Brian Mulroney’s Canada?
Mulroney is remembered for his policies, but his legacy includes political dysfunction and the decay of the political system.
When former Canadian Prime Minister Brian Mulroney died on February 29, there were broadly two sets of tributes. The first was for Mulroney as a person, and came from across the political spectrum. He had a reputation for cultivating personal relationships everywhere, a necessary skill for a successful politician, and many who were fierce political opponents expressed genuine sadness at his loss, and noted that he had remained a friend after everyone had retired from politics. This of course stood out in an era where political opponents have become enemies to be brought down at all costs.
Nevertheless, many tributes began with a bit of a qualifier, along the lines of “although we disagreed ferociously…” and many articles summarizing his career called his “divisive.” That leads to the other set of tributes, those that examined the policy record of his two majority governments. His governments were “transformative,” Mulroney was one of Canada’s most important prime ministers, and he was in many ways the father of 21st century Canada. These statements were true, though not always for the reasons intended. Mulroney is indeed remembered for his policies, and those policies still have an imprint on Canadian politics. But Mulroney is also the father of 21st century Canadian politics because of his role in setting up political dysfunction and the decay of the political system.
Broadly speaking, Mulroney had three major accomplishments: negotiating the Meech Lake Accord, a set of proposed amendments to the Canadian constitution, negotiating the Canada-United States Free Trade Agreement, and the North American Free Trade Agreement (NAFTA), and introducing the Goods and Services Tax (GST). All three were significant achievements, but none was an unqualified success, and all three represent unresolved problems for Canadian policy.
The Meech Lake Accord had the potential to make 21st century Canadian politics very different from what came before, had it resolved once and for all the question of Quebec’s role in Canadian federalism and the broader question of the political consequences of Quebec’s unique linguistic and social character. A ratified Meech may not have accomplished this once the Supreme Court of Canada denied the applicability of the Accord’s distinct society clause in one or another case. But what is more important is that the three-year debate leading to the Accord’s failure illustrated that Mulroney did not understand what the Canadian public outside Quebec expected from constitutional change and the relationship that many had already developed with the 1982 Constitution Act and the Canadian Charter of Rights and Freedoms. In particular, he erred in assuming that there would be such relief at persuading Robert Bourassa’s government to “sign the Constitution” that no one would fuss at the Accord coming as an unexpected (outside some narrow academic and policy circles) fait accompli not open for debate. Beyond setting off a chain of events that culminated in the 1995 Quebec sovereignty referendum, Meech Lake led to the expectation that future constitutional packages (such as the 1992 Charlottetown Accord) would be submitted to national referenda, and may well have unwittingly established the principle was unamendable and unfixable in regard to Senate reform, Aboriginal self-government, and the notwithstanding clause. It also means that Quebec’s status continues to be a constitutional irritant, and that there are still calls for a third sovereignty referendum.
Free trade with the United States unquestionably made Canada wealthier, and it created more efficient supply chains in North America extending across international borders. It is now common in Ottawa and Washington to hear the expression that Canada and the United States do not trade as much as they make things together. Where free trade has come up short is on a political level. Before the 1980s, free trade with the United States was a difficult sell in Canada not because of any doubt that there was an economic benefit for Canada, but because of worries about American political attitudes toward Canada. There was the legacy of Manifest Destiny in the 19th century United States, reflected in the Liberal ad from the 1988 election where an American negotiator erased the Canada-U.S. border from a map of North America. Fear of annexation is of course overblown, but the real issue that Canadians hoped to fix with a trade agreement was protectionist pressures in American politics. In 1971, in the midst of a balance of payments crisis that drove the Nixon Administration to abandon the Bretton Woods system, Nixon announced a surcharge on imports that initially included those from Canada. This led to a Canadian policy known as the Third Option, an attempt to shield Canada from political volatility in the United States that could impact market access. In the 1980s, that same volatility took the form of countervailing duties aimed at Canadian imports found to be subsidized in violation of the General Agreement on Tariffs and Trade. Instead of the Third Option, Mulroney presented a free trade agreement as a way to exempt Canada from Section 301 of the Trade Act of 1974. This of course did not happen, and it was naive for anyone to think the U.S. Government would do so. However, after more than 30 years of free trade, Canadian governments still agonize over threats to the trade relationship arising from domestic U.S. politics, and have led to an intense focus on Ottawa’s part of Donald Trump’s trade proposals should he regain the presidency, and a more general fear at what a broader unraveling of the American political system would mean for Canada.
Economists applauded the GST when Mulroney’s government introduced it in 1991. Economists argue that consumption taxes are less distortionary than taxes on income, and the GST replaced a “manufacturer's sales tax” that taxed Canadian exports while exempting imports. In time, the GST won credit for balancing Ottawa’s budget later in the 1990s, though it raised about the same level of revenue as the abolished tax. Politically, the GST was disastrous. Canadians outside Alberta already paid provincial sales taxes, and were furious at seeing two taxes on receipts, as well as the expansion of the tax to the service sector. Significantly, the tax took the form of a surcharge on purchase prices, unlike outside North America, where taxes are built into advertised prices. Most provinces resisted proposals to fold their taxes into a national consumption tax, as has happened in Germany and India, though five provinces later agreed to a “harmonized sales tax” but refused to mandate tax-inclusive pricing. The GST will not be going away, as Ottawa needs its revenue, but nationwide grumbling has not gone away. Stephen Harper won office in 2006 by promising to reduce the tax by two points, and governments cannot raise it in the face of deficits. Many stores still have “we pay the GST” promotions, including one that rearranges the HST acronym into something off-color. The legacy is anger at all consumption taxes, which presently spills over into discussion of carbon pricing.
More probably, the roots of the populist surge in Canadian politics were visible in the 1980s, and the Mulroney government, not fully aware of what was happening, did things that encouraged populism. The underlying theme in the debate over Meech Lake was “governments vs, the people,” where governments grew visibly irritated with public opposition to policy. The Meech episode encouraged a populist response in Western Canada, not only at the focus of Canadian politics on Quebec, but a broader reaction on the right that thought Mulroney’s Progressive Conservatives were too centrist. The introduction of the GST, coming on the heels of Meech’s failure, further inflamed the public, and helped ensure not just the reduction of the Progressive Conservatives to two seats at the 1993 election, but the eventual end of the party as an organization. The rise of a populist right in Canadian politics is as much Brian Mulroney’s creation as his policy legacy.
References:
https://www.theglobeandmail.com/opinion/the-gst-hated-by-many-stands-the-test-of-time/article560699/
https://www.google.com/books/edition/Transforming_the_Nation/f6KiHZe3KVgC?hl=en&gbpv=0
https://www.wilsoncenter.org/blog-post/lessons-civility-brian-mulroney-and-canadas-warm-farewell
https://www.policymagazine.ca/brian-mulroney-dared-greatly/
https://www.wilsoncenter.org/microsite/8/node/118376
https://www.winnipegfreepress.com/opinion/analysis/2024/03/12/mulroney-not-all-good
https://rabble.ca/columnists/we-are-all-living-in-brian-mulroneys-canada/
https://search.worldcat.org/title/1019221924