by John English
And they were. Trudeau met with his caucus on September 27. The MPs still bore the enthusiasm of recent triumphs in the election and the referendum. Even those who had doubted Trudeau in 1979 and those who would later urge his departure were firmly behind their leader as he rose and informed them that he did not have time to wait. He explained that the nine “English-speaking premiers had accepted a completely new list of demands” drafted by Lévesque and Morin, and that some premiers were so drenched in their understanding of the British parliamentary tradition that they would join Lévesque in resisting a full charter where the courts upheld the basic rights of citizens. He concluded with the prediction that they would have an epic battle ahead of them if they wanted a full charter. The caucus sensed the moment: a Quebec member rose and declared, “Allons-y en Cadillac.” A full-size North American model it would be, one where the Constitution would no longer rest in London, where Canadian courts and legislatures were completely sovereign, where a charter enshrining basic rights would prevail over legislative fiats, and where the Supreme Court would make historic decisions that would profoundly affect the way Canadians lived their lives—just as the controversial American Supreme Court had done in the postwar era with its historic rulings on school segregation and the rights of prisoners.
The following day, Trudeau met his Cabinet. Although records of the meeting are not yet available, few, if any, secrets remain. Trudeau had warned the Cabinet before his September meeting with the premiers that they faced a tough fight over the Constitution and the charter: the provincial leaders would oppose them strenuously, the British would waver, and opponents of the entrenchment of minority language rights for the English in Quebec and for the French elsewhere in the country would resist bitterly. In short, he concluded, “We could tear up the goddam country by this action, but we’re going to do it anyway.”20 Time had run out for him and the country. Buttressed by the dual mandate of the overwhelming victory in Quebec in the 1980 election and the referendum, Trudeau now set out with determination to remake his country.* Some in the Cabinet hesitated: Pepin, as expected; franco-Ontarian Jean-Jacques Blais, who feared a backlash; Senator Ray Perrault, who was always unpredictable; and Charles Lapointe, a young Quebec minister who was part of a group of Quebec MPs uneasy with the challenge to the nationalistes. The notion of a pan-Canadian referendum as an alternative to unilateralism was briefly mooted, but the Cabinet rejected the idea. Doubts soon disappeared in the face of Trudeau’s determination and the exuberance of the caucus. With the Liberals in agreement, Trudeau tried to find allies to bolster those areas where his government was weak. And so he invited NDP leader Ed Broadbent in for a chat on October 1, 1980.21
Broadbent, as we know, had turned down Trudeau’s earlier attempt to form a coalition with the NDP. Besides, the party faced a major internal challenge, divided as it was between western MPs suspicious of the Liberals, Quebec, bilingualism, and central Canada and eastern MPs supportive of patriation, resource taxes, a charter of rights, and official bilingualism. During the summer, MPs such as Ontario’s fluently bilingual Bob Rae had expressed support for Trudeau’s initiative, while westerners were far more reluctant.22 Trudeau and Broadbent had an uneasy relationship, perhaps because of Trudeau’s own NDP past but more likely because the NDP and the Liberals fought for the same voters. Trudeau now told Broadbent that he intended to go forward with patriation and an entrenched charter, regardless of the provincial opposition. Broadbent agreed to support the initiative, subject to a few amendments seeking greater control of resources to assuage Saskatchewan socialists.
But Broadbent had not consulted his MPs widely enough. His decision caused a tempest in his party, with Blakeney leading his critics and accusing him of betrayal and ignorance. One of his own aides told his biographer Judy Steed that Broadbent “failed to massage the party’s egos at the critical moment. He forgot about playing politics. And for that he got the shit kicked out of him.” David Lewis, who backed Broadbent, disagreed deeply with his son, Stephen, who took Blakeney’s side, and four western MPs openly opposed their leader. But the commitment held.23
Fortified by the enthusiasm of his caucus and armed with Broadbent’s support, Trudeau appeared on television on October 2, 1980, and announced his plan to patriate the Constitution unilaterally. It was the night when Larry Holmes fought Muhammad Ali in Ali’s fourth comeback. That fight brought a quicker and clearer outcome—Ali’s only defeat by a technical knockout—than the battle that had begun in Canada’s political forums. Trudeau’s speech had three distinct parts: patriation of the Constitution; a charter of rights and freedoms enshrining minority language and education rights, which would be binding on all governments; and a method for arriving at an amending formula for the Constitution. Trudeau said that any group that opposed the plan “would look foolish in the eyes of the world.” Conservative leader Joe Clark immediately registered a strong dissent, one echoed not only by Quebec Liberal leader Claude Ryan but also by Premier René Lévesque. Their greatest objections were to Trudeau’s refusal to offer new powers to the provinces or “special status” in exchange for the bargain. Broadbent offered support as expected, though he expressed disappointment at the limited provisions for provincial control of natural resources. The following morning Ontario’s William Davis broke with Clark and announced that he would back Trudeau’s plan. Peter Lougheed, after consultation with Bill Bennett, announced furiously: “We will fight back any way we can devise.” The gloves were off.24
Trudeau’s proposals did offer some conciliatory gestures to the provinces. Ontario would not be required to become officially bilingual, land sale restrictions in Saskatchewan and Prince Edward Island were exempted, and the provisions for free trade among the provinces were dropped—an omission the Canadian Chamber of Commerce protested and one Trudeau and many others later regretted. These concessions were quickly brushed aside by his opponents, who focused on the “centralization” implicit in the charter. Joe Clark’s virulent attacks on Trudeau and the constitutional changes resulted from his party’s strong support in the West, his hopes for a Tory breakthrough in Quebec, and, not least, the growing threats to his own leadership within his party. In September 1980, as Clark was readying his response, Brian Mulroney, his leadership opponent in 1976, gave a public address calling for a reinvigorated party with a strong Quebec base. Mulroney, in common with nearly all Quebec anglophones, supported the proposed charter. Thus, while looking forward, Clark also had to look behind. Lougheed, too, had jousted with him when the Tories were in office, but now the Alberta premier expected much from Clark in the duel against constitutional reforms.25
Before long, a second front opened in the federal-provincial war. On October 28, 1980, Finance Minister Allan MacEachen rose in the House and, in his slow, deep voice, unveiled the National Energy Program (NEP)—a plan that caused perhaps the greatest economic controversy since John A. Macdonald’s National Policy a century earlier. The NEP quickly turned the West against the East and manufacturers against natural energy suppliers while simultaneously enriching the coffers of the central government.
Like the National Policy, the NEP is best understood through its politics rather than its economics, although both elements are central to its origins and its effects. Marc Lalonde, the minister of energy when MacEachen introduced the policy, points to the economic and political arguments in his later defence of the NEP. Clark, he says, had also experienced difficult negotiations with Alberta—his finance minister, John Crosbie, even called Lougheed by the name of Bokassa II, a reference to the mad emperor of the Central African Republic—and on their return to power the Liberals were determined to end the “image of fuzziness and aim-lessness” they had projected before their 1979 defeat. The NEP built squarely on one of Trudeau’s campaign speeches of January 1980, which had promised a “made-in-Canada” price for oil, the expansion of Petro-Canada, energy security through the development of Arctic and offshore oil, increased Canadian ownership of the energy sector, and th
e incorporation of energy into Canada’s industrial policy. It “detonated like a bomb over Alberta, stunning the petroleum province momentarily, while its fall-out spread slowly across the continent.”26
For Lougheed, the NEP, following on the threat of unilateral patriation in late September, was the final straw. Angered, brittle, and deeply suspicious of the federal government, he linked the constitutional proposals with what he now believed was a fundamental assault on the provinces’ ownership of resources. Even before his Conservatives came to power in Alberta in 1971, Lougheed had asserted that Alberta’s sole control over energy resources was essential, and he had criticized his Social Credit predecessor for failing to stand up for Alberta’s interests at the Victoria Conference on the Constitution. The NEP, though it did not question Alberta’s ownership, still asserted Ottawa’s right to control pricing, taxation, and international trade in the resource. Economists called the struggle a debate over economic rents, but journalists in the various media personalized that abstruse concept as Ottawa versus Edmonton, Toronto versus Calgary, Lougheed versus Trudeau, Galbraith versus Friedman, and rich versus poor. And crude as they often were on the front page and the cartoon page, these images were a rough approximation of reality. Fundamentally, the NEP was about politics: who gets what, when, and how.27
On November 4, exactly one week after MacEachen and Lalonde presented the NEP, Ronald Reagan swept to victory in the American presidential election and in his inaugural address referred to his “intention to curb the size and influence of the federal establishment and to demand recognition of the distinction between the powers granted to the federal government and those reserved to the states or to the people.”28 The NEP, with its interventionism, its nationalist promise to regain Canadian ownership of its energy sector, and its favouring of Canadian firms over multinationals, suddenly became a direct affront to the new American administration. Lougheed, of course, noticed, but so did his socialist neighbour Allan Blakeney, whose strong opposition to Trudeau’s constitutional reforms now intensified with the aggressive federal stand on energy policy. Although much of the Ontario business community and the press vigorously opposed the NEP, essentially because they preferred the new conservatism, Premier Davis recognized that the lower oil prices and the focus on Canadian nationalism were popular among his constituents. He therefore made only muffled noises about the NEP while continuing to back the federal Liberals on the Constitution.
In Quebec, as always, the political issue was more complicated, with Lévesque’s social democratic government opposed to Reagan’s antigovernment stance and favourable to the economic equalization aspects of the NEP, particularly the Canadian-controlled oil price and the higher taxes on producers. Yet Lévesque and Lougheed found common ground on decentralization and provincial rights. Indeed, Ted Byfield’s Alberta Report, the influential conservative journal, claimed that provincial government officials had concluded just before the referendum that a “yes” vote would be best for Alberta because it would undermine Trudeau’s “centralization” ambitions and weaken the province of Ontario. No provincial politician, the magazine added, dared make such views public, but they were widely held.29 To muddle things even more, the economy was sputtering into the worst recession since the Great Depression, with unemployment averaging 7.5 percent and rising every month; by 1982 it would be over 12 percent. The five-year mortgage rate stood at 18.38 percent, and inflation at 12.4 percent. With the so-called “Misery Index” at its highest point in Canadian history, it was not an easy time to remake a country.*
Trudeau knew that it never would be easy. Unlike the confusion following the collapse of Keynesian approaches in the seventies, however, the eighties appeared to offer clearer choices. There were, on the one hand, the monetarist and supply-side economists, who were increasingly linked with neo-conservatives and who regarded excessive welfare as debilitating and demoralizing for any society; on the other were the social democrats and liberal interventionists, who continued to look to the state for leader ship in the creation of a more equitable and just society while recognizing the failures of specific welfare policies. The NEP, then, was a broader response to the economic challenges the government faced. Believing that energy prices would continue to rise dramatically throughout the decade, the federal government wanted more revenue to sustain its programs, from the increasingly expensive medicare to support for the poorer regions of the country. Energy seemed the key to unlocking the engine that would secure a stable financial future for the western provinces, especially Alberta and Saskatchewan, and, simultaneously, release abundant new revenues for the federal government, where expenses were growing rapidly and the budgetary deficit had ballooned. Conflict was inevitable.
Lalonde and MacEachen surrounded themselves with brilliant young analysts who had been attracted to Ottawa in the early Trudeau years, when so much had seemed possible, and the art and science of government intriguing. Ed Clark, the son of Canada’s most eminent sociologist, S.D. Clark, was a development economist who had written his Harvard doctoral thesis on Tanzanian socialism. He gave leadership in drafting the NEP. Mickey Cohen, a tax lawyer who had been deputy minister of energy, mines, and resources in Joe Clark’s government, guided the NEP through the thicket of his bureaucratic colleagues. He also secured the cooperation of Ian Stewart, a former Rhodes Scholar who, as deputy minister of finance, sought a middle way between the Keynesians and economic liberals in Trudeau’s circle and the many monetarists and a few supply-siders in the Bank of Canada and the Finance Department. At Lalonde’s side throughout this period was his executive assistant, Michael Phelps, a young Manitoban with an LLM from the London School of Economics.* Possessing the energy of youth and the debating skills to skewer their opponents, the young economists and lawyers on the energy file were a parallel regiment to the one assembled around Michael Kirby on the constitutional file. Together they marched toward their greatest challenge as the economy teetered and constitutional reform seemed in doubt in the first months of 1981.
On New Year’s Day, 1981, Globe and Mail political columnist Jeffrey Simpson bade farewell to 1980 in a column entitled “PM’s Free Hand Gives Canada Its Bitterest Year.” The coming twelve months, he argued, promised more of the same. Simpson linked together the heavy resistance from the energy provinces and from Quebec to Trudeau’s attempt “to reassert the primacy of the federal government.” Faced with continuing and growing budget deficits, which had reached $11 billion in 1980, a shortage of revenue, and increasing inequalities, Ottawa demanded a proper share of the expanding energy pie. Trudeau’s position was relatively strong: “He still has a freer hand to pursue his vision of the country through the exercise of political power than a prime minister could reasonably expect.” And more than before, Trudeau understood the uses of power.
But so did the provinces and his opponents. Soon after the announcement of the NEP, Lougheed fired three effective salvos: a constitutional challenge to the natural gas tax; a staged reduction in shipments of oil to other provinces; and a freeze on the oil sands, whose development the NEP encouraged. Although the Petroleum Club and the radio talk-shows in Alberta cheered the premier, and bumper stickers declared “Let the Eastern Bastards Freeze,” Lalonde had included provisions in the NEP that attracted key Albertan players. These entrepreneurs and their lawyers rightly saw the provision that there must be 50 percent Canadian ownership on the Canada Lands—those potentially rich areas under government control—as highly beneficial. Dome Petroleum, Nova, and Petro-Canada therefore complained about the new taxes on gas and oil but did not join Lougheed’s general denunciation of the NEP. The influential Bob Blair of Nova, a major figure in the oil patch, openly declared his Liberal allegiance and remained in close touch with both Trudeau and Lalonde. “Smiling Jack” Gallagher of Dome most enthusiastically embarked on the acquisition of foreign oil companies, which were eager to abandon Canada in the wake of the NEP. Ensconced in a new tower in the heart of Calgary, dubbed “Red Square” by its critic
s, Petro-Canada was the creation of the Trudeau government, and it welcomed its enhanced role under the NEP.
All these companies would eagerly pursue the new Petroleum Incentive Payments, which encouraged a shift away from conventional resources in Alberta toward exploration on the Canada Lands. What the NEP sought to force was an end to Alberta’s dominance over the oil and gas market through the creation of offshore resources and the development of the northern frontier. To that end “new” oil received more generous treatment than “old” oil.30
The rhetoric was bitter and personal, and it worried Lougheed, whose Canadian patriotism was never in doubt, even if his anger with Ottawa was profound. He quietly told his energy minister, Merv Leitch, that it would be better to negotiate an agreement with Ottawa on sharing the revenues. After the Iranian hostage incident and the fresh evidence of the power of OPEC to set world prices, neither Ottawa nor Edmonton doubted that energy prices would rise continuously through the decade and that the “new” oil and gas would begin to flow. In short, there would be ample funds to share. Moreover, British Columbia and Saskatchewan, though much less significant in the energy field, were firm allies of Lougheed. In the case of Saskatchewan, the situation was complicated by the growing closeness between Roy Romanow and Jean Chrétien in sorting out constitutional details. While Chrétien tugged at Romanow to join in the patriation exercise, Blakeney stuck firmly with Lougheed—so much so that Chrétien, who respected Lougheed, believed that the socialist from Saskatchewan “seemed afraid to cross” the Conservative Albertan. Inevitably, the two tracks continued to intersect as energy and the Constitution dominated Canada’s political life in the winter and spring of 1981.31