in Canadian foreign and defence policy that DID at times appeared subordinate, at times little more than a service department. Not surprisingly the rationale for several key defence decisions had reflected political rather than military considerations. Some policy turf, therefore, had to be reclaimed by Beatty, while at the same time strengthening relations between the two departments at all levels. A second issue related to collegial decision making. Although the Mulroney Cabinet was weak overall, the stronger ministers were acutely interested in the defence budget—if not in defence policy itself. The reasons were clear enough. With roughly onehalf of the federal capital budget, and over $30 billion in the pipeline, the letting and location of DID major projects had become formidable objects of ministerial competition. Moreover, as the deficit squeeze continued to dominate overall government operations and to cut virtually all departmental budgets except National Defence, DID was suddenly exposed. The sudden change of status from pariah to cabinet "fat cat" was problematical for DID omcíals, accustomed W berate everyone with their sorry state in NATO and the continuing neglect by Canadian governments.4 Effectiveness in this Cabinet required personal and bargaining skills in the

The Department of National Defence /169

two areas of policy and (more importantly) resources. Could Beatty be simultaneously successful in both?

Interdepartmental Recruitment Beattg's promotion accelerated important changes affecting DID recruitment patterns, interdepartmental relations and public openness. Although the civilíanization of DID had proceeded apace since the 1960s, during the bleak years of the 1970s (until Trudeau's conversion to NATO and renewed military acquisition programs) National Defence held little interest for Ottawa's best and brightest: it was a dead-end department. This began to change during the last Trudeau government, as DID's budget soared, increasing eight per cent in 1983, for example. But the extent of this emerging interdepartmental interest in DID became more apparent when Robert Fowler, who headed the PCO cabinet secretariat for foreign and defence policy, moved over to National Defence in 1986 as Assistant Deputy Minister (Policy). With this growing accumulation of capable senior officials from the central agencies and elsewhere, DID gained a new kind of professionalism in "policy development." They knew the central agencies and the skills of interdepartmental bargaining, a perfect match with the new ministerial style of Beatty (who in turn has encouraged lateral recruitment of military personnel). There was now a quantum jump into public openness, bringing DID finally into the twentieth century in this regard, as both the Minister and officials sought to enlarge the Canadian defence community as a potential political base of support. Defence had come out of the cold, and was now a challenging place to work.

Internal Consensus Internally, the Honourable Perrin Beatty found a department aching for strong leadership. The result within DID has been very positive. The perception of interdepartmental respect has permeated down through the ranks—even to the reserves who were immensely impressed by Beattg's commitment to end their second-class status. Beatty dumbfounded the Canadian military by listening to them. The new uniforms, the White Paper, but above all a strong leadership, have restored morale and dissipated some of the prevailing ghetto mentality within DID.

1701 How Ottawa Spends The Minister's orthodox orientation to East-West relations has also been an important factor in internal consensus-building. As reflected in the White Paper and public statements, he is a true believer in DND's essential soldiering role, the global Soviet threat, loyalty to Washington as leader of the free world, and the wisdom of negotiation from strength—the core beliefs of DID where U.S. strategic doctrine is rarely questioned.ó The Minister's ideological projection has on occasion exceeded credibility, casting him (unfairly) as a somewhat more benign Caspar Weinberger or Nestor Sanchez: his earnest advice to educators, for example, to arm their schoolchildren with "the right information" (the Soviet world-wide menace). During Lightning Strike, a 3,000-member Canadian Special Forces exercise in February, 1988 to counter it Soviet Arctic assault (unleashing a Third World War for control of the Norman Wells pipeline, 2,000 kilometres north of Edmonton), Beatty again relished this opportunity to educate the Canadian public (inaccurately) in the more insidious aspects of the global threat. "There would not be a Soviet invasíon...They would use their special forces. Spetanaz are basically world-class athletes whose role it is to disrupt things by causing havoc and assassination."6 But these public musings have not hurt him in DID—quite the reverse. There is a boy-like eagerness here, a bravado and "let's trust the Rusldes when we can see the whites of their eyes" mentality that has immensely heartened National Defence. Beatty really likes the military and his portfolio. The feeling is mutual. They can be proud again among their NATO peers. At last they have a straight-talldng minister who is well-received by the allies; the mortifying days of gratuitous insults from U.S. conservative defence analysts appeared to be over.7 POLICY: THE DEFENCE WHΙΤΕ PAPER The release of the Defence White Paper, Challenge and Commitment, after a 16-year hiatus was itself an important achievement and a major step in the right direction. Particularly after the progressive deterioration of superpower relations since 1979, but acutely following the election of Ronald Reagan, there was mounting criticism that Canada was not doing its share in the NATO alliance. But what is the right share? It is not easy for the public or Parliament to determine the adequacy of defence expenditures in the common interests of national security. Such expenditures also

The Department of National Defence / 171

inevitably mean less money for other national redistributive programs. Given their high cost, taxpayers must understand why and for what a $10 billion budget is necessary.$ Moreover, the present military threat to Canada is diffuse and less obvious than, say, to West Germany. Finally there is no a priori reason why Canada's definition of security should be the same as (for example) Washington's. Indeed, most Canadians approve of neither the annual estimated $4.5 billion U.S. military involvement in Central America nor the U.S. challenge to Canada's northern sovereignty, to mention only two areas of considerable public interest. The advent of the Gorbachev period in the Soviet Union and the gradual warming trend in East-West relations made the formulation of a new policy statement on military priorities within the broader requirements of Canadian national security increasingly necessary. Despite this, the overall orientation and underlying premises of the White Paper unveiled in June 1987 were characterized by continuity rather than change with post-war policy. The legislative and policy mandates remained basically unchanged, and the four familiar themes of Canadian defence and security policy were reaffirmed: "maintenance of strategic deterrence"; "credible conventional defence" (ΝATO); "protection of Canadian sovereignty"; and of course, peacekeeping to help prevent the escalation of regional conflicts into global confrontations.9 The White Paper did not really offer a "new" policy. With the exception of the CAST commitment to Norway, existing defence obligations were confirmed. Something was given to everyone— the Canadian Forces (Navy, Air Force, Army and the Reserves), as well as both the Europeans and the U.S. According to the Minister, the restoration of military capability to implement this "blueprint for defence policy to the end of this century and beyond," included: •

•

o

a three-ocean navy for the defence of Canada's seaward approaches and maritime interests, centred on a fleet of 10 to 12 nuclear-powered submarines and both new and upgraded surface vessels; the consolidation of Canadian forces on the European central front to provide a credible contribution to the collective defence of Europe, at the expense of the Norway CAST commitment; the enlargement and revitalization of the Reserves to sustain the European-based forces and Canadian defence tasks; and

172 /How Ottawa Spends

° the improvement of Canadian air and maritime surveillance capability.10 Several aspects of the White Paper were strongly received. The building of a three-ocean navy capitalized on a public groundswell of concern regarding adequate control over our 72,000-kilometre-long coastline, sea approaches, the economic zone, and particularly Arctic waters. This is an imaginative concept for which DID deserves full credit. Taken together, the proposed initiatives to increase Canadian surveillance and territorial defence (participation in the North Warning System; five northern Forward Operating Locations; further CF-18 aircraft; upgrading of AWACS' bases; and more recently, the long overdue decision to create a permanent training base at Nanisivik, among others), have also responded to growing media and public criticism regarding the lack of adequate capabilities for protecting Canadian sovereignty and security. For its part, membership in NATO consistently receives overwhelming public support in Canada; peacekeeping is likely to become increasingly significant as regional breakdown escalates in the 1990s. A rationalization in some form of the European NATO commitment was welcomed; the Total Force Concept with upgraded reserves is interesting; and so forth." But how do they all fit together? What hard choices have to be made? It was particularly disappointing that defence priorities were not ranked—a deliberate omission to avoid the controversy surrounding the 1971 White Paper. But this has permitted very different assessments of the actual thrust of the White Paper. Did Europe remain the prime focus (as David Haglund of Queen's University has argued); or is the Mulroney government "swinging emphasis from a NATO-pushed defence policy to a Canada-pulled one"?12 The new salience of the Pacific and Arctic might suggest the latter. According to Robert Fowler, the ADM-Policy in National Defence: I think both Canadians and Americans quite separately have sought to point out that there isn't only one North Flank in Europe and indeed in NATO there is a western flank that isn't the coast of Newfoundland. And the whole concept of west coast Canada or the MARPAC (Maritime Command, Pacific Region) area as being somehow NATO related for many Europeans is very hard to wrap their minds around.13 But it is not spelled out in the White Pager.

The Department of National Defence 1173

The two top Canadian defence priorities, of course, are predetermined by geography, but here also the specific relationships are left vague. Canadian support for the U.S. nuclear deterrent follows from Canada's geographic location between the superpowers. Either we help defend it within an alliance framework or the U.S. will do it unilaterally.14 Similarly, with a huge country and a very modest population, territorial control and surveillance to ensure sovereignty is both essential and increasingly costly. How are these priorities to be defined, ranked and implemented? The centrepiece of the proposed procurement to operationalize the White Paper, the new fleet of nuclear-powered submarines, illustrates the problem of conceptual fuzziness. The submarines will consume a good portion of the entire proposed procurement budget; depending on their cost, many other items may have to be dropped from the shopping list. But the proposed roles and missions of these vessels remain unclear. Specifically, what are the sues to be used for? Are they wrapped in the flag of northern sovereignty for public relations? Are there more effective options for securing control of subsurface movements in the Northwest Passage? Or are they to be used to chase Soviet submarines in the Atlantic and Pacific in cooperation with allied submarine forces? If so, will we have the capabilities required for maritime surveillance and coastal patrol? The language of the White Paper provides no answer. This fleet cannot be justified on the basis of Arctic sovereignty alone, but without a maritime policy neither defence specialists nor the public can evaluate the merits of this proposed addition to a new Canadian fleet.15 Meanwhile, a submarine procurement project office with a $23 million budget (1988-89) has already been set up; the British and the French have opened a fierce competition for the contract; and the actual DID commitment tο purchase them deepens. The costs of eventual withdrawal from the program down the road lengthen. However, an overarching conceptual design is missing. Then there is the "why" of defence expenditures: the assessment of threats confronting Canada. The White Paper is pessimistic regarding Soviet intentions, advancing the claim that its long-term aim is "tο mould the world in its own image." The uncompromising language delighted the Conservative party, DID and Washington, just as it disappointed mainstream Canadian defence specialists (and who in any case considered the glossy, slick format of the White Paper too obviously a version of the U.S. State Department's Soviet Military Power). Although there are more balanced references to East-West relations buried in the text, and

174/How Ottawa Spends

DID officials have denied that the White Paper had revived Cold War rhetoric, on balance, its examination of the strategic assessment appears unnecessarily hawkísh.16 Certainly it appears well behind Canadian public opinion. Terrorism, immigration and regional breakdown, and more generally the relative decline of the superpowers have diluted the East-West factor, and now require a Canadian security policy that addresses the 1990s in all dimensions. Such policy studies might well confirm the recommendations of the White Paper; in their absence the sterile invocation of the Soviet threat may damage its credibility.17 The major priorities in any case do not need a Cold War rationale. This cardinal point--and the consequent need for u rovation in Canadian strategic doctrine—remains a vital conceptual challenge facing DID planners. Whatever its shortcomings, the White Paper is a fundamental building block for defence planners—a point of departure offering a longterm planning outline and a program of capital expenditures. Indeed, as Geliner has noted, the principle of longterm funding is a major advance.18 The equipment needs outlined by the Minister, estimated at between $55-60 billion, were acknowledged to be a "significant challenge for this and future governments." But the government had committed itself to two per cent real growth annually for 15 years, plus `bumps": Cabinet allocations beyond the two per cent base-line for major capital acquisition programs. The Minister had got a commitment from the most incrementally-minded government in recent memory. Could the system deliver? RESOURCES Financial Resources for Defence Since declaratory policy to be meaningful must be translated into programs, financial resources are the test of government will. But Canada's Department of National Defence has heavy built-in budgetary constraints, as Middlemiss and others have noted. Therefore the framework for examining resources and resource management requires a brief outline.19 As a professional force it is high-cost, aggravated by the decision in the early 1970s to equalize military and civilian salaries and benefits. Civílianization has contributed to a high support personnel/combat unit ratio. (Table 1) The Canadian Forces roles and missions are capital and technology intensive,

The Department of National Defence / 175

with accompanying high procurement and replacement costs. Α tradition of "gold-plating" to keep up to the military Joneses may accentuate capital costs. But of course there are also non-military factors which have played a central, and often decisive role in DΝD resource allocation, constraining procurement choice and adding a significant premium which must then be absorbed by National Defence in the interests of regional development or industrial offsets' Table 7.1 Department of Νaί οnaΙ Defence Personnel Strengths and Costs 1979-80 to 1987-88 Year

Military

1979 (FY 1979-80) % increase

78,417

1980 (FY 1980-81) % increase

78,421

1981 (FY 1981-82) % increase

79,669

1982 (FY 1982-83) % increase

81,071

1983 (FY 1983-84) % increase

82,188

1984 (FY 1984-85) % increase

80,838

1985 (FY 1985-86) % increase

83,037

1986 (FY 1986-87) % increase

84,686

1987 (FY 1987-88) % increase

85,627

Employees' Civil 33,173

111,590

33,731

112,152

34,385

114,054

% of DΝD Expenditures3

2,363,115

53.8

2,586,703

50.9

3,037,556

50.4

3,405,908

48.8

3,710,529

46.6

3,929,077

44.1

4,148,323

45.3

4,379,145

44.2

4,544,393

43.9

(1.0)

(0.7)

0.5

0.01

1.7

1.6 34,320

115,391

33,293

115,481

33,228

114,066

35,597

118,634

34,684

119,370

1.2

1.8

.8

1.4

—1.2

—1.6

4.0

2.7

0.6

2.0

1.1

Cost2 (5000s) $ Current

Total

34,026

119,653 0.2

1 From figures quoted in the Estimates. Employee numbers for 1986 and 1987 are a forecast and an estimate, respectively. 2 Based on expense category No. 1, in the objects of expenditure, as reported in the Estimates. 3 DΝD expenditures are the riet program expenditures quoted in the Estimates. 1986 is a forecast, 1987 is an estimate; all others are actual.

176 / How Ottawa Spends

The critical issues for DΝD relate to the capital budget and continuous updating of equipment. For eight years, between 1968 and 1976, Canada did not place a single contract for a major weapons system; in 1972, the capital budget fell to eight per cent. DΝD is still Øvering. But the capital share of the budget had rebounded to 28 per cent by 1984-85, and a shower of major procurement projects accompanied the general election of 1984. By the end of the Trudeau period the DΝD rebuilding process was clearly off the ground. The Mulroney government came into office with an election pledge to increase defence spending after inflation; in practice this intention fell victim to Finance's fiscal policy of deficit reduction, with the Fiance Minister (Michael Wilson) announcing in February 1986 only a two per cent real growth ceiling through to the fiscal year 1990-91.'1 The first Minister of National Defence (Coates) was challenged in the House shortly after the election on earlier promises and had to acknowledge that "there is nothing we can do until we get that deficit under control.' The impact of the plunge of world stock markets in October 1987 has been to strengthen further the decisive presence of macroeconomic factors and the role of the Department of Finance in defence budgetary decision making. The effect on defence spending has been to reduce the increases to below the level attained during the final Trudeau years. (Table 2) In these circumstances, funding the White Paper proposals will be a major challenge. Many experts remain doubtful of the estimated price-tag of the shopping list—particularly the most expensive items, such as the nuclear-powered submarines? Moreover, DΝD cannot start with a clean slate. Billions are already committed in programs already underway, such as TRUMP (the Tribal Class Update and Modernization Program), placing a prior call on the capital budget. Also, the major equipment purchases of a decade ago are aging and will require refitting or replacement. Meanwhile the cost of weapons systems continues to soar. The truth is that funding Canada's inherited military roles reaffirmed in the White Paper will require resources that neither this nor future governments are likely to deliver.

The Department of Nation! Defence 1 177

Table 7.2 Department of National Defence Total Expenditures 1979-80 to 1986.87' (in thousands of dollars) Total $ Current

Per Capital $ Current

% of Federal Expenditure'

% of GNP

1979-80 % increase

4,389,289 6.8

185.4

8.5

1.63

1980-81 % increase

5,077,076 15.7

212.1

8.5

1.70

1981-82 % increase

6,027,729 18.7

247.6

8.4

1.75

1982-83 % increase

6,980.294 15.8

283.7

8.2

1.93

1983-84 % increase

7,959,356 14.0

319.8

8.5

2.02

1984-85 % Increase

8,911,650 12.0

354.7

8.5

2.07

1985-86 % increase

9,153,550 2.7

360.9

8.1

1.98

1986-87 % increase

9,906,451 8.2

387.1

8.7

2.01

1 Based on actual expenditures quoted in the Estimates; FY 1986-87 is a forecast. 2 Based on population figures quoted in Federal Government Finance, 1985 and 1982 editions, and the January 1988 Canadian Economic Observer. 3 Based on figures reported in the National Income and Expenditure Accounts, 3rd quarters of 1987 and 1984, and the Canadian Economic Observer, January 1988. 4 Up to and including FY 1985-86, based on figures from the National income and Expenditure Accounts. i st quarter of 1986; date for FY 1986-87 from the Canadian Economic Observer.

The Gross National Expenditure (GIE) Deflator Α peculiarity of defence budgetary planning is the significance of

accurate data on inflation. High inflation played havoc with DND's financing formula in the 1970s.E4 One positive result, however, of this painful experience was the development within DID of its own economic model which tracked the inflation associated with defence-related goods and services. On this basis an accurate deflator could be calculated for the measurement of real growth. Until 1984-85, Treasury Board accepted the deflator; that year it insisted on the application of the GNE deflator. The result has been to build in another DID disadvantage, since official figures on DID real growth are overstated. Thus, as Willis and others have noted, a defence-specific price deflator would adjust the calculation of real growth significantly downward: only 1.2 per cent for the fiscal year 1986-87 and no net increase at all in estimated expenditure for 198788. Thus the official Conservative formula of two per cent real growth with a GIE price deflator overstates the actual results.

1781 How Ottawa Spends

Incrementalism vs. Long-range Planning One of the most significant aspects of the White Paper was the commitment to long-term planning for defence procurement. This is essential to guarantee predictable commitments when weapons technology and development requires long lead-times, as well as to phase capital expenditures rationally over the entire research, development and production cycle. In the case of the submarines, the White Paper spells out no less than a 27-year process (at which time Canada would be famous for its antique Trafalgar Class submarines long since abandoned by Britain). The key is to move the process along without major discontinuities, moving forward consistently. However, governments normally have four-year terms, and the dynamic of elections confounds long-term commitments. Thus Perrin Beatty was only able to obtain agreement among Cabinet colleagues for a two-tiered formula: two per cent real growth annually for the first 15-year cycle plus additional "bumps," or increments, above that base-line for major capital projects to be reviewed by Cabinet on a case-by-case basis. This "formula" implies a built-in long-term uncertainty. The "bumps" maintained the theoretical prospect of actually implementing the White Paper (estimated to require average annual increases of 5 to 5.25 per cent after inflation), were DID to get everything it asked for as an additional increment. But conversely the two-tiered formula could mean coming up with empty hands and falling far short. The feat of actually securing long-term funding stability would require exceptional leadership and inter departmental persuasiveness on a year to year basis. It would require in the first instance establishing priorities, of `ordering the procurement and trying to determine which projects have the greatest urgency, and what we can aflbrd to delay, how much we can accommodate in that first period, and so on—that poses the greatest challenge."n The logic of incrementalism inevitably conflicts with the basic long-term programming requirements of defence procurement. DID planners therefore will have to take it a year at a time, leading one official to explain: "Let's say the government gives us the go-ahead for the first year of the patrol frigate follow-on program. We wouldn't be able to start any other programs because we won't know how much we're getting two to four years down the road. This two per cent formula is no better than any others we've had in the past 20 years.'"

The Department of National Defence /179

RESOURCE ALLOCATION AND THE CENTRAL AGENCIES The hegemonie role of Finance in enforcing restraint has altered DID's central agency relationships, particularly with Treasury Board. The implementation of the Policy and Expenditure Management System (PEMS) had generated a logical flow and review structure, permitting Cabinet examination of both policy and expenditure implications together at the annual Roundtable. PEMS had strengthened Treasury Board's overview role. However, National Defence, with its separate spending envelope, had worked out mutually acceptable rules of the game with the Treasury Board Secretariat (TBS). On its side, the Board gave a unique degree of latitude to the hybrid civilian/military DID. While it policed its specific mandate vis-à-vis national defence, it perceived the Department as well managed, and considered the evaluation of military requirements and specifications beyond its competence. The major negative intervention in Trudeau's last year-i-imposing the GIE deflator—was the result of a weak Liberal defence minister, since this unfortunate change was motivated by cosmetic reasons. The GIE index made Canadian defence expenditures look more impressive within the NATO ranks; we were no longer in the cellar with Denmark and Luxembourg. The deficit has changed all that. With the Department of Finance now in control of the process, the negotiation of the fiscal framework determines the annual DID allotment. Fiscal framework determination is an intensely political process under the Mulroney government; because PEMS has broken down it is unclear what Finance is using to set departmental figures. Pervasive budgetary uncertainty has resulted; DID is fortunate to have a two per cent formula, but governments and ministers change. There have also been some specific problems accompanying the relative decline of TBS in the expenditure management cycle. First, the Department of Finance does have a group of analysts with comparable knowledge of defence issues and the operations of DID. Treasury Board in its previous lead role respected policy and the Defence base budget. However, led by Finance, the central agencies are now becoming more interventionist and concerned that DID justify its base to qualify for claiming an increment above the two per cent formula. Also, DID military programs and overall efficiency are vulnerable to cuts in its Operations and Maintenance (0 & M) budget, a previously neglected TBS target. That is now

1801 How Ottawa Spends

changing as DI D's formula financing has left this category exposed for review. As PEMS gives way to the current ad hoc system, so central agency involvement is growing and becoming less crisp. While this perception of flabbiness also reflects the brokerage style of the Prime Minister, there is no doubt that the Defence Program Management System (DPMS) confronts á less orderly and politically more turbulent resource allocation process than during the peak years of PEMS (when the Liberals did not worry about such uncomfortable issues as the deficit.) In these circumstances, DND's internal operations will be important in maintaining policy and procurement consistency within a multi-year planning cycle. If it must plan in a political vacuum, then it must create a world of its own. It must at least know internally how the implementation of the White Paper is proceeding. There have been administrative improvements in expenditure management and force development planning. The paradox is that an increasingly sophisticated front-end planning system within DID coexists with the breakdown of PEMS. But National Defence is not an island unto itself, and the politicization of the process makes this challenge ever more daunting.'

POLITICS AID DEFENCE PROCUREMENT Capital spending in the National Defence budget has accelerated from 18.5 per cent ($853 million) in 1980 to 25.8 ger cent in 1988, with a peak year of 28 per cent in 1985. (Table 3) By the fiscal year 1983-84, the dollar figure approached $2 billion; it is currently nearing $3 billion. The stakes involved for Canadian business are significant now and for the foreseeable future. Megaprojects such as the CF-18 program (and even the maintenance contract), new patrol frigates or nuclear-powered attack submarines inevitably involve major regional and industrial considerations. But a host of smaller and less dramatic, but sometimes exceptionally attractive, capital projects are in the works which (as for example, in space research) may have potential billion dollar procurement applications. Major export contracts (the Oerlikon ADATS defence system, for example) are also involved. In short, the re-equipment program initiated under Trudeau and continued under Mulroney has achieved momentum, with the latter the beneficiary of a wave of defence contract letting and procurement decisions unprecedented since the Korean War. "It [1987] was a remarkable year," heralded

The Department of National Defence / 181

Canada's Defence Review Bulletin, and "the start of something big." The arms industry, both Canadian and international, is delighted.80 Table 7.3 Department of National Defence Expenditures' by Major Budget Category 1979-80 to 1987-88 (in thousands of dollars) Year

Operating

%

Capital

%

Grants2

%

1979-80

3,560,760

77.4

852,782

18.5

186,823

4.1

1980-81

4,041,279

76.1

978,409

18.4

292,180

5.5

1981-82

4,810,665

76.0

1,202,690

19.0

317,318

5.0

1982-83

5,405,536

74.2

1,540,446

21.1

338,667

4.6

1983-84

5,942,420

71.8

1,974,007

23.9

354,553

4.3

1984-85

6,269,337

68.3

2,567,428

28.0

345,352

3.8

1985-86

6,708,100

71.0

2,332,733

24.7

402,713

4.3

1986-87

7,080,645

69.4

2,676,385

26.2

440,225

4.3

1987-88

7,424,574

69.8

2,743,079

25.8

465,114

4.4

'Percentages are rounded off, and may not add up to 100'• 1 The expenditure figures used here have not had the receipts and revenues subtracted. These latter funds are, however, relatively insignificant, generally not exceeding $300,000 in any given fiscal year. Also, FY 1979-80 through 1985-86 are actual expenditures recorded in the Estimates. FY 1986-87 is a forecast, and FY 1987-88 is an estimate. 2 Grants, contributions and other transfer payments.

Inherited Problems For DID the procurement bulge is both welcome news (for obvious reasons) and a source of continuing concern. First, the growing complexity of high technology weapons systems development requires long lead times and creates programming and budgeting uncertainties. Delays, cost overruns, and tedious haggling within the consortia set up to produce the systems are endemic in defence procurement. Second, the supposed discretionary character of procurement is more apparent than real. The long-term sunk cost of procurement decisions (such as the projected 2?-year submarine program) is one factor. Another stems from the burden of historical military roles and the inertia they come to represent. (Nicely settled in Lahr, West Germany, does not the Army need another batch of the most advanced Leopard tanks to display proudly, with flags flying, in the annual ΝΑΤΟ exercises?) Similarly, Geliner has addressed the "gold-plating" syndrome of Canada's military procurement officers: piling elaborate technologies on top of one

1821 How Ottawa Spends

another in fewer and fewer large, increasingly expensive (and not necessarily more useful) weapons systems.31 By far the most important problem, however, concerns the growing politicization of defence procurement in which non-strategic reasons have come to play an increasingly significant role in selection and location of production. Bargaining for industrial offsets and trade concessions, job creation in depressed areas, a "buy Canadian" policy when much cheaper equivalent equipment is available internationally off-the-shelf, adds a significant premium on DID defence production and slows the process even more (sometimes by years) as cabinet ministers and their departments negotiate trade-offs s2 For DID the capital budget must try to be "defence-centric" to reflect military priorities rather than subsidize other national purposes. Of course, all budgetary decisions are constrained politically to a certain degree. Seven of DND's bases in Canada would be wound down were regional jobs not at stake, for example. Clearly, major capital expenditures do have regional development implications which cannot be ignored: both the shipbuilding and repair, and aircraft and parts industries are heavily dependent on defence spending (54.9 per cent and 22.3 per cent), involving ferocious federal-provincial bargaining over contracts. This has been reflected most visibly in Manitoba's fury over Mulroney's (politically-motivated) award of the CF-18 maintenance contract to Canadair of Montreal over Bristol Aerospace of Winnipeg 33 The problem long predates the Mulroney years. Byers has concluded that the Trudeau governments similarly failed to design a consistent procurement policy. But it has now grown worse (in part because the stakes have grown), exacerbating both the public policy implications of this lush political undergrowth, and the more specific costs to National Defence. Procurement Whirlpools The major source of Cabinet interest in defence procurement (or CIDA contracts) lies in its availability as a political resource when discretionary funding programs are scarce. To deliver a big defence plant to a riding is a major event in a ministerial career. In overall terms, compared with NATO partners, defence spending is relatively unburdensome to the Canadian economy.

The Department of National Defence / 183

Imports account for some 26 per cent of total defence sρending.Υ Domestically, it accounts for only 2.7 per cent of total employment, or roughly 302,000 jobs the lion's share of these in central Canada—with impact and sensitivity varying between regions and industrial sectors. But although Canada's "military-industrial complex" can easily be exaggerated in importance, not enough attention has been given to the emerging dynamics of government-DID-private sector collaboration in defence procurement. While the formal defence procurement process (PIS), with Senior Review Boards for major Crown projects, has not changed since 1972, new patterns of interaction have evolved behind government efforts to develop a national defence industrial base. "Buy Canadian" no longer is supported only by job-creation or even regional development. More potently this philosophy is now touted as a contribution to a viable internationally competitive defence sector, which can also meet the military's requirements during mobilization and wartime (defence industrial preparedness). The planning of industrial offsets, the Defence Development/Defence Production Sharing Agreements with the U.S. providing duty-free access to Canadian Ι rms bidding for U.S. defence contracts, direct subsidies via the Defence Industry Productivity Program, and export insurance provide the principal policy thrust in this direction. The long-term goal of defence industrial planning, therefore, is a regionally consistent, efficient, defence-centric procurement system—an ambitious objective to say the least, considering the number of federal and provincial agencies involved and the inherent tendency toward incrementalism within the Mulroney government. The practice under Mulroney has therefore been at odds with theory, although there are isolated success stories (lerlikon; the rationalization of the ammunition sector). Procurement has been marked, not by long-term planning, but by increasing politicization. Moreover, it has become more sophisticated—more "Americanized" one might say. While pathetic examples of Latin American-style corruption (such as land-flipping) make headlines in the media, the far more dangerous tendency has been the deepening of clientelism, or «whirlpooIs" of government-DID-private sector influence that make a mockery of defence industrial base planning. The fact is that each case is decided individually, with political competition built into the process at every level. Layalin's successful bid for the $250 million Army heavy trucks contract illustrates one aspect of the problem. Lavalin's

1841 How Ottawa Spends

promotion of an Austrian-designed product for its first large defence contract was DND's favourite on technical grounds; at least that part of the decision was right. Everything else was wrong. In 1986 Lavalin bought 85 per cent of the Kingston-located Urban Transportation Development Corporation (UTDC) for $30 million, after losses to *1e Ontario taxpayer of $228 million. With Lavalin's golden charm in the PMO, every defence analyst in Canada realized that an immediate search for lucrative government procurement would now follow—and no one doubted the capacity of this multinational firm to deliver a first-class bid in really any available product area. The problem was that the government had already designated two other "centres of excellence" for the production of heavy trucks—Bombardier Inc. of Montreal and General Motors in London. Did Canada, with its narrow market, limited needs for heavy trucks and poor export markets need another facility that will probably be mothballed after the end of the project (unless it gets another order from DID)? Nor is it a favour to DID, as the Auditor General recently observed, to proliferate this range of plants whose dependency and political connections will condition procurement decisions in the future.' There is an urgent need to set certain ground rules for DIDbusiness relations, and this is particularly true for those larger successful companies (Litton, SPAR, Lavalin, etc.) which have the greatest potential for becoming internationally competitive. At the moment there are no conflict-of-interest guidelines regarding industry hiring of DID procurement officers or others in National Defence who knοω the system from the inside, and therefore knοω how to structure a successful bid. The potential for abuse without technically violating the formal process is apparent, and lateral industry recruitment from DID appears to be accelerating. On the one hand, the Mulroney government is searching for partnership with the private sector, and DID procurement offers a comfortable quasi-public sector relationship with certain firms. On the other hand, these companies are working with tax dollars, requiring much closer scrutiny than they have received but from which they are not likely to escape. Recently, the report of the Task Force on Defence Industrial Preparedness advocated a stepped-up cooperative (government/private sector) effort, with a national advisory committee to strengthen planning within a single-market Canadian-U.S. conti-

The Department of National Defence / 185

nentalist framework. National Defence, in its own way, is also cheering on free trade. DEFENCE AND THE PUBLIC It is often argued that Canadian political culture has a strong antimilitarist streak that historically has made sustained defence expenditures vulnerable to social priorities. Certainly, the absence of an imperial past, large standing armies, and an immediate territorial threat has meant that civil-military relations in Canada are low-key. The military-intelligence community is neither visible nor socially powerful. A defence constituency, per se, has been difficult to sustain. The results have been unfortunate. In the mid-1970s throne speeches routinely neglected defence altogether; the press and media virtually ignored this sector despite the budgetary dollars involved; defence policy rarely was even mentioned as an issue during general elections; and strategic studies in Canadian universities were in their infancy. For its part, the Canadian military established a tradition of technical excellence but with little creativity in strategic thinking. Despite the country's massive effort during the Second World War, Canadian officers were loyal and dependable seconds in command to the British. National Defence has not produced great thinkers or independent strategic doctrine since then. After 1945, it receded in the public mind. DID became a relatively unknown, unpopular and closed world, except for a vigorous but politically ineffectual old boy network. Trudeau's attitude toward civil-military relations (officers should keep their opinions to themselves) reinforced the isolation of DID. However, the 1984 Conservative victory with its "honour the commitment" electoral pledge coincided with impending changes. In the early 1980s many signs heralded heightened public interest regarding defence issues. A number of high profile issues (cruise-missile testing; cold-war revival; and particularly Reagan's Strategic Defence Initiative, or Star Wars), revived the Canadian peace movement that had been dormant since the 1950s. Reflecting an international mass movement, it also became thematically linked to a broader national groundswell centred on social change and environmental concerns. The U.S. challenge to northern sovereignty in 1985 further strengthened an awareness of Canada's

186 'How O'tawa Spends defence needs and vulnerabilities. The arrival of immigrants and refugees from Southeast Asia and Eastern Europe with visceral anti-communist views fed a small and vocal, if not influential, neoconservative constituency with strong ideas on security. The result has been a proliferation of channels available for the public discussion of defence and security questions. Public and private research groups, including Project Ploughshares, The Canadian Centre for Arms Control and Disarmament, the NorthSouth Institute, the Canadian Institute for International Peace and Security, and many others, have established themselves across the country. DID-financed programs now developed momentum, particularly the Canadian Institute for Strategic Studies (Toronto) and the Military and Strategic Studies (MSS) program. By the early 1980s, strong university centres to anchor longterm research and teaching activities were attracting considerable student interest. The Conservative victory in 1984, therefore, coincided with accelerated important ongoing changes in public interest in defence. The Mulroney government differed from its predecessor in placing a greater emphasis on communications. Clark, as the Minister of External Affairs, displayed an unusual openness to the public and a desire to involve Parliament more, particularly the standing and special committees, in foreign and defence policy. DID officals opened up more in this changed atmosphere, aware that a more effective public orientation was long overdue. By 1984 it was abundantly clear that unless National Defence could create a stronger base of support in the defence constituency, it would be at a comparative disadvantage in the political competition for scarce resources. Here again, the leadership of Beatty has been important in developing a strategy; Nielsen was secretive by instinct and could not provide direction in the arts of persuasion. The result now is a more open department, with a 50 per cent expansion in the MSS program, and a "pro-active" public information activity with regional offices and now a speakers' bureau (complete with media consultants) to demonstrate effective responses to difficult questions. Senior officers and DID civilian officials regularly visit university research centres for briefings, lectures and in-house seminars. But openness to the public is not confined to specific outreach programs. DID personnel are now visible at public conferences to εlarify official views and field questions.

The Department of National Defence / 187

Any growth of public interest in national defence is a positive development. As the defence constituency broadens, there can be some confidence that defence issues will not sink out of sight again as they did in the 1970s. Indeed, with the increasing incoherence of the Liberal opposition, the focus of criticism of highprofile Conservative initiatives such as nuclear-powered attack submarines has shifted to extra-parliamentary groups. The primary question now concerns impact and effectiveness rather than available information or accessible channels of communication. DID in effect is taking a calculated risk that Canadians will become more supportive of increased defence spending as their knowledge of national security issues grows. Sceptics in contrast argue that public support for defence spending is inherently soft in Canada, that a bedrock belief in U.S. protection during international emergencies inevitably means that defence will be traded down in public policy trade-offs. This controversy remains unresolved. It is true that 2.5 per cent real growth is an entirely reasonable investment in national security considering the challenges confronting the country and successive Canadian governments that have failed to meet this target. But when there has been a clearly perceived threat, Canadians have responded. If security is defined broadly to include development, Canada's foreign aid record is far superior to that of the United States. Clearly, if DID criticizes Canadians for their supposedly miserly attitude toward defence, the public for its part can also fault the entire defence community for its failure to articulate a convincing national security policy. Why should taxpayers support major expenditures for purposes that remain unclear? In other words, the problem is mutual, not the public's alone, and it is up to Ottawa to provide some leadership in strategic thinking. Why is DID beating the drum fora fleet of nuclear-powered submarines before articulating a maritime policy? If experts cannot understand the rationale, how can the working public? Should not DID be taking the lead in looking beyond the Central Front troop commitment (rather than positioning for another batch of Leopard tanks), when the Europeans themselves are rethinking some ground rules of post-war security (and when the Europeans after 40 years of NATO partnership dismiss Canada's core interests in the Arctic)? How should Canada rank NATO and non-NATO related threats? These (and many equally important) questions all point to the urgent need to go the next step—beyond the White Paper-

188/ How Ottawa Spends

to formulate a convincing national security policy with which the Canadian people can identify. We must get beyond the current primitive debates, featuring both anti-American slogans and equally sterile charges of "Alliance disloyalty." Could not the "Canada in ΝΑΤΟ" debate be transformed into a debate regarding the recasting of Canada's roles and missions within an alliance that is overwhelmingly favoured by the public? The public is bored with platitudes of all kinds, even as the approaching general election will likely see them trotted out in quantity. From this perspective, DID's public information programs Ø be a useful component in structuring national discussion, but to be credible they must provide content rather than management. University programs offer a potentially valuable forum for testing new ideas and approaches regarding defence and security. But initiatives such as the DID speakers' bureau may create a public and media backlash if they are perceived merely as agents for selling controversial programs such as nuclear-powered submarines. Α more specialized aspect of DND's public relations campaign is the systematic courting of regional and corporate support. In some provinces military bases contribute significantly to GDP, making for natural regional allies. In the private sector, the current government has been particularly active in promoting a joint government-business approach to procurement policy. Beatty noted, in explaining the White Paper to the Montreal Chamber of Commerce, that: "This modernization and improvement program will involve hundreds of projects...and will present unparalleled opportunities and challenges for Canadian industry." Α new group, the Defence Industrial Preparedness Advisory Committee (DIPAC), composed largely of corporate executives from the principal Canadian defence suppliers, was created to institutionalize for the first time this "partnership with industry."a'' Whether this partnership will yield sustained cross-regional political support and avoid credibility-threatening divisiveness remains to be seen. As with public information, constituency-building with business and governments demands skill and sophisticalion to be effective. THE OUTLOOK: POLITICAL AND ECONOMIC CONTEXT The Defence Minister has put a good face on Cabinet discussions of the White Paper since its release in June 1987. Cabinet has been

The Department of National Defence 1189

"very supportive of the whole thing." The costs and implications were spelled out before June, he explained, and ministers "are going to have different priorities," but he defended the results. When asked if he felt comfortable with the budget, he responded, "Yes. And I think it will be well received in NATO as well. And at the same time as most of the allies are finding themselves under very serious constraints, Canada's making an honest effort to move ahead and make improvements in terms of its capital base."38 The Estimates give no such call for optimism. While the February 10, 1988 budget "begins the process of implementing" the Defence White Paper, according to the Minister of Finance, the accent is definitely on the word `begins." The new batch of six patrol frigates (SRP-II) has been considered a key signal of government intentions given its estimated cost ($3.5 billion), and therefore its significance for future defence funding. A Cabinet decision to fund the program as an increment (in addition) to the two per cent formula would produce an estimated 5.5 per cent real growth to the turn of the century and bring the White Paper much closer to realization. The reverse, financing entirely within the two per cent, would have meant the cancellation of dozens of smaller projects within the procurement basket ss Instead, the 1988 budget has produced a predictable split, accenting long-term uncertainty, but without jeopardizing the implementation of the White Paper. Other positive signals included the restoration in the 1987-88 fiscal year of the $200 million deferred last year.Ø In general DID cannot complain with a 6.23 per cent growth rate before inflation, or 2.14 per cent real growth. Nevertheless these steps represent a basic minimum to maintain momentum in the capital program. The performance of the economy in the post-recession has probably peaked; the ability of DID to count on much beyond the two per cent formula is debatable. For the forseeable future, every project above that line will have to be fought through Cabinet in a climate of growing uncertainty. Has Perrin Beatty, by lifting the DID's status and dispelling the gloom and sense of second class status that has hung over National Defence Headquarters, succeeded in dealing with the inherited commitments-capabilities gap? Has he been able to attack the internal and external constraints on National Defence? While the 1988 budget and Estimates are inconclusive, it appears doubtful that ministerial leadership alone can prevail in the short run

190/How Ottawa Spends

against the factors constraining innovation: partisan politics, regional pressures, international uncertainties, departmental inertia, public apathy, the lack of strategic doctrine, central agency management problems, and so forth. The White Paper probably can be toughed out for a while, but the crunch will come in three to four years when it becomes apparent that rust-out is advancing beyond the capacity of the capital budget to refit and re-equip the Canadian Forces. Then the options will be starker: drastic role reduction, restructuring procurement to get more out of the DID capital budget, recasting the policy framework towards sovereignty and regional security threats away from East-West management, or ńnally blundering along—slipping back from the Beatty hiatus to the morale-killing credibility problems of the 1970s, the impossibility of performing all military roles, and the inevitable demand for a new defence review. CONCLUSION The greatest achievement of the Mulroney government in defence has been the revitalization of the Department after years of neglect. But morale and consensus have not yet been translated into assured long-term funding; and a vastly improved front-end policy planning capacity coexists with increasing uncertainty in resource management and allocation. This achievement, however, should not be underestimated. It is the first step on the long road back to effectiveness. DID is no longer a fringe player and the public debate about the future of defence policy is now a permanent part of the Canadian political landscape. The challenge facing the next government will be to maintain this momentum, while adapting defence policy (probably drastically) to the rapidly changing domestic and international circumstances affecting Canadian security. If another funding crunch down the road is virtually certain, National Defence has been strengthened by this hour of respect.

The Department of National Defence i 191

Notes *

I wish to thank the following persons for their assistance and helpful comments: John Gellner, Andrew Dewít, Rod Byers, David Leyton-Brown, Mike Slack, Martin Shadwíck and John Willis.

1.

The Progressive Conservative Agenda, "Honour the Commitment: National Defence and the PC Party," August, 1984. There is no hard evidence, however, that Mulroney himself, or PC campaign literature, ever proposed a 6 per cent real growth commitment—a figure which nevertheless has taken on an apparent life of its own.

2.

Danford W. Míddlemiss, "Department of National Defence," B. Diem, (ed.), Spending Tax Dollars: Federal Expenditures 1980- 81, School of Public Administration, Carleton University, 1980, pp. 75-97. The present paper has sought to maintain continuity with the Mídd!emiss chapter in National Defence data presentation by preserving a similar format for the statistical tables located in the text.

3.

For an excellent analysis of the Mulroney style, consult Harald von Riekhoff, "The Structure of Foreign Policy Decision Making and Management," Brian Tomlin and Maureen blot, (eds.), Canada Among Nations (Toronto: Lorimer, 1987).

4.

The reversal of fortunes has led some officials to reflect νicariοuslÿ on ironic "best of both worlds" scenarios: a Beatty as Defence Minister and a Trudeau (but only as he appeared in later years) as Prime Minister, who could follow through when he made up his mind on something.

5.

The Honourable Perrin Beatty, "Defence Industrial Preparedness." Address delivered to the Montreal Chamber of Commerce, Montreal, February 2, 1988, p. 4. "The best disarmament and arms control deals are struck when we are dealing with the Soviets from strength rather than weakness."

6.

Quoted in the Globe and Mail, [Toronto], February 8, 1988.

7.

For an example, loaded with insulting and superlor references, see Steven L. Canby and Jean Edward Smith,

1921 How Ottawa Spends "Restructuring Canada's Defence Contribution: A Possible Key to Western Security," Political Science Quarterly, Vol. 102 (3), Fall, 1987. 8.

R.B. Byers, Canadian Security and Defence: The Legacy and the Challenges, Adelphi 214, January 1986, for by far the best examination of this problem.

9.

R.B. Byers, "The 1987 Defence White Paper: An Analysis," Canadian Defence Quarterly, Vol. 17 (2), Autumn, 1987, p. 12.

10.

The Hon. P. Beatty, op. cit., p. 2.

11.

Not that important criticisms have been absent. For a range of opinion, consult "Comments on the Defence White Paper" in Behind the Headlines (Toronto: Canadian Institute for International Affairs, September, 1987).

12.

Sharon Hobson, "Canada's New Priorities," Jane's Defence Weekly, Vol. 8 (20), November 21, 1987, p. 1187.

13.

Quoted in Ibid., p. 1187.

14.

John Gellner, `The Military Task: Sovereignty and Security, Surveillance and Control in the Far North," Edgar J. Dosman, (ed.), The Arctic in Question, (Oxford: Oxford University Press, 1976).

15.

For another view, see Byers, op. cit., p. 18; Joseph T. Jockel, "Canada's New Military Plans," International Perspectives, September/October, 1987, pp. 17-20.

16.

This question is discussed in Canada's Defence News Bulletin, Vol. 2 (1), January, 1988, pp. 4-5.

17.

A North-South Institute poll found that only 6.2 per cent of Canadians (survey sample of 1,210) thought that increasing the size of Canada's armed forces would be the most effective way of promoting Canada's influence. Globe and Mail, [Toronto], December 23, 1987.

18.

John Genner, in Comments on the Defence White Paper, op. cit., pp. 7-8.

The Department of National Defence 1193

19.

Míddlemiss, op. cit., pp. 75-76.

20.

Byers, Canadian Security and Defence Policy, (cited above), Chapter 4.

21.

John Willis, "The Economics of Canadian Defence," Canadian Strategic Review, 1985-86.

22.

House of Commons Debates, Hansard, November 19, 1984.

23.

James Bagnaf, "Beatty's Doctrine," Defence Special Report, The Financial Post, [Toronto], November 16, 1987.

24.

D. Middlemiss, "Paying for National Defence: The Pitfalls of Formula Financing," Canadian Defence Quarterly, Winter, 1982-83, pp. 10-17.

25.

House of Commons Debates, Hansard, September 22,1987, p. 9169 for a time series indicating the impact of respective deflators.

26.

Figure quoted from The Financial Post, [Toronto], November 16, 1987.

27.

"The Wednesday Report," Canada's Defence News Bulletin, December 1987.

28.

Quoted in The Financial Post, [Toronto], November 16, 1987.

29.

The process would benefit from moving the annual review forward to spring.

30.

"The Wednesday Report," CDNB, January 6, 1988.

31.

John Gellner, "Firepower, Not Finesse, is East Bloc Military Aim," Globe and Mail, [Toronto], February 8, 1988.

32.

Byers, op. cit., pp. 31-45. The figures are very high: two to three years for Cabinet approval; and another three years for finalization.

33.

Willis, op. cit.

194/How Ottawa Spends 34.

See C.G. Galligen, The Economic Impact of Canadian Defence Expenditures: FY 1984/85 Update, Centre for Studies in Defence Resources Management, The Royal Military College of Canada, Report 11, Kingston, Summer, 1986.

35.

Willis, op. cit.

36.

As quoted in SITREP, Vol. 45(2), February 1988.

37.

Department of National Defence, News Release, May 29, 1987.

38.

"The Wednesday Report," CDNB, December 30, 1987.

39.

The Financial Post, [Toronto], November 16, 1987.

40.

The point was raised by David Legton-Brown, "U.S. Reaction to the Defence White Paper," International Perspectives, July/August, 1987.

CHAPTER 8 FOR WHOSE BENEFIT? SMOKE AND MIRRORS: CIDA'S DEVELOPMENT ASSISTANCE PROGRAM ΙN THE 19808 Nasir Islam

Approximately two cents of every dollar spent by the Canadian federal government is invested in assisting developing countries. Three quarters (73.7 per cent in 1987-88) of Canadian Official Development Assistance (ODA) is delivered to the Third World through the Canadian Iηternational Development Agency (CIDA). The rest is channelled through the International Financial mnatitutíons (via the Department of Finance), the International Development Research Centre, the Department of External Affairs, Petro-Canada International and the International Centre for Ocean Development. In this chapter we will limit our analysis to the activities of CIDA. The major focus will be on who gets what, why and how much of Canada's foreign assistance. Ιn answering these questions we will begin by analysing the raison d'être and objectives of Canadian foreign aid. We will examine the process by which the recipient countries are chosen and to what extent the choice of recipients corresponds to the aid objectives. We will discuss the issues concerning the volume and the quality of foreign assistance provided as well as its sectoral distribution. We will briefly describe and evaluate the channels, mechanisms and organization through which the aid programs or projects are delivered and implemented. An attempt will be made to explore the questions of utility, performance, effectiveness and impact of Canadian foreign assistance from the donor's as well as the recipient's points of view. Finally, we will try to anticipate the impact of the Winegard Report on ODA and the future directions that the CIDA programs are likely to take. The questions we have raised above seem simple and straightforward; alas the answers are not. The answers are complex, multiple, equivocal and contingent. Where one stands on foreign aid issues depends on where one sits. Foreign aid is a policy arena λ95

196 / How Ottawa Spends

where a myriad of diverse interests converge and compete for favourable outcomes. Whatever rational objectives CIDA's ministers and managers may design for aid programs, they are constrained by a host of institutional actors, and, in turn, by their constituencies with their particular interests. In addition, CIDA's policy and program objectives have to be matched with the priorities of the recipient governments. If the policy-making process appears to be complex, its implementation occurs under even more trying circumstances. CIDA projects/programs are executed by outside agencies over which CIDA exercises relatively little direct control. These executing agencies often work in distant lands with unfamiliar cultures, customs and languages and under the tutelage of sovereign foreign governments. Mist CIDA projects require a longish lead time and are characterized by uncertain socio-economic and political environments in developing countries. Monitoring and evaluation are painful exercises. Thus the confusion, complexity and illusions surrounding foreign assistance, and hence, our title: Smoke and Mirrors. IN SEARCH OF OBJECTIVES: REAL OR HIDDEN? From the earliest days, humanitarian, economic and political motives have been attributed to Canadian foreign assistance. Keith Spicer was probably one of the first scholars to explain Canadian aid in terms of these three categories.' Sanger argued that development assistance is primarily based on political rather than humanitarian or economic objectives? Tríantís considered national self-interest, i.e., political and commercial interests, as the major justification for development assistance. He particularly emphasized the political objectives, quoting Lester Pearson on the use of foreign assistance for containing communism in South and South East Asia.3 The Colombo Plan was conceived, following World War II, partially as a program to develop capitalist economies in Asia against threats of communist expansion. As Britain began to dismantle its colonial empire, in the Caribbean and in Africa, support was needed to keep the newly-independent countries in line and to prevent them from falling into the socialist camp. Thus the Commonwealth, Caribbean and African programs for aid came into existence. Aid to Francophone Africa was also politically inspired. The aid program to Francophone Africa began as a federal government move to prevent the Quebec government from establishing an international presence in Francophone Africa.4 These are the more obvious examples of where political objectives may have been the predominant consideration for extending foreign assistance during the 1950s and 1960s.

For Whose Benefit? Smoke and Mirrors 1197

In addition to these specific instances many observers have attributed general political objectives to foreign aid. Wyse mentions limiting nuclear non-proliferation, reducing the threat to Canadian peace and security and reducing instability in the Third World as possible foreign policy objectives to be served by the foreign assistance programs.5 This view considers foreign aid primarily as a tool of foreign policy for promoting Canadian security by co-opting the radical elements in poor countries.6 We believe this view is somewhat dépassé and too simplistic for explaining the foreign aid policies.of the current regime. The Department of External Affairs uses the same categories of aid: humanitarian, political and economic. However, in the Department's view these categories are not incompatible but rather an indivisible trinity. Peace and security in less developed countries (LDCs) are linked to economic growth both in the LDCs and in Canada. The Foreign Policy Review of 1970 declared poverty elimination through fostering growth in educational, social, industrial, commercial and administrative systems of the developing countries as the primary objective of the Canadian development assistance program. But this objective "must not only be relevant but sensitive" to other national objectives, i.e., political and economíc.7 During the mid-1970s, CIDA issued a strategy paper which recognized the failure of the current approach to "development" through industrialization. Simply gut, the benefits of industrialization in LDCs were not "trickling down" to the poor, especially the rural poor. The new strategy declared that the development assistance program would support the efforts of the LDCs toward economic growth and the evolution of the social system. The needs of the least-privileged people of the LDCs were to be accorded priority. But all this would be compatible with the broad goals of the government's foreign policy. Development assistance was also viewed as "catalytic" and having "positive effects" on the Canadian economy.$ In 1984 another strategy paper again reiterated the broad humanitarian, political and economic objectives. Canada must do "what we can to help the innocent victims of world poverty and underdevelopment." The political objectives were related to the promotion of peace and stability: bilateral and multilateral aid was viewed as an instrument to achieve these objectives. At the same time, promotion of self-sustaining economic growth in the LDCs was considered as a means to create markets for Canadian raw materials and manufactured goods.9

198 / How Ottawa Spends

A recent official document of the Tory government considers China, India and Pakistan as vast potential markets for Canadian goods and investment opportunities. The development assistance program is viewed as support for a Canadian economic and political presence. Latin America is also viewed as a growing market for Canadian exports and a source 0f oil imports. "It is the largest offshore recipient of Canadian bank loans, with current exposure of $15 billion." It is considered the major destination of Canadian direct investment after the U.S. In Africa, trade and security have been added to largely humanitarian objectives. In the Commonwealth Caribbean, trade and regional security have been historically important objectives. The External Affairs Department clearly perceives foreign assistance as a source of influence in various regions and as an actual and potential link to promoting trade.1° The most recent and provocative attempt to deal with the thorny issue of the objectives of foreign aid is contained in the 1987 Report of the House of Commons Standing Committee on External Affairs and International Trade (the Winegard Report). According to this report, government policy has three national interests in ODA humanitarian, to alleviate human suffering and promote social justice; political, to increase stability and peace; and economic, to support the economic growth of developing countries.11 These objectives are stated in very broad and general terms. They are difficult to operationalize and lead to multiple interpretations, thus creating confusion in the minds of citizens as well as CIDA managers and project officers. The Winegard Report admits: "After almost one year of studying Canadian official development assistance, we conclude that it is beset with confusion of purpose.i12 As we have shown above, the government agencies have been consistent for almost 35 years in describing the broad objectives of foreign assistance in terms of humanitarian, political and economic labels, but they are much less consistent in fixing clear priorities among these and defining them in operational terms. Ambiguity in the objectives also means less precise (or non-existent) criteria of performance measurement. The official statements of public policy on development assistance also seem to imply that the three types of objectives are consistent and complementary. A review of ODA in the 1970s by the North-South Institute declared: "... there continues to be a steady flow of conflicting objectives, priorities and interests blurring the focus of Canadian aid and frequently blunting its effectiveness."13 This apparent confusion of objectives leads some critics to conclude that there is a discrepancy between ODA's officially stated

For Whose Benefit? Smoke and Mirrors /199

objectives and its real objectives as manifested in the programs and activities. Carty and Smith maintain, "In many cases, the real purposes of a given program have been papered over by a rhetoric designed for public scrutiny..."14 The attribution of humanitarian objectives to official development assistance prompts Canadians to support foreign aid willingly. This is probably why the politicians overemphasize the humanitarian aspects of development assistance. Carty and Smith claim that a review of CIDA's programs rather than its press releases shows that the humanitarian aim is in fact close to the bottom of Canada's aid agenda.15 This Ø requires more substantive evidence. There does not seem to be a deliberate design on CIDA's part to introduce confusion between "stated" and "real" objectives. CIDA, like most big organizations, finds it difficult to translate broad objectives into appropriate operational goals. The Winegard Committee has attempted to clear this confusion of purpose. At the end of the first chapter of their report, it has made clear-cut recommendations fixing the basic principles underlying ODA. The primary purpose of ODA is to help the poorest countries and people. ODA must strengthen the human and institutional capacity of developing countries to solve their own problems in harmony with the natural environment.18 The most crucial element in the Winegard recommendations is a clear setting of priorities. The Winegard Committee recognizes that there are many pressures on the aid program to serve shortterm interests, not all of which are consistent with the central purpose of Canada's ODA.17 They consequently recommend that "development priorities should always prevail in setting objectives for the ODA program. Where development objectives would not be compromised, complementarity should be sought between the objectives of the aid program and other important foreign policy objectives.n18 This is probably the first time an authoritative body has articulated, as clearly as possible, the objectives and priorities for Canada's ODA program. It is a very significant and positive contribution to policy development in this sector. CIDA'S FOREIGN ASSISTANCE: VOLUME OF AID INPUT Since it is very difficult or at best controversial to determine the impact of aid programs, the quantity and quality of aid inputs have become the proxy measures to evaluate the performance of various aid programs. How much aid is given; how much of it is given to

Ø /How Ottawa Spends

the least developed or poorest (LLDCs) countries; its sectoral distribution; the degree of concessionality (loan/grant conditions); and the extent of tying procurement have become the "indices" of good or bad, efficient or inefficient aid programs. Aid reformers have demanded, for a long time, that a greater proportion of GNP be allocated to official development assistance. In 1961 the Western countries agreed in principle to divert one per cent of their GNP to the developing countries. Within this one per cent, 0.7 per cent was to be guaranteed as official development assistance (concessíonal transfers/grants from the governments). It may be noted that 0.7 per cent was considered as a minimum and not an ideal or a ceiling. Tables 1 and 2 show Canada's performance during the last two decades in terms of aid quantity: In September 1975, CIDA's strategy review declared: "The Government reafrms its determination to achieve the official United Nations target of 0.7 per cent of GNP and to move towards this target by annual increases in the proportion of omØ development assistance to GNP.s18 Canada had accepted the UN target of 0.7 per cent in 1970 but had not set a time limit for its achievement. In 1969-70 Canada's ODA stood at $277 million, which represented 0.34 per cent of Canada's GNP. By 1975 these figures had substantially improved to $760 million and 0.54 per cent of GNP. This would remain the highest level of ODA as a percentage of GNP ever achieved by any Canadian government. It was still signifiØtly below the level fixed by the United Nations. However, the absolute volume of Canadian aid to the Third World continued to increase substantially and surpassed the billion dollar level in 1979-80. In 1980, the Brandt Commission deplored the disappointing record of total official aid to the Third World? The report received a great deal of publicity in Canada. It was ironic that a decade earlier, a former Liberal Canadian Prime Minister, Lester Pearson, had recommended the target of 0.7 per cent to the United Nations.21 With Prime Minister Trudeau's re-election in 1980 and his keen interest in the problems of the poor nations, the newlyelected Liberal government promised to boost the level of ODA to 0.55 per cent of GNP by 1985 and to 0.7 per cent by 1990. This promise was never fulfilled. Although the ODA percentage of the GNP improved from 0.43 in 1980 to 0.49 in 1984-85, it remained significantly below the level of the 0.7 per cent target. The North-

For Whose Benefit? Smoke and Mirrors / 201

Table 8.1 Canadian Aid In the 1970s (in millions of dollars) Year Canadian ODA ODA as % al GNP

1971

1972

1973

1974

354.3

395.1

507.3

587.87 760.0 903.5

.42

.47

.43

1975

.48

1976

.54

.46

1978

1979

1980

973.1 1050.5 1241.1 .50

.52

.45

Source: Figures collected from CIDA annual reports.

Table 8.2 Canadian Aid in the 1980s (in millions of dollars) 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 CIDA 1,221.11 1,327.37 1,458.83 1,671.14 1,637.16 1,923.5 2,103.1 2,242 2,702 2,929 ODA 1,489.02 1,669.67 1,811.95 2,096.97 2,174.01 2,536 ODA as % .49 .5 .5 of GNP .43 .45 .46 .46 .5 Source: CIDA's Annu& ReØ, 1983-84 1985-86, and Estimeles 1986-87, 1988-89.

2021 How Ottawa Spends

South Institute has criticized Canadian governments (both Liberal and Conservative) for sliding inexorably back from the U.N. target. According to the Institute the ODA percentage figures "remain the most important gauge, for Canadians and others, of a rich nation's willingness to share in a world of misery. In relation to long accepted minimum targets they are a national and international embarrassment." However, Canada is not the only donor to have failed to reach the target since 1961. When the 0.7 per cent target was proposed, the most industrialized countries accepted it. Some accepted it in principle (e.g., West Germany) and some in terms of a time framework. The most notable exception not to commit itself to this objective was the U.S.Α. Sweden became the first country in 1974 to achieve the target and was followed by the Netherlands in 1976. The Scandinavian countries, and the Netherlands have consistently outperformed the other ODA donors from the Organization for Economic Cooperation and Development—Development Assistance Committee (OECD/DAC) for over a decade. Although Japan, U.K., the U.S.A., Italy and Germany, remain the largest donors in absolute volume, they have performed much below the expected level of 0.7 per cent of GNP. In terms of absolute aid volume, Canada ranked eighth from the top among 18 DAC members in 1986. In terms of ODA percentage, it ranked seventh for the same year.25 This, in our opinion, is not an "embarrassing performance," as far as the volume of ODA is concerned. The present policy of the Canadian government is to maintain 0.5 per cent until 1990 and then increase gradually to 0.6 per cent by 1995. The Winegard Report, instead of recommending a ceiling which may never be achieved, has proposed a floor for the ODA. It has asked the Canadian government to commit itself to 0.5 per cent of GNP as the minimum level of ODA to be prονided.Ø In our opinion, volume of aid is not the issue; more efficient and effective utilization of aid is. Uncoordinated project proliferation has created a recipients' market in foreign aid in many low income countries. This leads to waste, duplication and inefficiency in many poor countries with inadequate absorption capacity. The electorate in most donor countries seem relatively ignorant of levels of foreign assistance. It has been pointed out that it is unlikely that many voters in donor countries know enough about

For Whose Benefit? Smoke and Mirrors 1203

the tax price to them of foreign aid to be sensitive to changes in it. Since support for foreign assistance is largely based on altruistic or humanitarian reasons, voters may not attach much importance to the tax price. Consequently the voters in donor countries are not likely to show a systematic negative attitude toward foreign aid. Paul Mosley concludes that aid disbursements by nearly all donors are significantly influenced in an upward direction by two variables. First, past disbursements which tend to create commitments over long periods of time; second, disbursements of other countries which encourage or shame donors to "keep up" with the international Joneses of the donors' club—the Development Assistance Committee (DAC). The U.S. and Sweden are the two exceptions.27 Canadian ODA has continued to increase at a faster rate than most other federal government expenditures. It is however mildly receptive to budget deficits and fiscal restraints. The two major dips in ODA percentage targets—in 1976 and again in 198586—were the results of fiscal discipline and an atmosphere of budget cutbacks. The slow pace of Canada to reach the 0.7 per cent target is largely due to the government's commitment to reduce the federal deficit. As the Winegard Report points out, ministers of finance, in particular, tend not to like the rigidity of commitment associated with targets. However, the humanitarian and altruistic tendencies of a substantial proportion of the Canadian electorate has enabled successive governments to maintain a steady growth in aid volume. It is important to note that most studies of aid tend to use the nominal values, yet nominal values overestimate the net transfer of resources over time by very substantial amounts.

THE QUALITY OF AID INPUTS: FLEXIBILITY, LIQUIDITY AND TYING To qualify as official development assistance, aid transfers must have a grant element of 25 per cent or more for an individual transaction. The grant element is a measure of the degree of concessionality of aid funds as compared to private sector funds which carry an interest usually based on the market rate. The quality of foreign assistance is partially dependent on the degree of concessionality offered to the recipients. Concessionality refers to the grant element and soft leans. Thus the higher proportion of grants to loans, low interest rates and longer terms 0f maturity are consid-

2041 How Ottawa Spends

ered as indicators of better quality foreign assistance. In 1972, the DAC members were encouraged to maintain an average grant element of at least 84 per cent of their overall ODA commitments. This was later raised to 86 per cent.' In 1975, the Canadian government declared that the total degree of concessionality of the Canadian bilateral program would remain not less than 90 per cent. It also promised that Canada would continue to provide most of its loans on terms of zero per cent interest, a 10-year grace period and a 50-year maturity. Loans would be provided to countries with higher income and foreign exchange earnings on the basis of three per cent interest, seven year grace period and 10-year maturíty.80 The overall concessionality of the Canadian ODA has remained very high. In the early years of the 1970s ODA concessionality was reported at the 96-97 per cent level and during the latter part of the decade it hovered around 85 per cents' Recently the government has abolished the loan element in the ODA and henceforth all ODA will be composed of grants—thus a concessionality level of 100 per cent has been achieved. Canadian performance, in terms of concessionality of aid, compares well with other DAC donors during the last two decades.az Since 1980-81 Canada has extended 100 per cent of its ODA to the LLDCs (least-developed countries) in grant form and as we indicated above, all Canadian ODA will henceforth be extended in grant form. In comparison to other DAC members, Canada offered by far the best financial terms on its loans—zero per cent interest rate, the longest maturity terms and the longest grace period.tm

CANADIAN AID: TIED OR UNTIED? Probably the most criticized and controversial aspect of foreign aid in general and Canadian aid in particular is its tied nature. Tying generally refers to the procurement of goods and services under aid programs at the source--in the donor country. As Cassen points out, most aid is tied by the end use. Often countries which may formally have a higher proportion of untied aid use informal methods to increase their tied proportion. They choose sectors and commodities for various projects which oblige recipients to buy in the donor country. They use subtle pressures.

For Whose Benefit? Smoke and Mirrors / 205

Cassen et al. conclude in their recent report that there is abundant evidence that tying raises costs of imports, reduces the real value of aid, limits competition and choice and encourages external dependence instead of promoting self-reliance. It creates opportunities for corruption in both the recipient and donor countries. Transfer of specialized equipment and procedures under tied aid lead to added cost for training. It allows suppliers considerable scope to increase prices in the face of an externally set inelastic demand. Tied aid is considered responsible for skewing recipients' priorities toward capital-intensive projects. Capital-intensive tied aid coming from different sources also creates a nightmare in securing spare parts and maintenance and eventually contributes to inefficient and run down equipment. According to Michael Todaro, the import costs under tied aid are often increased by as much as 40 per cent.' Prior to 1970, all Canadian aid was tied to procurement in Canada. During the 1970s bilateral aid tying was reduced to 80 per cent and multilateral aid was untied. Despite pressures from the DAC, Canada did not sign the 1975 memorandum to further untie bilateral aid. A 1975 strategy paper called for the untying of bilateral development loans. But this policy was never implemented and in any case is no longer relevant since the institution of the 100 per cent grant element in Canadian aid. Compared to other OECD/DAC members, a relatively high proportion of Canadian bilateral ODA remains tied. Most DAC members have a higher level of untied bilateral aid than Canada. Martin Rudner points out that actual tying of aid has tended to exceed the policy minimum in Canada. Some 59.2 per cent of Canadian ODA disbursements were in fact tied in 1982-83. Rudner also points out that despite the criticism of tied aid by Canada's non-governmental organizations (NGOs), they have generally insisted that CIDA special program funding (which is officially untied) be channelled through Canadian organizations and not be given directly to the recipient country counterparts. This is tantamount to tying special program assistance to the Canadian NGO sources.a' It may be noted that the Canadian NGOs and universities receiving these funds retain up to 30 per cent of grants as overhead expenditures and significant amounts are spent in Canada. Ιn addition to bilateral aid and some portions of special programs, food aid, which represents about 15 per cent 0f the total aid budget, is also tied to procurement in Canada. The Wmegard Committee, however, thinks that "contrary to some critical impressions more of Canada's aid is now untied than tied." According to them the split is about 60/40."

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In comparison to other members of the aid club (OECD! DAC), the Canadian tied element of ODA remains high. Consequently, the Winegard Committee has recommended relaxing the 80 per cent tied rule and gradually raising the untied bilateral assistance to 50 per cent instead of 20 per cent of bilateral assistance. The Committee has also recommended waiving the tying requirement for some LLDCs in sub-Saharan Africa and untying food aid to the extent that food surpluses from neighbouring countries could be utilized. CIDA has accepted the waiving recommendation for sub-Saharan LLDCs. Aid may now be untied up to a level of 50 per cent for LLDCs in other regions and 331/3 per cent for countries in other categοrίes.40 Untying for the poorest African nations is a major step forward. There is evidence that the overall tying policy of CIDA will change substantially in the short run. Consequently the tied component of the Canadian ODA will remain fairly substantial. From the recipient's point of view this is a major drawback of Canadian aid.

FOR WHOSE BENEFIT? WHO RECEIVES CANADIAN AID? The most important official objective of development assistance is to foster economic and social development in the poor nations of the Third World. Therefore one might consider the proportion of ODA disbursed to the poor nations as an indicator of its quality. The Organization For Economic Cooperation and Development (OECD) categorizes the developing countries into low income (1980 per capita income below $600 U.S.); lower middle income (between $600-1200) and upper middle income (above $1200). The low income category includes the LLDCs defined by the UN as the least developed countries.41 The criteria used for the latter are GIP per capita, literacy and the extent of manufacture in national production. The World Bank classifies 37 developing countries in the low income category with a GIF per capita of 400 dollars (U.S.) or less in 1985; 59 countries in the middle income category of 401 dollars or more. All the LLDCs are included in the World Bank's low income category.42 This classification does not include nonmember countries like Afghanistan, Uganda, Chad, Lebanon, Laos and Kampuchea. The intent behind all these classifications is to refer to the most deprived countries having very severe obstacles to overcome in their development process. We will refer to "the poorest countries" in this sense.

For Whose Benefit? Smoke and Mirrors 1207

A great majority of developing countries are eligible for Canadian official development assistance. Only seven countries— Afghanistan, Cuba, Iran, Kampuchea, Laos, Libya and Vietnamare not admissible for ODA. Two out of these—Afghanistan and Laos—are in the "least developed" category. No right-wing dictatorship, whatever its record in human rights, is ineligible. Evidently the reasons for non-eligibility are political. It would be ridiculous to provide foreign aid to governments which have no diplomatic relations with Canada. The CIDA system for classifying countries eligible for aid is complex and problematic. Admissible countries are classified into three categories: Category I comprises core countries. Ιn these countries, a substantive, long-term commitment of relatively large sums of ODA funds is envisaged. For these countries multi-year commitments of development assistance are made and ODA can be transferred through all available channels, i.e., bilateral, multilateral and special programs. Category ΙΙ (non-core) is composed of nations where a significant Canadian presence is required but a full fledged ODA program is not appropriate or feasible due to political uncertainty or administrative resource constraints. Different transfer mechanisms may be used. Category III includes those countries where a major Canadian ODA presence is not anticipated. Bilateral programs are not undertaken in these countries. Transfer of aid is usually restricted to the mission administered funds (MAF) under the authority of the Canadian ambassadors/ high commissioners. Specific projects can also be supported through Canadian NGOs, institutions and the industrial cooperation progaam.' Table 3 presents a breakdown of countries eligible for ODA in various categories according to need and level of GNP per capita. Canada has been criticized for spreading its ODA resources thinly. Canada is an important member of the Commonwealth and la Francophone; it is situated close to Latin America and the Caribbean. Ιt receives immigrants from all over the Third World and it is an export-oriented country. Such a combination of foreign policy considerations, economic interests and historical links creates a desire to have a visible presence in a broad range of friendly countries. At the same time there has been a desire to concentrate bilateral assistance on a limited number of core countries to maximize the impact of resource transfer." Five years after the 1975

208 /How Ottawa Spends

Table 8.3 Number of Countries In Different Categories According to Need/Income and ODA Distribution Between Categories Category I Total number in the category

Category II

Category ill

31

24

53

Least Developed Countries (LLDCs)

9

7

21

Low Income Countries (World Bank)

18

5

7

Lower-middle Income

11

10

5

Upper-middle Income

0

4

7

Distribution of ODA (govt. policy)

75%

20%

5%

Distribution of ODA, 1984-85 (actual disbursements)

80

13

7

Source: Compiled through material provided by CΙDA.

strategy declaration, the North-South Institute concluded that very little progress had been made to concentrate Canadian assistance in fewer countries.46 In the 1980s some progress has been made. As Table 3 shows, 31 countries (and two regional programs) are receiving over 75 per cent of ODA. Nine of these are LLDCs and 18 fall in the low income category of the World Bank. Table 4 shows that during the 1980s just about one third of bilateral assistance has gone to the LLDCs. It may be noted that in 1970 only 4.8 per cent of the bilateral disbursements went to

Table 8.4 Canada Aid Disbursements to LLDCs (Government-to-Government) (in millions of dollars)

LI DCs

1981-82

1982-83

1983-84

1984-85

1985-86

216.20

257.76

280.96

36

256.45 37

285.53

32

32

34

—

—

.06

.07

.06

% % of GNP Source: CIDA annual reports.

Canada the LLDCs. By 1973 this percentage had risen to provides 0.31 per cent of its GNP in aid to low income countries (1984-85) and 0.14 per cent of GNP to the LLDCs. The DAC aver-

For Whose Benefit? Smoke and Mirrors /Ø

age for these two categories is 0.19 and 0.08 per cent respectively. Thus, in terms of international comparison, Canadian aid to the poorest countries is substantially above the DAC average. However, Norway, the Netherlands, Denmark and Sweden provide respectively 0.67, 0.61, 0.58 and 0.55 per cent of their GNP to the low income countries.47 CIDA has failed to achieve its own objective of 0.15 per cent of GNP in official development assistance to the LLDCs. CIDA provides substantial amounts of aid to a number of middle income countries. In Latin America all the core countries are middle income countries. Ιn the Americas region, Jamaica is the largest recipient with over $34 million of country-to-country ODA. Peru and Columbia both are middle income countries receiving a large amount of aid. Costa Rica, which is not a core country, received more ODA than Columbia, a core country, in 1985-86. In Anglophone Africa, Zimbabwe, Egypt and Botswana which are all middle income countries, receive a substantial amount of foreign assistance. Cameroon and the Ivory Coast in Francophone Africa receive almost as much country-to-country assistance as Burkina Faso, an LLDC. Until recently, Algeria which is almost at the top of the upper middle income category with an income per capita of $2160 U.S., was among the top ten recipients. Ιn Asia, Indonesia is the second largest recipient of foreign assistance, over 77 million dollars in 1985-86. It is a middle income country. Thailand and the Philippines both have even higher GNP per capita and they receive substantial amounts of assistance. The aid to these countries may largely be motivated from commercial and political reasons. But some of them also contain substantial pockets of poverty. On the positive side, Bangladesh, Ethiopia, Burkina Faso, Mali, Niger, Malawi, Tanzania and Sudan are all LLDCs, and receive a major portion of Canadian aid. India, Pakistan, Sri Lanka, Kenya and Senegal are all low income countries which are amongst the largest recipients of Canadian aid. Overall it appears that Canadian performance in providing foreign assistance to poorest countries is commendable but still has room for improvement. Formally it seems the country selection is done on the basis of need, commitment to development, political interest, and commercial interests. It is interesting to note that a list of the most important issues in core country programming does not mention any developmental issues with the exception of the impact on women

210/ How Ottawa Spends

and environment. The emphasis is on commercial, business and economic factors. According to the Winegard Committee, the country classification system has been over-extended and betrays a confusion of objectives. The Committee also considers it a hostage to foreign policy considerations. The Winegard Committee very perceptively points out that the system of classification has become a top down political process rather than country selection being a bottom up exercise based on field-oriented regional and sectoral planning.48 The Committee has recommended the abolition of the system and suggests a set of criteria which are much more coherent and development-oriented. It includes human rights, the recipient's need, Canadian experience with the recipient, compatibility of the recipient's development priorities with Canadian policy and the country's capacity to use aíd.49 Earlier the Desmarais Report had also criticized the classification system and made elaborate recommendations to reduce the spread of countries. It called for the 20-25 major recipients to be chosen from the LLDCs and World Bank's low income category. It appears that the Desmarais recommendations would lead to a choice of recipients similar to the present ones, the difference being that the Desmarais formula limits assistance for the middle income countries to 25 per cent of the country-to-country disbursements.ó0 The Government of Canada has accepted the Winegard recommendations to abolish the present category system and five criteria for core programming mentioned earlier. The government will propose a new eligibility system.51 This is certainly a positive step which will go a long way to improve the channelling of aid to the most needy and effective users. Success will depend, however, on how the Winegard recommendations are operationalized.

SECTORAL DISTRIBUTION OF DEVELOPMENT ASSISTANCE In contrast to its geographical dispersion, Canadian foreign aid is highly concentrated in terms of sectors. Roger Young has pointed out that Canadian ODA is historically oriented to food aid and the financing of physical infrastructure in hydroelectric energy, railways and technical assistance.b2 These are areas where Canada has experience and expertise; but these are also sectors where aid can be tied almost up to 100 per cent with greater ease. In 1975, the Canadian government promised to focus on food production and distribution, rural development, education and

For Whose Benefit? Smoke and Mirrors f211

training, public health, shelter and energy. The strategy went on to reiterate that although greater emphasis would be given to the areas mentioned above, Canada would continue to provide aid in traditional areas like transportation and communications where it has expertise and appropriate technology." The North-South Institute reported in 1980 that the diffusion of basic ODA objectives obstructed the gradual movement toward these key sectors. In 1978 only 8.7 per cent of Canada's total bilateral commitments were being targeted directly to agriculture and rural development, despite the fact that the 1970s were the heyday of the appeal to basic needs, social justice and integrated rural development. The corresponding figure for 1977 was 7.7 per cent (not including fertilizer loans, which would raise the figure somewhat)." In the 1980s, CIDA again emphasized agriculture (including forestry and fisheries), energy and human resource development as three priority sectors." The Desmarais Report maintains that the pattern of bilateral assistance in the mid-1980s, was a function of decisions taken much earlier. It reveals a marked tendency toward homogenization of aid programs dominated by lines of credit, food aid and physical infrastructure. According to the Desmarais Report, "Agricultural aid holds a declining position and even it (agriculture) was directed more toward infrastructures (silos, etc.) than toward food production as such."Ø The share of agriculture in bilateral disbursements declined from 20.4 per cent in 1977-79 to 15 per cent in 1983-85.57 There was an improvement to 18 per cent by 198586. Table 5 below gives a sectorel breakdown of the bilateral (government-to-government) assistance for the year 1985-86. It is evident from the Table that the overall share provided to agriculture has slightly increased but it remains modest, given the fact that agriculture is the major priority. Since agriculture is related to rural development and food production, it is assumed that aid to agriculture is likely to help more poor people in the Third World countries. Consequently agriculture as a percentage of the total disbursements is considered an indicator of the quality of aid. The figures presented here are very rough indicators. As the Winegard Report points out, the statistical breakdowns among sectors are often incomplete or misleading because projects may be reclassified to suit different reporting purposes and definitions of sectors change from time to time." CIDA in its various official statements has often given a great deal of emphasis to Human Resource Development (HRD). It is one of three major priority sectors. Despite this, HRD received

2121 How Ottawa Spends Table 8.5 Breakdown of Bilateral Aid Sectorai 1985-86 (percentages) Africa (Ang.)

Africa (Fr.)

Americas

Asia

All regions

Agriculture

19

16

16

23

18

Energy

13

14

6

15

12

Transportation & Communications

15

25

25

9

18

5

7

9

5

6

Social Development (Health & Sanitation) Education and HRD

12

8

10

4

6

Food

22

14

13

16

16

Others

14

16

41

28

24

100

100

100

100

100

Source: CΙDA Annual Report, 1985-86.

only six per cent of government-to-government (bilateral) assistance as shown in the table above. Even when Education/Human Resource Development is combined with Social Development (Health, Sanitation and Human Settlements), the total for the category still accounts for only 12 per cent of assistance. Transport and communications, which are not an official priority, received 18 per cent of the disbursements. CIDA programming in Human Resource Development (HRD) seems to be biased in favour of post-graduate training and education in professional, scientific and management fields—a very narrow definition of the sector. HRD, as a concept, has emerged from the broader concept of human development in the early 1980s. Human resources are increasingly considered to be the most important resource of the low income countries. In the early 1980s it was noticed that the developing countries, in addition to investment in physical iØtructure, must invest in HRD—i.e., in activities which indirectly contribute to long-term development. These include literacy, education, nutrition, primary health care, housing and training: Technical, scientific, professional, administrative and entrepreneurial skills have traditionally been considered important. But less importance had been given to the skills, knowledge and attitudes of the great mass of ordinary workers, small farmers, women and village traders. The improvement in skills and attitudes of these groups is part and parcel of human resource development. Their skills and attitudes, to a large extent, are a function of liter-

For Whose Benefit? Smoke and Mirrors 1213

acy, nutrition, health and poverty. The World Develoρmeni Report, 1980 provided evidence to show the relationship between productivity and these varíables.σ9

Thus, in LLDCs or low income countries, priority should be given to those HRD projects, which are broad-based, creative and targeted to such groups as destitute women, the landless poor, urban slum dwellers and small entrepreneurs. Graduate and postgraduate education benefiting a very limited number of people is not only very costly but is of limited utility. Some of CIDA's HRD projects appear to be elite-oriented replicas of Western models transplanted in totally different cultural environments. Their utility, at best, remains questionable. There is evidence to show that in countries with a very high degree of illiteracy, the rate of return for primary education projects is much higher than post-secondary education projects. CIDA's record in giving assistance in the health care field has been abysmal. Spending money on primary or preventive health care is a much better use of funds than postsecondary/university education, particularly in least developed countries. CIDA's program of immunization, or their support to the Agha Khan Rural Support program in Pakistan are good examples of efficient use of funds for human development. There is too much emphasis on capital-intensive physical infrastructure in transportation, energy, roads and even agriculture. Bangladesh, for example, is a major recipient of billions of dollars of aid from all major donors. It is the largest recipient of Canadian ODA. Many aid observers have pointed out that aid donors have not been able to alleviate poverty. Easy availability of capital stock from some donor or other has discouraged the recipient government from maintaining the existing stock. It has been pointed out that some donors are just dumping capital equipment in Bangladesh, particularly in the railway sectοr.ó0 CIDA has also spent a lot of money on energy and more recently on rural electrification. In some cases, CIDA projects have been crucial in the process of development of the recipient country; in others they are questionable. For example, CIDA spent $14.8 million on the electricity network in Port-au-Prince and some related projects in Haiti. The project took the lion's share of the country program budget. $1.8 million has been allocated to buy back up generators. The electricity program will have no direct influence on the rural areas and relatively little on the urban poor. Without CIDA's financing, the electrification program would have continued but with existing resources and older equipment resulting in

214 / How Ottawa Spends some losses in efficiency.fi1 In a country where disease, malnutrition and hunger are rampant, where the majority of people are illiterate and most have no access to potable water, giving an improved electricity network to the élites living in Port-au-Prince is an odd priority. There is substantial evidence in the literature that the electricity utilities in LDCs benefit the rich and the middle classes by providing them with electricity at subsidized rates. Leroy Jones concludes that consumers of energy-intensive products are predominantly in the upper half of the income scale. Direct consumers of electricity are also disproportionately wealthy. The producers who use electricity are evidently well-off. If one thinks of the opportunity costs of these projects to other social and human development projects whose beneficiaries would have been the true poor, it is obvious that energy-intensive projects have transferred benefits from the poor to the rich. Furthermore, since the supply of electricity in most Third World countries is subsidized, this form of aid has created a system of permanent transfer of resources from the poor to the rich. Rural electrification is equally or more inefficient in terms of benefiting the poor. It is much more costly than urban electrification and has very little positive impact on the rural poor.' Judith Tendler in a study for AID supports this cοnclusiοn.ó4 We believe that CIDA's sectoral strategy must be carefully revised in the light of the Winegard Report's recommendations. The Wipegard Committee points in the right direction, at least, if the real or primary objectives of ODA are rural development and poverty eradication. On balance, however, the overall quality of Canadian aid inputs seems to be better than a number of OECD donors with the exception of the Scandinavian countries and the Netherlands. Using four indicators—recipient countries (poor or not), sectoral distribution, the untied component and concessíonality—Mosley has compared the aid performance of selected OECD donors? Table 6 below summarizes his rankings. In the light of information and data provided earlier in this paper, we tend to support haley's ranking of Canada. As Canada has abolished the non-grant element and some of Mosley's data are dated, Canadian performance may have slightly improved. However the Scandinavian countries and the Netherlands continue to perform better. Japan and France are at the bottom of the OECD group. Canada is right in the middle. Canadian policies on infrastructure aid and tying need revision. It may be noted that tying aid provides

For Whose Benefit? Smoke and Mirrors 1 215

a motive for devoting more ODA to physical infrastructure than human resource development. Table 8.6 Quality of Aid-Comparison with OECD Countries

Canada

Tying status

Grant Element

Aid Quality Index

Aid to Agriculture and Social Infrastructure

Aid to LLDCs

5

6

4

6

3

9

8

5

France

9

8

W. Germany

4

7

5

3

8

Japan

8

5

7

7

9

Netherlands

3

1

3

4

6

Norway

1

3

1

1

1

Sweden

2

4

2

2

1

U.K.

7

9

6

5

4

U.S.A.

6

2

8

9

7

Source: Paul Mosley, The Politics! Economy of Foreign