by Paul Martin
Nonetheless, at this same time Jean Chrétien had allowed the race to succeed him to begin informally. Jean Pelletier pulled me aside one day and told me that the prime minister would run for re-election one more time and that would be it. Although Jean Chrétien never spoke directly to me about this, it became clear that he had given some of my potential opponents the go-ahead to begin organizing. We heard this directly from people around Sheila Copps and were able to infer it indirectly through the actions of Allan Rock. As the tempo picked up in 1999, we established a trust fund to begin fundraising for my leadership bid.
All this coincided with growing restlessness in caucus. To some degree, this was the inevitable product of our years in power. In our parliamentary system, there are often MPs of quality who become frustrated over time with their lack of influence when their own party is in office. It was also clear that having been a supporter of mine in 1990, while not necessarily a fatal obstacle to advancement, was not helpful. As MPs became identified with me, or expressed their dissatisfactions in other ways, their chances of advancement declined correspondingly. Unlike Brian Mulroney, who had held his fractious party together for so long in part by a meticulous attention to the individual needs and personalities of his caucus, Jean Chrétien did little to cultivate the ordinary MP.
As the biennial meeting of the Liberal Party approached in March 2000, some of my supporters in caucus were clearly getting wound up. The more rambunctious among them saw the meeting as an opportunity to push Jean Chrétien out before another election, even though there was no leadership review at the biennial that would have made this even technically possible. I was absolutely opposed to making trouble for the prime minister at this meeting. So were those working most closely with me. What sense would it make? I also have a visceral dislike of party in-fighting. My goal had never been to knock Jean Chrétien off but to replace him. Believe me, though, there were plenty of MPs at the time who didn’t share my aversion to fighting it out right then and there.
In order to calm the troops and avert a party crisis at the biennial meeting, my senior organizers gathered together some of my caucus supporters a few days before the convention. They met at the Regal Constellation Hotel near the Toronto airport. David Herle, I later learned, gave a PowerPoint presentation in which he made it clear that Jean Chrétien’s position was secure and should not be challenged. The message to my supporters in caucus was to use the meeting to position ourselves for the time when the leadership opened up and not allow it to become a festival of open defiance, which would not advance our cause. As Michael Heseltine discovered when he played a central role in removing Margaret Thatcher as prime minister and leader of the Conservative Party in Britain, the one who wields the hatchet can end up being seen as too divisive a figure when it comes time to choose the new leader.
I was aware of the Regal Constellation meeting beforehand and knew the general approach David was taking, though I did not consider it a big deal. He debriefed me on the phone afterwards, but, given what happened later, I was remiss in not thinking through the implications. That set the scene for one of the most embarrassing moments I ever experienced in politics.
Despite David’s advice, a number of MPs couldn’t contain themselves and spoke up in the next few days, calling on Jean Chrétien to step down. On the Tuesday evening of convention week, CBC News led with a story revealing the fact that the Regal Constellation meeting had taken place. The report made it clear that David’s advice was to lay low during convention week. In the context of the outspoken remarks of some of my supporters, however, it looked to some people as if there was a plot to oust the prime minister. Normally, the role of the prime minister’s advisers would be to play down a story like this, but from the moment it broke they did the opposite: torquing the story with reporters as hard as they could and building it up as an act of open rebellion orchestrated by me. The next morning, I made a prearranged appearance at an early morning meeting of Liberal women at the convention. I was completely unprepared for the media frenzy that confronted me when I came out. I still didn’t think it was much of a story — or, perhaps I should say, didn’t realize that it was. When reporters asked me about the Regal Constellation meeting, I said that my staff met with members of caucus all the time — which hardly satisfied the scrum.
Ideally, in any interaction with the media, you have an exit plan: a door nearby through which you can disappear. In this case, though, there was no door nearby, no place to go. As it became apparent that my replies weren’t satisfying the reporters, I decided to end the scrum. But I had to leave the conference floor in the Westin Hotel by a series of three escalators. There were cameras in front of me and cameras behind. There were reporters shouting questions to me from every direction. My endless, silent escalator ride was an instant television hit: it ran and ran all day. That afternoon, in an attempt to recoup, I held a second scrum in which I explained more about what had happened at the Regal Constellation, having been “re-briefed” by David and Scott Reid. But it was much, much too late to change the impression that we had planned an ambush on Jean Chrétien — an impression that his coterie was keen to sustain.
A few days after the convention, I was in the House of Commons on what is called a “duty day,” which simply means taking your turn sitting at your seat so that there is some cabinet representation in the chamber. I received a note saying that the prime minister wished to see me. When I arrived at his office, he was sitting with Jean Pelletier and Eddie Goldenberg, and he was clearly in a furious temper. He confronted me with a memo purporting to be the minutes of a conference call in which a group of my organizers were planning to swoop in for the kill in the aftermath of the convention. The transcript was marked with initials such as DH, SR, and RT — David Herle, Scott Reid, and Ruth Thorkelson, in other words. I took a quick look and saw right away that it was a complete fraud and I said so.
The prime minister said, “No, it is not.” He was mad as hell.
And then I blew my cork: “Wait a minute here. I am telling you this is a fake. Are you calling me a liar? This is despicable.”
And he said, “I don’t believe you.” I may then have used language that I would not repeat here.
“Go ahead and investigate,” I said. “I want you to investigate.”
About this same time, mysterious brown envelopes began to circulate to the media, containing the same phony transcript. Most reporters immediately recognized it for the garbage it was. Inevitably, however, there were a few who reported on it without first establishing its authenticity. The whole dirty tricks campaign was plainly got up by someone close to the Chrétien camp, whether authorized or not.
It had all degenerated into a disgraceful mess. To take some of the steam out of growing media enthusiasm for the “civil war in the Liberal Party” story, Scott phoned some reporters and said that we would “down tools” in the interest of party unity. And we did do what we had already done — this time with better effect — which was to urge our supporters not to make a public show of disunity. But we were not about to dismantle the organization we had built for the leadership campaign the prime minister had repeatedly signalled would come sooner or later.
A week or two later, Pelletier phoned me and said that he had established the memo was fake. I replied that my people and I were owed an apology by the prime minister. We are still waiting.
The rivalry between Jean Chrétien’s supporters and my own had become a problem. It was damaging me; it was damaging the prime minister; and it was damaging the party. As it happened, Michel Camdessus, who was then managing director of the International Monetary Fund, was due to step down in 2000. There is a longstanding tradition, which continues to this day, of a European leading the IMF and an American heading the World Bank. There was some talk among finance ministers at the time about the possibility of breaking this pattern and opening up the processes in both institutions. As a successful finance minister, having by this time overcome the deficit in Canada and bec
ome active in wrestling with international financial crises, my name came up. But it was never much more than cocktail party talk. My interest had always been in the World Bank, where my close friend Jim Wolfensohn was in charge. If that job had been open, which it wasn’t about to be, I might have been interested. But in any event, it quickly became clear that the Americans would not loosen their grip on the World Bank, in which case the Europeans were not inclined to do so at the IMF. So there was no issue.
Nevertheless, some of those around me were urging me to quit. Most importantly, Sheila felt that I should get out of politics. She believed that I could do as much in private life as I could staying in politics, and that I would be perfectly happy beginning the “third career” I had always talked about right then and there. At the time, Terrie also felt I should get out. She believed that since the deficit had been conquered, the government had drifted from its moorings. She argued that my credibility was being undermined by my continued association with the government — a source of disagreement between us, to be frank. David Herle, for his part, thought that I might be better positioned to run for the leadership from outside the government, as John Turner and Jean Chrétien had both done. But that simply wasn’t in my character. If I got out of politics, I was going to get out and get on with my life. Quitting government or politics as a “play” for the leadership wasn’t something that even remotely tempted me. Furthermore, as the dean of the G7 finance ministers at a time when the global sands were shifting dramatically, I was in a position to influence economic policy in a direction I felt was best for both Canada and the world, and I was not about to walk away from that.
That fall, the prime minister decided to call an early election. As a result, when we brought in our fall economic and fiscal statement a few weeks before, it amounted to an annual budget. Not just any budget. We brought in the biggest personal tax cuts in Canadian history. It was an important milestone in our long fiscal journey. We had conquered the deficit, started paying down the debt, reinvested in crucial social programs, and now we had sufficient funds to provide tax relief on an unprecedented scale.
Any personal relationship with the prime minister was by this time utterly non-existent, but politically we continued to work together. I spoke extensively across the country during the campaign. In Quebec, the party’s television ads put me in the shop window. On one occasion, John Rae asked me on short notice to take the red-eye flight to Vancouver to introduce Jean Chrétien at a rally, which I dutifully did. On the stump, the prime minister sometimes promoted a Liberal vote as a “two-fer”: that is, a Liberal government gave you two for one, Jean Chrétien and me.
During the election, the prime minister sent strong signals in public that this would be his last campaign, partly in response to opinion polls indicating that while the public continued to support the party, they were tiring of his leadership. After the vote, which produced a larger majority for us, Jean Chrétien had his usual consultations before announcing his new cabinet.
“Well,” he said to me, “you have been minister of finance for a long time. Don’t you think it would be time for a switch?” He offered me Foreign Affairs. In a way it wasn’t surprising. After all, it was the post in which my father had served with great distinction. But it was not for me.
“I’ve got to tell you,” I said, “I am probably doing more in terms of foreign policy right now at Finance than I could do as minister of foreign affairs.” It was in no sense a negotiation. He made the offer. I declined. He said he would keep me in Finance as I wished.
When the cabinet was sworn in at Rideau Hall, there was as usual a reception afterwards. Jean Pelletier approached me and confirmed our earlier conversation to the effect that Jean Chrétien would not run again. “Bide your time,” he told me, “and there will be a leadership convention.” We also heard again from supporters of Sheila Copps that the prime minister had indicated directly to her that he would not run again, but there was never any discussion of the matter between me and the prime minister, nor did I expect that there would be, given our strained relationship. Most of the signals pointed in the same direction: it was time to move the leadership preparations into high gear.
The economic package I had delivered before the election made the usual February budget redundant. The next budget came in December 2001 as part of the government’s response to the shock of September 11. The terrorist attacks had imposed many unexpected new costs, including our deployment to Afghanistan, as well as measures to beef up domestic security. It was the result of our long-term fiscal discipline that we were able to absorb very substantial new spending on security. With the use of the “prudence” reserve I had always built into my budgets, we were able to do so without slipping back into deficit. The budget allocated $6.5 billion to intelligence, policing, border screening, and the military. It also included more than a billion dollars for the high-tech “smart borders” program we wanted to put in place, to keep trade moving freely without allowing terrorists to do the same. It was an important budget. The demands on Kevin Lynch, now my deputy minister at Finance, to find a way to meet these sudden demands for spending without breaking our fiscal framework were huge. But because of Kevin’s earlier experience at the Department of Industry, he had the ideal background for the task, and we were able to pull it off.
It was in this context that Brian Tobin, who had returned to federal politics in the 2000 election and become industry minister, decided to push for a billion-dollar cross-Canada broadband infrastructure program. I very much respect Brian, and to be truthful, if I had been at Industry at the time, I can imagine myself pushing for something equally bold. He was obviously counting on the prime minister to help give him what he wanted. But his proposal would have cracked the fiscal framework that we had worked so hard to establish. Moreover, I thought it was unwise to invest heavily in a hard-wire technology that would soon be rendered obsolete by the emergence of wireless broadband.
When the story of our disagreement hit the press, I was obviously concerned, because for most of my tenure at Finance we had been successful in keeping internal disagreements over budgets out of the public eye. At that point, from my perspective, it became an issue not just of policy but also of budget discipline; in other words, if we yielded after Brian had gone public it would have encouraged others to end-run the process in the same way. But it never came to that. I said no and heard nothing more about it from the PMO. At the time, I believed this was because some people in the PMO, including Eddie Goldenberg, had doubts about the wisdom of his project on policy grounds, and they took my side, notwithstanding the deep divisions between us politically since the biennial.
I am told that Jean Chrétien has subsequently said that he gave Eddie instructions to allocate a preliminary $100 million to Tobin’s scheme (rather than the $35 million the budget actually contained). I was unaware of this at the time. My relations with the prime minister at this point were so poor that we no longer had direct contact. Indeed, I would say it was the first budget in which I was not certain that I could rely on his support for my final decisions. However, with regard to Tobin’s broadband proposal, I simply assumed that the prime minister had decided not to let the tensions with me get in the way of maintaining fiscal discipline and was not fighting me on the point for that reason.
There were, however, other instances where these tensions were more obviously at play, with real-world consequences — and not for the good. One involved a miscalculation of federal tax payments affecting several provinces, but Manitoba in particular, which had received more than they should have. It was the fault of the Revenue Department, a separate ministry. By default, however, I became the lead minister trying to clean up the mess. At Finance, we came up with a formula that relieved the affected provinces from having to pay back the money they had mistakenly received. But this created an issue with other provinces, who would complain that they were being short-changed. I held a meeting involving the affected ministers, including Stéphane Dion,
who was at Intergovernmental Affairs, to explain my approach. Stéphane raised some very reasonable objections, which I went back to Finance to work through. Once I had done that, Stéphane came fully on board.
At that point, someone at the Privy Council Office raised concerns, to the effect that I was trying to run the government behind the prime minister’s back. The objection was that I was calling meetings of ministers to discuss major policy matters outside the formal PCO structure. This was nonsense. I was merely trying to work out a solution to a problem with the relevant ministers as I had always done. As a result of the PCO’s intervention, however, the prime minister decided to assign John Manley, by this time deputy prime minister to take the cabinet lead on the file. I explained to John when we met that Stéphane and I had worked out the solution that was acceptable to the concerned ministers, but John, asserting his authority, said he was not sure he agreed and wanted to study the matter. At that point, I was fed up. I told him the solution was in front of him and it was now his file to handle. For whatever reason, John then recommended our proposal be rejected. None of the ministers who had been consulted understood this, and neither did the government of Manitoba. Unfortunately, I did — only too well!
