The short-lived minority government led by Joe Clark did not have time for a great deal of legislative activity. The Clark government's permanent contribution to Canada's body of laws and public policy was minimal at best. Elected on May 22, 1979, the Progressive Conservatives waited nearly four months before facing Parliament, the Throne Speech having been presented on October 9. December 13 saw the lost vote of confidence on the budget and the calling of a general election. This election was held in February, 1980, and a Liberal majority was returned. To a certain extent, it would be unfair to be too critical in examining the policy developed by the Conservatives during their very brief tenure in office. At the same time, the Conservatives were in government long enough to present a Throne Speech, create special committees to examine various legislative ideas, and table a budget loaded with policy implications. At the level of policy-making below the legislative, many Orders-in-Council were passed, administrative directives sent out, international agreements-in-principle made, and other executive actions undertaken. Moreover, Tory cabinet ministers and backbenchers gave speeches in Parliament which indicate the direction of legislation and the extent to which the government's actions were going to live up election literature promises.
Clark's government was often accused of "flip-flopping" on major issues, of vacillating between positions and breaking election promises. Eventually, few people felt they could trust the government to even approximate the legislative agenda they had talked about during elections. While Clark's government made major policy reversals in a number of areas, there was one area where the general thrust of policy was clear. Ironically, it was the clarity of the Conservative's vision of energy issues that helped to destroy their government and elect a Liberal majority in 1980.
Energy was a burning issue during Clark's term in office, an issue with the capacity to divide Canadian society and exacerbate regional tensions. It also had the potential to divide the Conservative Party and even the Cabinet. It was an economic issue that was highly personal at the same time as being global in extent. Clark's government had the misfortune of having been elected in a year when several developments outside of Canada impacted energy policy. Its misfortune was compounded by the fact that the 1980 election was held in the winter, a time of year when energy consumers ( both as individuals and provinces ) are most conscious of their needs. This seasonal factor was recognized by at least one journalist at the time, who predicted in January 1980 that it would cause the Conservative to do less well in the February 1980 election than they had in May 1979.(1)
To say that Canadian energy politics around 1980 was a struggle between producers and consumers over price is simplistic because there were other issues, such as Canadian ownership, involved. Still, pricing was a very central issue. 1973 had seen the Oil Producing and Exporting Countries (O.P.E.C.) cartel dramatically raise world prices for oil. For countries with no domestic sources of oil, the only feasible course of action was to accept the price increase and pay more. Countries with substantial oil deposits, such as the United States and Canada, were in a somewhat different position. The United States imported a large portion of its oil, so prices there rose quite steeply. Canada was also a net importer of oil, but not nearly to the same extent. Moreover, oil imported from the Middle East was depended upon only in the parts of the country nearest the Atlantic Ocean. Natural gas pipelines had not yet reached as far east as the Atlantic Provinces, so an important substitute for oil was unavailable in that region. In Quebec, the need for imported oil was still strong. Before 1973, the federal government had decided against funding a rapid expansion of the oil and gas pipeline network on the grounds that it was more cost effective for people east of the Ottawa river to use imported oil rather than Western Canadian oil and natural gas. Even in the pre-1973 period, the interests of Eastern consumers and foreign producers had been privileged over those of Prairie producers.
After 1973, this tendency to privilege consumer needs would be continued, but in a different form. In Ontario, even less imported oil was used than to the east, but here industry was most energy-intensive, with the amount of energy per unit of economic activity the highest in the country. Only two provinces produced more oil than they consumed in the late 1970's. Saskatchewan produced about a tenth of the country's oil. Alberta produced most of the rest, about eighty-five per cent of Canada's domestic production.
After 1973, the government had responded to the "energy crisis" on an ad hoc, piecemeal basis; no comprehensive energy plan such as the National Energy Program of 1980 was introduced. Still, a basic tendency could be observed towards protecting the interests of consumers at the expense of producers. The government was determined to keep domestic prices down, and had a number of techniques at its disposal to achieve this goal. The government reduced the sales tax on gasoline. As American demand operating in the Canadian market would tend to drive prices up, sales of oil and gas to the United States were limited by imposing export charges. These export charges were varied on a monthly basis according to expected demand. Imports of oil from other countries were encouraged by government subsidies on imports, which compensated importers for the difference between the high international purchase price and the lower domestic selling price. Thus, distributors like Irving Oil could sell oil for much less than it had cost them and still, paradoxically, make a profit. Import subsidization was particularly helpful for consumers in Atlantic Canada, but was important for central Canada as well. Generous financial assistance was also available to bring new sources of oil into production.
The above policies were a spectacular success in reducing the price of oil. By 1978, Canadian oil prices were well below American levels, which were in turn well below world prices. For instance, in the middle of that year, O.P.E.C. prices were $18 for a barrel of oil. In Canada, the same barrel of oil cost about $13.75.(2) Moreover, Canada's supply of oil was much more secure than America's. When O.P.E.C. raised prices once again in early 1979, American motorists had to face long lines at gas stations. In Canada, lines of this sort were virtually absent.(3) During the period of Clark's term in office, the expectation world-wide was that the price of energy would continue to rise for years to come. It was suggested that prices of $80 or $100 dollars a barrel might be commanded for crude by the 1990's. This erroneous belief was quite widespread, being held by a wide spectrum of people, ranging from Saudi princes to the Fraser Institute to government planners to environmental groups like Pollution Probe.
While international oil producers might benefit from the expected surge in oil prices, Canadian producers saw themselves as destined to be excluded from the bonanza by federal policies. Despite the generous subsidies and tax deductions the Liberal government had given oil producers in the 1978 Budget ( which was praised in the Canadian Petroleum Association Review ), overall Liberal energy policy was detrimental to the interests of stakeholders in oil production. These stake-holders included the petroleum producers and oil companies as well as the Alberta government, communities where oil production takes place, and land-owners who have oil wells on their lands. In the election campaign of 1979, the Conservatives had promised policies that were in the interests of the producer. The Conservatives said that if elected, Canadian energy self-sufficiency by 1990 would be achieved. Increased Canadian production, curtailment of imports, support for the development of Alberta tar sands, would all serve this aim, but higher prices would be the chief mechanism for spurring the development of more remote reserves of oil and for encouraging conservation. Allowing oil exports to the Unites States would improve our balance of trade, said Joe Clark during the 1979 election, raising the value of the Canadian dollar. According to the Conservatives, the Liberal's energy policy was not only detrimental to an important regionally-based interest, it was harmful to the national interest as well. As the Conservative policy on energy pricing corresponded with the prevailing view in Alberta, it is not surprisingly, every seat in Alberta was in 1979 was won by the Conservatives.(4)
The issue of the Canadian Petroleum Association Review immediately after the 1979 election announced with evident glee that the three Liberal members most involved in making energy policy had lost their own seats. Strikingly, the news of the defeat of Energy Minister Alastair Gillespie, Minister of Indian Affairs and Northern Development Hugh Faulkner, and Environment Minister Len Marchand was announced in bold print. The Review was a publication that did little editorializing, focusing instead on providing bulletins about prices, export charges, and corporate appointments. Nevertheless, the partisan preference of the Review is obvious. It warmly welcomed the new Alberta-born Prime Minister, the new Energy Minister, Ray Hnatyshyn, and the Clark government's commitment to "energy self-sufficiency." The same issue of the Review pointed out that Canadian energy self-sufficiency would require "higher prices." A few months later, the Review opined that the domestic price of oil would have to be raised "towards world prices" at $4 a barrel per year until 1983, and at $5 a barrel per year thereafter. In July 1979 the difference between the Canadian and world prices per barrel of crude was a little over $4 dollars a barrel, but this proposal reflected the prevailing wisdom that energy prices would be rising indefinitely.
The first meeting of the Conservative Cabinet was symbolically in Western Canada. Assembling in Jasper, the Conservatives reaffirmed their commitment to all their election promises.(5) The first substantive action in the energy area undertaken by the Clark government was in late June 1979. Clark's first major international meeting was with other G7 leaders in Tokyo on June 28. To deal with the worsening world energy crisis, the leaders of the seven countries agreed to limit their oil imports and thus reduce global demand.(6) While Clark was a junior player at the conference, the agreement to limit increases in oil imports to one percent a year for the next five years was entirely coherent with his domestic policies. Moreover, a few weeks later Clark went beyond the commitments made in Tokyo and announced that Canada would freeze oil imports at their current level.(7) The fact that the Prime Minister was making announcements in areas that fall under the Energy Minister's portfolio show how import energy policy was for this government. Energy Minister Ray Hnatyshyn announced shortly thereafter that "the government will consider speeding up effort to raise prices to world levels."(8)
As the summer of 1979 proceeded, an issue strongly related to energy was increasingly discussed. Soon after its election, the Clark government had announced a task force on the "denationalization" of Petro-Canada, and this task force was due to report its findings on September 5. The idea of creating a nationalized, vertically-integrated oil company had been strongly promoted by the New Democrats during their 1972-1974 coalition with the Liberals. The idea of nationalized industry had a natural appeal for the New Democrats, but there were other considerations that gave the idea of Petro-Canada credence with pragmatic Liberals. None of the major oil companies were Canadian-owned at this point; Petro-Canada would give Canadians a presence in the oil industry; Petro-Canada emerged from the government's purchase of the Canadian operations of Petrofina of Belgium. Major international oil deals were increasingly between state oil companies; Petro-Canada would facilitate Canada's participation in these agreements. Having a federal Crown corporation involved in the oil industry would give the federal government greater say over energy issues, as well as over the direction of future oil and gas exploration.(9) Moreover, many prominent Liberals attacked the privately-owned oil companies as prioritizing their own profits over the needs of consumers; a publicly-operated oil company would be to the consumer's advantage. The idea of Petro-Canada was popular with the voters, and in 1979 and 1980, both the Liberals and the New Democrats claimed the corporation as their own idea.(10)
The major oil firms and the Government of Alberta intensely disliked the idea of Petro-Canada for precisely the reasons Liberals were in favour of it. They saw it as detrimental to their immediate financial interests. Moreover, there was a certain ideological opposition to the idea of a state-run oil company. Conservative campaign literature was sprinkled with the rhetoric of individualism; pages were headlined with phrases like "Individual Initiative: Our Greatest Resource." While the Conservative campaign literature tended to define "individualism" very broadly, including the many social-welfare programs necessary to help "individuals," some of the rhetoric of the Thatcher and Reagan against excessive state involvement in the economy was present as well.(11) It is not surprising that one of the first task forces to be created after May 1979 was concerned with the future of Petro-Canada. At first the "denationalization" of Petro-Canada was proposed, but then a more euphemistic and "newly-coined" term, "privatization," was used.(12)
This task force was headed by Donald McDougall, President of Labatt's Breweries. The task force's report suggested splitting Petro-Canada into two separate organizations. The prospecting division of Petro-Canada, Petro-Canada Exploration, Inc., was to be retained by the government, while the refining and retail operations were to be sold to the private sector. It was pointed out by the government's opponents that the more profitable retail and refining divisions of Petro-Canada subsidized the unprofitable exploration operations of the Crown corporation. If the corporation was to be split up with a government agency responsible exploration, asked Marc Lalonde of Ray Hnatyshyn, "who is going to pay the cost of those expenditures by that government agency ?" Marc Lalonde suggested that the cost of Petro-Canada Exploration were to going to be met by "increasing taxes on Canadians." (13)
New Democrat leader Edward Broadbent echoed Lalonde's concerns about taxpayers being left in position of the unprofitable rump of Petro-Canada, also pointing out that polls showed that "the vast majority of Canadians... do not want Petro-Canada dismantled."(14) Allegations of corruption were also made, as Mr. McDougall, chair of the task-force, was president of a company owned whose parent, Brascan, had expressed an interest in buying Petro-Canada.
The summer and early fall of 1979 saw the increased likelihood of a split within the national Progressive Conservative family over energy issues, with energy-producing provinces pitted against energy-consumers. Premier William Davis in Ontario was being increasingly vocal about energy issues; clearly any affinity he felt with the Conservative governments of Peter Lougheed in Alberta and Joe Clark in Ottawa was secondary to Ontario's interests as a major consumer of oil. Ontario's manufacturing industry was very energy-dependent, and the Liberal's low-energy prices had given Ontario a competitive advantage over neighbouring American states. While consumers across the country qua consumers obtained some benefits from low energy prices, the regional impact of Liberal energy policies was greatest in a region including southern Ontario; Ontario households saved hundreds of dollars as year in energy costs. Perhaps sensing the change in priorities in Ottawa, a June 1979 Cabinet shuffle saw the creation of Ontario's first Ministry of Energy. The Provincial Energy Minister, Robert Welch, has mused about achieving "Ontario self-sufficiency in energy."(15) While rather impractical given the lack of fossil fuels in Ontario, the idea of reducing the province's dependence on Alberta energy attests to the lack of concord amongst the nation's Conservatives. Davis was more moderate than his Minister of Energy, but emphatically asserted in a speech given in Alberta that "Ontario can not support a domestic price that is blindly tied to the world price." Other provincial Conservative government's were unhappy with the Clark government's energy policies. Prince Edward Island had virtually no internal sources of energy and was in an even more vulnerable position than Ontario. Its coastal position meant that most of its oil was imported, and its distance from natural gas pipelines meant that an important oil-substitute would not be available in the near future. The provincial Liberal government had embarked on some trial programs of wind and solar energy in the middle of the seventies, and the Conservatives had continued these policies. Still, these sources of power were long-term solutions at best, and the PEI government was anxious to avert a possible increase in the price of oil.
As members convened in Ottawa for the opening of Parliament, energy issues loomed increasingly large in the public consciousness. In late September, a major oil company lost a court case related to pricing practices; Liberal parliamentarians laid the blame for the energy shortage on oil companies. The day before the Throne Speech was to be read, the Toronto Star (which strongly advocated the interests of Ontario consumers), devoted considerable space to guessing what the Clark government energy policies would be and praising Bill Davis for championing Ontario's interests.
The Throne Speech of October 9 was devoid of policy ideas and filled with agreeable rhetoric. The Kingston Whig-Standard remarked that this collection of platitudes might be expected of a government that had been in office for years, not a fresh administration that prided itself on having creative solutions.(16) Despite the lack of substantive content in the Throne Speech, there was much for the House of Commons to discuss. From the moment the Parliament opened, the government faced an array of questions related to energy. The issue of privatizing Petro-Canada was brought up by the two larger opposition parties. For some time there had been a rumour to the effect that the government was planning "a price increase of $5 to $6 a barrel in the price of oil in 1980, which would cost the average consumer perhaps $100 more per year to drive his car." (17) For his part, the Minister of Energy did nothing to deny that such a price increase was being comtemplated. Later, the question of a "$4 to $6 a barrel"(18) increase was posed to the Prime Minister, who merely said that any increase in the price of oil would be accompanied with measures to help "lower income Canadians."(19) Mr. Hnatyshyn also faced questions about "gouging in Nova Scotia by Imperial Oil"(20) as well as the country's dwindling reserves of heating oil.(21) The Minister conceded that "we are in a fragile situation. Hopefully, we will make it through the winter." However, he promised nothing in the way of concrete action except that the government was monitoring the situation closely.(22) While the opposition parties discussed Ontario school boards unable to secure heating supplies for the coming winter, the Minister pointed out that Canadian consumers were getting energy at low prices, with a gallon of gasoline available for $1.05 in Canada costing $3.75 in Italy; "the domestic price of Canadian crude oil must increase faster than it has in the past."(23) To someone in Ontario unable to send their child to school this knowledge would hardly be consoling. The distance between the attitudes of those representing consuming regions and those from producing provinces was evidently great. Moreover, the tension between the Conservatives in Ottawa and Queen's Park over energy issues continued. An opinion piece in the Toronto Star described "Bill Davis as fighting for us...Davis is shadow-boxing with his Conservative colleagues in both Alberta and Ottawa." The federal cabinet was "sharply divided" over this issue, there being "no easy middle-ground between Davis and Lougheed." (24)
The budget tabled in December contained a measure quite obviously harmful to the interest of the energy consumer, an increase in the gasoline tax by eighteen cents a gallon. More than any of the non-energy related provisions of the budget, the increase in the gasoline tax was responsible for its failure to pass and the collapse of the Clark government. The five Social Credit members upon whom the Conservatives were dependent for support opposed this measure. All were from rural Quebec ridings and did not accept the arguments of Alberta and Saskatchewan Conservatives that increasing energy prices would be beneficial by encouraging conservation and the use of public transit. The Creditistes refused to support the government, which lost a confidence vote as a result.(25)
In the election campaign that followed the collapse of the Clark government, energy policy would prove to be a central issue. Liberal campaign literature focused on energy issues, the Liberal party publication, Election 80 News, combined attacks on Conservative energy policy and mockery of Joe Clark in roughly equal amounts. A graph depicting the probable impact of Conservative energy policies on typical household in different regions appeared on the front page of one issue.(26) This issue also reported a CTV poll taken on January 16 that showed that nearly a quarter of Canadians polled thought that energy was the most important issue in the election. The "disagreement and confusion" over energy policy within the Conservative party and its provincial wings was also pointed out.(27) The next issue of Election 80 News happily noted that there was a "massive shift in the Ontario heartland" in terms of voted support.(28) For their part, the Conservatives did nothing to challenge the assertion that they wanted to raise energy prices. Their campaign literature emphasized the long-term benefits of higher energy prices. In one publication, New Directions for Canada: Progressive Conservative Principles in Action, the dictum "Low Prices = High Consumption" appeared in bold print, followed by a comparison of Canadian gasoline prices with those in other countries. According to the Conservatives, Canada had no choice but to raise domestic energy prices towards world levels.(29)
The consuming provinces of Canada did not respond well to the Conservatives energy policies. The biggest losses in Conservative electoral support between 1979 and 1980 were in Ontario and Atlantic Canada. The Conservatives had won 57 seats of 95 seats in Ontario in 1979; in 1980 they took 38 seats, the Liberals wining 52. Of Atlantic Canada's 32 seats, the Conservatives took 18 in 1979 but only 13 in 1980 Quebec had stayed strongly Liberal in 1979 and remained so in 1980, with the Liberals obtaining the six ridings that had voted Social Credit the previous years. The Liberal gains were all east of the Ontario-Manitoba border; the number of Liberal seats in Manitoba remained stable a two, and declined slightly in British Columbia, to one single seat. In the two main oil-producing provinces (Alberta and Saskatchewan) the Liberals failed to gain win any seats in 1980 as they had in 1979. There was a noticeable shift in Western Canada away from the Conservatives towards the New Democrats. This helped ensure that there was Liberal majority government elected. In 1979, 136 Conservatives, 114 Liberals, 26 New Democrats, and 6 Creditistes were elected. In 1980, the Liberals won 147 ridings, the Conservatives 103, and the New Democrats 32. Social Credit was unable to elected any members.(30)
Having won a healthy majority in the oil-consuming provinces, the Liberals were in a position to impose their own energy policy in the country. Within months the new Energy Minister, Marc Lalonde, would present a comprehensive energy policy, the National Energy Program, to the country. While it contained many elements that had been present in the Liberal's energy policy in the seventies, the comprehensiveness of the program was something new, as were the extreme regional tensions that it ignited. The National Energy Program was the mirror image of the energy policies the Conservatives has wanted to introduce. In his remaining three years as leader of his party, Joe Clark would join figures like Peter Lougheed in denouncing the plan. However, the regional distribution of seats in the House of Commons meant that pro-producer energy policies were at disadvantage. The experience of the Joe Clark's government shows that the needs of electoral heartland of the country will generally be favoured over those of the West. The energy politics of 1979 and 1980 helped to convince Westerners that their interests would not be adequatley represented in the House of Commons. The stage for the emergence of the Reform Party later in the decade was set.
1. 1See Warner Troyer. 200 Days: Joe Clark in Power. Toronto: Personal Library Publisher.p.11 This "instant book" was written and rushed to press in the weeks after the non-confidence vote. 2Canadian Petroleum Association Review. August 1979, Vol. 3., No. 7 3Troyer. 200 Days. p. 23 4See Table 6, The Thirty-First General Election: the Report of the Cheif Electoral Officer of Canada. Ottawa: Cheif Electoral Officer of Canada, 1980. p.xxv 5Troyer. 200 Days. p.22 6CPA Review, Vol. 3., No. 7, Jul 1979. 7Ibid. 8Ibid. 9For a fuller description of rationale for creating Petro-Canada see a lecture given by Alberta economist and Fraser Institutre associate Kenneth Norrie in Salt Lake City, Utah, on April 8, 1981 entitled Canada's National Energy Program: a Call for Perspective. in Energy Development in Canada: the Political, Economic, and Continental Dimensions. Earl H. Fry, ed. Salt Lake City: Brigham Young University Canadian Studies Program, 1981. Interestingly, Norrie was supportive of the creation of Petro-Canada yet strongly opposed to the N.E.P. 10See Election 80 News, no. 3. p. 2, where the Liberals attack the N.D.P. for claiming responsibility for the idea. 11New Directions for Canada: Progressive-Conservative Principles In Action. Ottawa: Progressive-Conservative Party of Canada, 1980. 12Troyer. 200 Days. p.14 13Marc Lalonde to Ray Hnatyshyn in the House of Commons, October 15, 1979. Hansard, 1979, p.166. 14Edward Broadbent to Ray Hnatyshyn in the House of Commons, October 15, 1979. Hansard. p.167 15See "Ontario Self-Sufficiency" in the Kingston Whig-Standard, October 10, 1979, p.11. 16See the lead editorial of the Kingston Whig-Standard., October 10, 1979. 17Arthur Phillips to Ray Hnatyshyn, Oactober 10, 1979. Hansard, p.22, 18Cyril Symes to Joe Clark, October 10, 1979. Ibid., p.23 19Right Hon. Joe Clark, October 9, 1970. Ibid. 20John Evans to Ray Hnatyshyn, October 15, 1979. Ibid., p.168 21Marc Lalonde to Ray Hnatyshyn, October 15, 1979. Ibid., p.169 22Ray Hnatyshyn to Lalonde.October 15, 1979. Ibid. 23Ray Hnatyshyn, November 6, 1979. Ibid., p. 1021 24Toronto Star, Monday, October 8, 1979. p.A9 25Troyer. 200 Days. p.186 26Liberal Party of Canada. Election 80 News. no. 3. p. 1 27Ibid. 28Election 80 News, no.4, p.1 29Progressive Conservatice Party of Canada. New Directions for Canada: Progressive Conservative Principles in Action. p.11 30See Table 6 in the Thirty-First General Election: the Report of the Chief Electoral Officer, p.xxv for the 1979 provincial party tables and Table 6 in the Thirty-Second General Election: the Report of the Chief Electoral Officer.