Canadian government draws criticism on the economy

As a Canada-wide inquiry into the national economy gets started, many are blaming at least partly the policies of the Liberal government in Ottawa for the country's economic woes.

The inquiry is being conducted by a group called the Royal Commission on Economic Union and Development Prospects for Canada, and the chairman is Donald MacDonald, a former finance minister in Pierre Trudeau's government. The commission was set up late last year by Prime Minister Trudeau when his government saw itself as powerless to pull Canada out of the recession and the Liberal Party out of its accompanying dive in the public opinion polls.

The commission has been working on preparation and research for most of this year, and its public hearings opened here last week. Judging by the first batch of submissions, it looks as if the cross-country tour, 54 days in 32 cities, will be a litany of complaints from special-interest groups, with a dash of objective comment thrown in from time to time. The first week heard the government vilified for following the monetarist policies of President Reagan and Prime Minister Margaret Thatcher, and also a call for free trade with the United States, something the Trudeau government has always resisted.

The attack on monetarism came from the president of the British Columbia Federation of Labor, Arthur Kube. He said that Canada, the United States, and Britain have fought inflation using the people who could least afford it. A committed socialist, Mr. Kube held up Sweden, Denmark, and Austria as models of how social democrats fight inflation.

''They have kept people working with little inflation. Meanwhile, the countries which have suffered most, Great Britain, Canada, and the US, are those which have practiced extreme monetarism.''

Some committed capitalists then told the hearing that government interference of the kind advocated by Mr. Kube was one of the reasons their business would not expand. The president of the Mining Association of British Columbia, Tex Enemark, said that a taxation level of 58 percent, government regulations, poor markets, and low prices would mean that no new mines would open in British Columbia over the next decade.

''We closed five of them down last year. I wouldn't be surprised to see a couple more go down this year.''

The mining association was also critical of the growing trend to protectionism in Canada, especially with the Japanese. Mr. Enemark pointed out that while Canada had a billion-dollar trade surplus with Japan last year - much of it generated by sales of coal and lumber from British Columbia - politicians in central Canada are calling for import quotas on Japanese cars to protect the auto industry in Ontario and Quebec.

Some labor and left-wing groups have called for more government intervention in the economy. Business groups, such as the Canadian Manufacturers Association, want less.

And so it will continue until Dec. 15, when the hearings are over. The commissioners will then retire and prepare a preliminary report by next spring. Then there will be another round of hearings and, by 1985, a final report. It seems a long time, but that is how royal commissions work, and they have had a significant effect on public policy in Canada.

Earlier royal commissions, on subjects such as bilingualism and taxation, resulted in new federal policies on the use of Canada's two official languages and in new tax laws, including the introduction of capital-gains taxation to Canada for the first time, in 1972. But those studies were on single issues. This commission has to study every institution that affects the economy. It is a big job.

The biggest problem the commissioners could face is that when they hand in their final report, it could be read by a Conservative government, headed by the new leader, Brian Mulroney. The Conservatives are far ahead in the public opinion polls and seem at present to be sure to get in at the next federal election. Mr. Mulroney could choose to ignore the report, but there are two prominent Conservatives on the panel, William Hamilton, a former Tory Cabinet minister, and Jean Casselman-Wadds, a former high commissioner (ambassador) to London. If they have enough influence in the final report, perhaps a Conservative government will not ignore this royal commission on the economy.

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