TORONTO — Until a few years ago, Canada was up to its neck in red ink - borrowing billions to fund one of the most generous social-welfare and health-care programs in the world.
As debts grew larger than its economy, some whispered that Canada might "hit the [debt] wall" if nervous lenders suddenly refused to loan it money. About two years ago the Wall Street Journal tagged Canada "an honorary member of the third world."
Not anymore. This summer Canada became a net lender to the world for the first time in 11 years. Seven provinces - all but Ontario, Quebec, and Newfoundland - balanced budgets this year. Even the deficit laggards (including the federal government) promise to zap deficits by 2000.
Canadians are showing newfound zeal in chopping cherished social programs. This stern new approach toward formerly sacrosanct institutions has buoyed the currency, lowered interest rates, and raised creditor confidence, economists say.
But in winning its deficit battle, is Canada losing its soul? Wally McLellan thinks so.
In an old industrial warehouse, sunlight streaming through its cracked windowpanes onto a nearly silent loading dock, Mr. McLellan stands behind a battered desk. He is checking off a list of free food distributed to shelters from here at the Daily Bread Food Bank in downtown Toronto.
"I'm just trying to survive, and they've cut my welfare check," says McLellan, an unpaid volunteer. "This society is turning nasty."
Across Canada, teachers, nurses, and public employees are losing jobs by the tens of thousands despite strikes and protests. University tuitions are rising and free health care isn't as "free" as it used to be. Ontario last week announced $400 million more will be cut from its education budget.
McLellan, along with hundreds of thousands of welfare recipients across Ontario, had his monthly check cut 22 percent beginning last fall. Citywide, food-bank use has shot up 40 percent, officials say.
Having $96 chopped from his $452 check forced McLellan to move from his apartment to a single room. He still looks for a paying job two days a week, as he has been doing for four years. He works three days at the food bank.
Another sign of the times in Ontario: McLellan and about 300,000 other able-bodied single persons on welfare will this fall be required to begin "workfare" - working at a designated site in exchange for a welfare check. "I want to work, but I want a job - a real job," McLellan says.
Unlike the past, however, there is little sympathy for McLellan and others like him, even though the national unemployment rate is 9.4 percent. Five years of struggle through recession and corporate and government cutbacks have hardened middle-class attitudes.
"There have been too many people living off the system," says Paul Rominger, a telemarketer standing outside his downtown Toronto office building. "Canadians have to realize that times change, and there is not a never-ending supply of money."
Such comments reflect Canada's surly new mood. Some say that Canadians' much prized image of their nation as a more-caring society than their southern neighbor is crumbling before a "lean and mean" neoconservative shock wave.
John Wright, a pollster with the Angus Reid Group, says Canadian values are indeed changing - along with their sense of their own identity.
"Most Canadians today have identified themselves with our health-care and social-safety net," he says. "When these hallmarks of Canadianism are either changed or eliminated, it raises the fundamental question: 'Who are we?' " For a new generation of Canadians entering the work force, the answer to that question sounds a lot more, well, American, than it used to.
"I was raised with all these social programs to protect me," says Terri Price, a chemical engineer two years out of her graduate program. "But I've had to adapt lately to a tough job market. And I've grown into the belief that I have to look out for myself. I accept the fact that these [programs] won't be the same as they were."
With Canada's changed economic fortunes, a belief in self sufficiency began replacing a historical reliance on government. In the 1980s, Canada's rising deficits did not register a blip of public concern. That began to change in 1989, when former Prime Minister Brian Mulroney began cutting government programs. About 5 percent of Canadians then considered cutting deficits a top priority.
After Canada's recession began in 1991, deficit-cutting rose higher in public opinion polls until 48 percent of Canadians saw it as the nation's top priority in early 1995. Today, 25 percent of Canadians say deficits are the biggest problem - fourth on the list. Unemployment is first.
"We have a real class differentiation," pollster Wright says. "One-third of Canadians hate government spending. Another third loves it. Another third, in the middle, will be on [one or the other] side depending on how you spin the issue."
Right now the middle third wants to cut. And the political impact has tilted every provincial government to the conservative right fiscally.
Canada's Prime Minister Jean Chrtien campaigned in 1993 on a platform of job creation, but has long since backed off make-work programs, instead aggressively slashing the federal payroll. In May, the International Monetary Fund hailed Canada for its fiscal discipline
Deficit cutting, especially in the nation's most heavily populated province, Ontario, has polarized its heavily unionized work force and the conservative government of Premier Michael Harris.
John Clarke, organizer for the Ontario Coalition Against Poverty, says deficits are just a vehicle for big business to lower wages.
"The effect of welfare cuts has been to make many destitute," he says. "It has put many others into the most exploitative jobs. Without a social safety net, workers are at the mercy of business."
He and other activists say Canada's social safety net is changing into something Canadians have long loathed - the patchwork approach to social welfare found in the United States. But for young professionals like Ms. Price, the threat of losing a key component of Canada's old identity to new uncertainties is really beside the point.
"I'm not depending on government, on welfare, or on the social-safety net," she says. "I'm adjusting my dreams. I'm depending on myself."