Then-Prime Minister Brian Mulroney welcomes U.S. President Ronald Reagan to the G7 Summit in Toronto. on June 19, 1988.Fred Lum/The Globe and Mail
The past is always a foreign country. That includes the past of our own country. It looks strange in the recalling, and stranger still if meeting it for the first time.
In 1984, the year Brian Mulroney’s Progressive Conservatives came into office after an electoral landslide, Canadians were gassing up their cars at government-owned gas stations (Petro Canada) and flying on the state airline (Air Canada, then often mocked as Mapleflot). Ottawa owned a railroad (Canadian National), which at one time or another also owned a trucking company, passenger ferry services, a steamship line, a telephone company, a hotel chain and a vast real estate portfolio. The Lord’s Day Act made it illegal to shop on a Sunday.
Reconciliation was a national obsession, though it was all about reconciling with the country’s French fact. And while Bay Street was already the financial capital, the nation’s political prime meridian still ran through Montreal.
Mr. Mulroney, who died on Thursday, failed at his greatest political ambition: reaching a new constitutional accommodation with Quebec. The quest ultimately tore apart his government and consumed his party, which never recovered from the 1993 election.
But when it came to business, fiscal policy and the economy, Mr. Mulroney’s legacy was more enduring.
Let’s start with the Canada-U.S. free-trade agreement.
Free trade had originally been a Liberal idea – and opposition to it a core Conservative belief. Wilfrid Laurier’s government had tried to do a deal with Washington in the early 20th century, but many Canadians recoiled at the prospect. Conservatives of that era saw the Americans as a threat to the country’s soul, including the cherished tie to the Empire. In 1911, the Conservatives defeated free trade and swept into power on the slogan, “No truck or trade with the Yankees.”
By the 1970s, fear of Yankee truck and trade was an overriding concern for Liberals and New Democrats, too. As a result, Cancon regulations guaranteed that your local radio station had April Wine and Trooper in heavy rotation, while the Foreign Investment Review Agency made sure the Yanks didn’t send too many greenbacks up here.
Three months after forming government, Mr. Mulroney made his first visit to New York as PM and said, “Canada is open for business again.”
It’s a slogan conservative politicians still use today. It actually meant something then.
Mr. Mulroney’s push for free trade with the U.S. not only reversed his party’s historical position, it swam against the cultural tide. The idea that the Americans were bent on deflowering our national virtue was deeply lodged in the collective psyche. It took a certain kind of politician to say that maybe we had something to gain from a closer relationship with that alleged slick rapacious huckster creep living next door.
Mr. Mulroney pushed against Liberal resistance all the way to the 1988 election, which he won.
A generation later, when U.S. president Donald Trump threatened to gut the North American free-trade agreement – the successor to the FTA, and also negotiated under Mr. Mulroney – Justin Trudeau’s Liberal government rightly treated that as the gravest of threats to Canada’s prosperity. Free trade with the U.S. had long since become part of a bipartisan consensus. The Trudeau Liberals even called on Mr. Mulroney to help by leveraging his relationship with Mr. Trump, as he had done decades earlier with two other American presidents.
Mr. Mulroney had a real friendship with both Ronald Reagan and George H.W. Bush – friendships such as no Canadian PM has ever had with a U.S. president. That had benefits for the country, but it was also a domestic political liability.
The national psyche took it as a given that Canadians were doomed to always get taken to the cleaners by the Yanks, who were imagined as morally inferior to us, but superior in every other way. If an American president treated Mr. Mulroney as his best friend, that must be because our PM was a rube or a sellout. Maybe both.
But Mr. Mulroney got more than he gave. At the 11th hour, he got the Americans to put a dispute settlement mechanism into the FTA. When the U.S. wanted a unilateral trade deal with Mexico, he got Canada into the room. When the biggest environmental issue was acid rain, he got the White House to agree to the 1991 Canada-United States Air Quality Agreement.
Mr. Mulroney was derided by opponents as one of the anglosphere’s three neo-conservative amigos, the Canadian sidekick to Margaret Thatcher and Mr. Reagan. But unlike Mrs. Thatcher, Mr. Mulroney was not predisposed to act as if government was an inherently malign force. Unlike Mr. Reagan, he didn’t think “I’m from the government, and I’m here to help,” was a punchline.
He wanted, and got, major environmental agreements. And in the twilight of the Commonwealth, he picked a fight with Mrs. Thatcher (and won) over support for Nelson Mandela and opposition to apartheid.
He was in some ways Canada’s first neo-con PM. He was in other ways its last Red Tory.
Unlike neo-cons in the U.S. and Britain, he had no desire to gut social programs, though he found himself making politically unpopular cuts in a (failed) attempt to wrestle down the budget deficit.
But like neo-cons in the U.S. and Britain, his government did try to rethink the economy on more free-market lines. The National Energy Policy was dismantled. The privatization of big state enterprises was begun. Foreign investment rules were eased. As for the Lord’s Day Act, the Supreme Court struck it down.
Mr. Mulroney’s government also changed the tax code in a number of ways. He lowered the business tax rate but – because he was not a doctrinaire neo-con – he twice raised the capital gains inclusion rate, from 50 per cent to 75 per cent.
His most consequential tax move was the Goods and Services Tax.
It was a case of Mr. Mulroney listening to economists more than pollsters. The GST was a more efficient and fairer replacement for the old, hidden, export-discouraging Manufacturers’ Sales Tax. It was also an attempt to shift the tax burden to encourage savings.
It was as hard to find an economist who didn’t like the idea as it was to find a voter who did. The average person perceived it not as a revenue neutral replacement tax, but a new and omnipresent imposition. The GST was good public policy and disastrous politics.
Anger over the GST helped the Liberals win the 1993 election, and helped the Reform Party annihilate the PCs in Western Canada.
The Jean Chrétien Liberals, after making great political hay running against the tax, kept it. Former Reformer Stephen Harper harvested the same political field, and after coming into office in 2006, he permanently lowered Ottawa’s revenues by shaving two percentage points off the GST.
There’s one more legacy of the Mulroney era that never gets talked about: immigration.
Until the early 1960s, immigration to this country was largely restricted to Europeans and Americans. Then, under John Diefenbaker’s Progressive Conservatives, Canada for the first time opened itself to the world, adopting a race-neutral immigration policy.
A quarter-century later, Mr. Mulroney’s PCs made a second big change to immigration, by moving to permanently increase annual immigration levels, regardless of economic conditions. Until then, Canada’s quotas had fluctuated year-to-year. In the boom times of 1967, for example, a Liberal government admitted 223,000 new Canadians. But numbers were sharply reduced under Pierre Trudeau, reaching a low point of just 84,000 arrivals in 1985.
The Mulroney government decided to not only steeply raise the annual targets, but to keep them there. In 1993, Canada accepted just shy of 257,000 immigrants.
The Chrétien Liberals would scale back those numbers, but only slightly. For most of the Chrétien era, the number of immigrants remained north of 200,000 a year, and at around 0.7 per cent of the population. That continued through the Harper era.
The Mulroney decision, paired with the Diefenbaker decision, slowly changed this place. The Canada of a couple of generations ago often talked about itself as the product of two founding peoples, British and French. Such phrasing now sounds anachronistic, and it is. But in the early 1980s, the visible minority population was less than 5 per cent of the national population.
Today, that figure is closer to 30 per cent. The mayors of Toronto, Vancouver, Edmonton and Calgary are all visible minorities, three of them are immigrants – and nobody cares. That too is part of the Mulroney legacy.