Brian Mulroney marked my first years of adulthood, when I was a student at HEC Montréal, in the mid-1980s. What a transformative period it was!
At the time, the little guy from Baie-Comeau was the instigator of the debate raging within the walls of the university, namely the free trade negotiations with the United States.
There were many detractors. The union centers and cultural circles brandished the scarecrows, judging that it would cause Canada to lose its independence from the United States. The future of Canada, quite literally, was at stake.
But Brian Mulroney, as a good negotiator and politician, succeeded in leading the country to an agreement with the Americans in October 1987. Elected in 1984 with the promise of free trade, among other things, the businessman knew how to ally with influential politicians and economists from the West and Quebec, notably the PQ members Bernard Landry and Jacques Parizeau, as well as the liberal Robert Bourassa.
At the same time, several historic events took place in a few years: the stock market crash of October 1987, the death of René Lévesque in November 1987, the fall of the Berlin Wall in November 1989, the failure of the Meech Lake agreement in June 1990 and the August 1990 Gulf War against Iraq, among others.
In just a few years, the political and economic world has been transformed and international perspectives have opened up before us, young students, to which Brian Mulroney had contributed.
Free trade was a significant game-changer for the Canadian business world. Not only did it abolish certain customs tariffs and non-tariff barriers with the United States, but it allowed Canadian companies to be better equipped than their global competitors to face the countervailing or anti-dumping duties that the Americans arbitrarily imposed on us.
This is because the agreement introduced a mechanism allowing companies to resort to impartial arbitrators to review the decisions of the US Department of Commerce (Chapter 19 of the agreement). The lumber industry, among others, benefited.
In the years that followed, trade with the Americans jumped 12% per year, “a rate of expansion almost twice that of Canadian exports to the rest of the world,” notes The Canadian Encyclopedia. Imports also increased rapidly.
The free trade agreement, which Mexico joined in 1992, is not the only achievement under Brian Mulroney that shaped economic Canada. The introduction of the Goods and Services Tax (GST) in 1991 and the privatization of large state-owned companies, in a period of historic budget deficit, were also notable.
These privatizations include those of Canadian National (CN), Petro-Canada and Air Canada. That of CN, led by Paul Tellier and his lieutenants Michael Sabia and Claude Mongeau, was the greatest success, the carrier having, after significant cutbacks, undertaken a major expansion in the United States. The other two privatizations had much more mixed success.
The GST, this value-added tax similar to others in Europe, was much more effective than the old sales tax1. In 1991, Quebec was the only province to quickly follow, with the QST.
The imposition of the GST, very unpopular, was however one of the elements which contributed to the fall of Brian Mulroney in 1993. It must be said that the Mulroney government had inherited monster budget deficits in 1984, which he tried to reduce, and the end of his reign was marked by a long recession, between 1990 and 1992.
In 1984, the deficit reached 8% of GDP, a level that only the year of COVID-19 has exceeded, in 2020 (14.9% of GDP). Brian Mulroney’s Conservatives never knew how to balance their budgets, often too optimistic, but their measures probably helped the Liberal Party and the rigorous Minister Paul Martin to achieve it, a few years later.
Among the more questionable decisions of the Mulroney government, we can think of the $100,000 exemption on capital gains for individuals. The exemption was even supposed to increase to $500,000.
In January 1994, my illustrious predecessor at The Press, Claude Picher, wrote: “No taxpayer will benefit from the maximum exemption of $500,000. After two years, we simply realized that the exemption amounted to nothing more or less than giving a princely gift to the wealthiest Canadians, without this obviously leading to growth in the economy and job. »
Some argue that such measures, inspired by the trickle-down policies of the Ronald Reagan and Margaret Thatcher governments in the United States and the United Kingdom, have widened the wealth gap between the poor and the poor. better off in Canada afterwards.
Brian Mulroney remained influential long after he left politics, although his name was tarnished in the story of the cash commissions paid to him by controversial lobbyist Karlheinz Schreiber.
Over the years, Brian Mulroney had maintained contact with the political world and the business community in the United States, so much so that the Trudeau government – although liberal – used his services during the recent renegotiation of the agreement of free trade with the American government of Donald Trump.
He also remained close to the Péladeau family, in particular to Pierre Karl Péladeau, still serving as chairman of the board of directors of Quebecor recently.
With the death of Brian Mulroney, a whole page in Canada’s economic history has been turned. A page that marked the 33 years following the end of my studies at HEC Montréal. My sincere condolences to the family.
1. Why more efficient? Because the new GST only taxes the end user, ultimately, and therefore reduces the taxation costs of businesses compared to global competitors.