Fiscal issue could be millstone for both Martin, Bloc


The next few months will offer an answer to an important question raised by the federal election results: Is Paul Martin a spent force for the Liberal Party?
If he doesn't manage to rebuild bridges to the Chretien clan, which he and his entourage have blown up quite well, the answer could be a resounding yes.
But if he does reach out to Chretienites in a real way, Liberals could unite and mobilize again to keep what they know and appreciate most: power. Which bring us to the most difficult balancing act Martin could be facing in the next few months: How to reach out to Chretienites while trying to solve the issue of fiscal imbalance that Chretienites continue to deny is a problem worth addressing?
Worse, the Chretien clan, starting with Jean himself, not only denies it's a problem, it sees any real solution as a direct threat to federal power and, therefore, the survival of Canada. And yet, because Martin is in a minority situation, he won't be able to escape the tectonic plates of fiscal imbalance.
On the other side of the constitutional divide, it might be sovereignists who have the most to lose on this issue. As opposed to what Chretienites believe, redressing the fiscal imbalance wouldn't hurt Canada as a country. Far from it, it could weaken a major sovereignist argument that staying in this country is financially detrimental to Quebec.
If Martin does end up resolving this issue, even in an imperfect way, the Bloc and the Parti Quebecois would find themselves arguing for sovereignty after Ottawa would have delivered the goods on a demand they initiated. They could then regret having started this very provincial battle in the first place.
Although others had brought up the issue before, it was Quebec Premier Lucien Bouchard who made the strongest case against fiscal imbalance. In his resignation speech on Jan. 11 2001, he urged his successor to make fiscal imbalance the top priority of the PQ government - something he called the fiscal "strangling" of Quebec.
As soon as he became premier, Bernard Landry followed up. Instead of focusing on the promotion of sovereignty, he set up a commission to study this problem and named Yves Seguin, a federalist, as its chairman. He also ditched the "strangling" bit and replaced it with the more politically neutral term of "fiscal imbalance."
Landry then formed alliances with other premiers to pressure Jean Chretien into sending back enough money to the provinces so that they could fulfill their more costly responsibilities such as health care and social services.
As time passed, fiscal imbalance became an obsession for the Landry government. So much so that for months ministers like Francois Legault were pushing hard to shove sovereignty aside and hold a referendum on the patriation of tax points instead.
When he became premier in April 2003, Jean Charest - who had also fought against fiscal imbalance for years - took the fight up a notch. He named Seguin his finance minister and created the Council of the Federation as well as a bureau on fiscal imbalance to co-ordinate inter-provincial actions.
Although Charest would surely have preferred to negotiate with Ottawa a fairer share of revenues with a real provincialist such as Stephen Harper, facing a Liberal minority government headed by a fragile leader might not be such a bad deal, either.
The rehabilitated hard-liner Stephane Dion might again exercise considerable influence in the next Martin government, but a prime minister who happens to be in survival mode - perhaps more within his party than in the House of Commons - might have no choice but to put his money where re-election is.
It is hard to imagine Martin facing the electorate and provincial premiers again in a year or two from now without having addressed the issue of fiscal imbalance in a very serious way - especially given that the Conservatives remain sympathetic to the provinces' plight.
Martin is a leader under very heavy surveillance, especially by his own party. How he'll manage to bring the Chretienites back into the Liberal fold while resolving the issue of fiscal imbalance is a mighty tall order.
But if he doesn't meet it head on, he has zero chance of getting a majority the next time around, especially if the Conservatives ditch Harper for the much more politically mainstream New Brunswick Premier Bernard Lord.

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