Canada at 150 — Andrew Coyne comments

The end of the Liberal empire
Andrew Coyne on how the former Natural Governing Party might avoid certain doom

Going into the Liberal policy conference in Montreal last weekend, the papers were full of comparisons to the Aylmer conference of 1991, or even the Kingston conference of 1960—places of lore, where deep thinkers conjured up new ideas that later propelled the party to victory.

This is how the media imagines policy is born. You close the doors, pour some coffee, and brainstorm for a few hours, like advertising copywriters on a deadline, until a new idea pops into your head. The new idea is so obviously superior to the old that you are elected. Or, conversely, parties fail to meet the media’s demand for “new ideas” and are condemned to electoral hell.

By that standard, the conference was a failure: the only “new idea” to emerge from Montreal was a proposal to freeze corporate tax rates. But perhaps that wasn’t the point. Perhaps the point of the conference was rather to educate Liberals in some unpleasant realities: fiscal, social, political. The point, it seemed to me, was to tell them this wasn’t Kingston. The country’s problems are much different than those it faced in 1960, and so are the solutions.

Which is to say: the Liberal party itself is in a vastly different place than it was then. In 1960, the intellectual winds were blowing the party’s way. The solutions it proposed—public health care, public pensions, a vast expansion of the welfare state—were on the leading edge of contemporary thinking. By 1991, they were playing catch-up, grudgingly accepting the wisdom of free trade and balanced budgets. But against an exhausted Conservative government, it proved enough.

Today the situation is far more dire. In 1960 or 1991, it was still possible for Liberals to hope that, with a turn in the political tides, they could be carried back to power in relatively short order. In 2010, that is a harder case to make. Much is made of the failings of their current leader, Michael Ignatieff, as much was made of the failings of the last, and of the one before that. But the truth is that the Natural Governing Party is in the grip of a historic political realignment, which it is all but powerless to resist.

The only surprise is that we did not see it coming long ago. As recently as 2003, it was still common to refer to the Liberal party as an unstoppable political dynasty, and to Canada as a system almost of one-party rule. Yet that impressive imperial facade concealed deep fissures. The Liberal empire was cracking up, and had been for more than 50 years.

Go back to 1949. In that year’s election, the first under Louis St. Laurent, the Liberals took 191 of 262 seats to win their fourth straight majority. More impressively, they won a majority of the seats in every region: Ontario, Quebec, the West, and Atlantic Canada. Today they control only the last.

The West was the first to go. The Liberals’ western caucus was cut to single digits in 1957, then obliterated in the Diefenbaker sweep the following year, a calamity from which it has never recovered: 1949 was in fact the last time the Liberals carried the West. In most elections since they have struggled to win a dozen seats.

But that was not so much of a problem for the party, so long as it maintained its historic lock on Quebec. The Liberals won six of seven elections from 1963 through 1980, yet only once (1968) carried the rest of Canada. The difference was Quebec: under Pierre Trudeau, the Liberals routinely racked up more than two-thirds of the seats in the province. But the Mulroney sweep of 1984 ended that, and the party has never really recovered there, either.

Still, even then the party could eke out a majority on the strength of its near-total domination of Ontario. In three straight elections under Jean Chrétien from 1993 to 2000, the Liberals averaged over 98 per cent of the seats in Ontario. But with the formation of a unified Conservative party, that’s over, too.

One by one, the engines of Liberal supremacy have been failing. The party has been operating off of a narrower and narrower base, to the point that it is now largely confined to Montreal, Toronto, and Atlantic Canada. Worse, it is hard to see how that can change, so long as it remains shut out of the West, where the party now holds just seven seats. In the short term, it could perhaps scrape together a minority government without it: all it would take is another near-sweep of Ontario and the collapse of the Bloc in Quebec. But in the longer term, the money, the population and the seats will continue to flow to the West, whose political culture—populist, self-reliant, suspicious of Ottawa—will if anything grow more alien to traditional Liberalism. In 1980, Quebec had roughly as many seats as the western provinces combined. In 20 years, it will have perhaps two-thirds as many.

This is more than a dilemma. For the Liberals, it is an existential crisis. For most of the last century, the party was an endlessly adaptable vehicle for talented office-seekers of various stripes, donning whatever policy guise was needed to deliver itself into power. In the first half of the century, it was the party of the provinces and free trade; in the latter, the party of Ottawa and protectionism. In the 1950s it was the party of frugality and prudent government; in the 1960s and 1970s, of deficit spending and welfare statism. But always, it was the party of power. By the end of its run, its appeal was as much rooted in inevitability as anything else: you might as well vote for us, because we’re going to win anyway.

But if it is no longer the party of power, what is it? If it is now a party like the others, what does that party stand for? The party’s legendary flexibility in matters of principle, once a source of political strength, is now a liability. In a crowded political marketplace, it cannot simply rent out a stall: it needs a distinctive brand. Never has it been more necessary for the party to define itself in policy terms. Yet never has it felt itself so boxed in.

Whatever twists and turns it has made since then, the party is still very much the child of Kingston: its natural inclination, only temporarily muted by the deficit fight of the 1990s, is still toward activism. Many Liberals undoubtedly see their salvation in a return to government activism—a new social program, perhaps, or a high-speed rail line: a dramatic, headline-grabbing “national project.” But the world is a very different place now, and the constraints on activist government are much tighter.

In the 1960s, productivity growth was soaring, while the arrival of millions of baby boomers at working age provided an abundant source of labour. Revenues poured into federal coffers, and poured out even faster. It was an age, it seemed, of limitless possibilities. And even if, as we learned in later decades, there were limits, the challenge was merely to recover our balance, to live within our means.

But now it is 2010, the first of the baby boomers has reached retirement age, and suddenly the picture looks very different. If it were just the deficits we are now running that we had to contend with, that would be one thing. But it is the far worse imbalances facing us in future years, as the number of retirees mounts and the working-age population shrinks, that pose the real challenge—as speaker after speaker impressed upon the Montreal conference.

From the economist Pierre Fortin, the conference heard of the extraordinary strains this will place on government finances; from David Dodge, the former governor of the Bank of Canada, of the hard choices this will force us to make with regard to medicare and other social programs; from the management consultant Rick Miner, of the coming of an era when labour shortages will be as much a problem in some areas as unemployment is in others.

So the first check on Liberal hopes of spending their way out of trouble is this: we don’t have the money. Not in the short run, and especially not in the long run.

A second, related constraint is public opinion. People keep predicting a big swing back to big government, and it never happens. Even after the worst economic crisis in 75 years, widely claimed to herald the collapse of capitalism, there has been no surge in support for left-wing parties and ideas around the world. That seems even less likely in the straitened age into which we’re heading.

And to the extent that there is a constituency for such a program, Liberals face another problem: they have to share it with three other parties. Perhaps they hope to corral those votes for themselves—the intent, one supposes, of the corporate tax freeze, a direct steal from the NDP. But if it didn’t work for Stéphane Dion, it’s hard to see how it might for Ignatieff, whose past support for American imperialism and the Iraq war make him anathema to many on the left.

A third constraint: the Constitution. Time and again, the conference heard of the need for a “national strategy” to do X. Only, as often as not, X was in provincial jurisdiction: health care, education, housing and so on. Time was when Ottawa could worm its way into provincial jurisdictions via the federal spending power, but not only is there no money for this, but successive federal governments have promised not to do so without the provinces’ approval.

And fourth: it’s been done. Kingston happened. The essentials of the modern welfare state are already in place. Any new entitlements, like a national daycare program or pharmacare, are a harder sell, not least given the troubles we’re facing with the ones we have.

Perhaps this accounted for the general air of listlessness at the Montreal conference. Speakers did a good job of describing the challenges facing the country; they were rather less successful at proposing solutions. A panel on health care offered little but exhortations to appreciate how wonderful our system was, together with a caution that any reforms be “evidence-based.” A panel on “culture and the digital world” prescribed more support for Canadian content and emphasized the vital role of public broadcasting. A panel on foreign policy dwelled mostly on past glories, when apparently we bestrode the world like titans.

All in all, it felt more like a party playing to protect a lead than one in danger of irrelevance. It’s a strange mixture of complacency and despair, and neither is what the Liberals need. Their fate is not sealed. They are not doomed. If they are unlikely ever to be the Natural Governing Party again, they can certainly prevent the Tories from becoming one in their place. But to break out of the box they’re in, they will have to be bold.

I’ve described the demographic and fiscal challenges we face as constraints. But they can also be opportunities for the party to define itself by its willingness to confront them. Why can’t Liberals lead the way in tackling health care reform, for example, rather than inflaming public fears over every proposed alternative? To be sure, most of the heavy lifting will have to be done by the provinces. But there is a role for the federal government, in promoting best practices, facilitating competition, and assuring portability across provincial boundaries.

Likewise, it’s entirely open to the Liberal party to be the party of productivity—if only by default. However we attempt to deal with the coming fiscal squeeze, whether cutting spending or raising taxes, it’s peanuts compared to the benefits from a sustained increase in national productivity—which would give future generations the wherewithal to pay for, ahem, my health care. Our current rate of productivity growth is abysmal. Yet nobody is really talking much about it, let alone acting.

To be sure, putting the brakes on corporate tax cuts hardly moves us in the right direction. And Liberal rhetoric suggests the party believes the issue is a matter of careful planning and the injection of targeted funds for “innovation.” But there’s still time to get it right. Liberals have more room than Tories, in a Nixon-to-China way, to liberalize restrictions on foreign investment, delivering much-needed capital, not to say a competitive kick in the pants, to such important industries as telecoms and transportation.

There’s much else the party could be doing that wouldn’t cost much but would help to distinguish it from the Conservatives: policies that would appeal to the West, yet are consistent with Liberal traditions (or at least self-image). Among other things, there are openings for the party to stamp itself as:
• The party of democratic reform. How we nominate candidates, how we choose leaders, how we elect members, how Parliament functions—there’s clearly lots of work to do here. This used to be a Conservative issue. Today, not so much.
• The party of individual rights. In 2006, Paul Martin proposed removing the notwithstanding clause from the Constitution. Less ambitiously, Liberals could propose shoring up our national commitment to freedom of expression, by abolishing the ban on hate speech (the “incitement to violence” provision is surely enough) and clipping the human rights commissions’ wings.
• The party of consumers. Every economist will tell you: protectionism is a conspiracy against consumers, notably our egregious tariffs on agricultural imports. More competition, domestic or foreign, is the best way to bring prices down, and productivity up.
• The party of taxpayers. Former Liberal MP Dennis Mills used to campaign vigorously for the flat tax, complete with postcard-sized tax form. A corollary would be reform of EI and social assistance, along the lines recommended by the impeccably Liberal Macdonald commission: a simplified, streamlined universal income guarantee.
• The party of pensioners. The Quebec Caisse de dépôt’s ill-fated plunge into asset-backed commercial paper shows the perils of trusting everyone’s pension savings to one big investment fund. Why wait for some similar misfortune to overtake the CPP? Liberals are talking now of adding a supplementary individual savings plan on top of the CPP, as a way of addressing pension shortfalls. Why not reverse-engineer the CPP on the same lines, breaking it up into individually owned plans?
Oh, and one more:
• The party of the environment. Yes, that means a carbon tax. It’s a good idea, the only way Canada is ever going to come close to meeting its carbon emissions targets, and everyone knows it. Was it the carbon tax, as myth holds, that doomed the Liberals in the last election? Or was it because it was poorly designed and poorly presented? A better plan, better presented—a real “tax shift,” as implemented by Gordon Campbell’s Liberal government in B.C.—might be a winner.

That’s asking a lot, perhaps. Indeed, there are more shocking ideas in the last half-dozen paragraphs than were heard in three days at Montreal. But if Liberals are to find a place in the political spectrum, or deserve to, they need above all to be the party of straight talk and hard choices. It’s not like they have much to lose.