Paul Martin

I

INTRODUCTION

Paul Martin, born in 1938, 21st prime minister of Canada and leader of the Liberal Party, who was credited with turning around the Canadian economy as finance minister under the government of Jean Chrétien. Martin became prime minister upon Chrétien’s retirement in December 2003 and served until his party lost power in January 2006.

Martin was born in Windsor, Ontario, to Nell and Paul Martin, Sr. His father was a member of the Canadian Parliament, representing Windsor, and later became a prominent federal Cabinet minister. Martin spent part of his childhood years in Windsor, but received most of his schooling in Ottawa, where his family spent the fall and winter months while Parliament was in session. Because his father was French-speaking, Martin was educated in French-language and bilingual schools and became fluently bilingual in English and French. After taking an undergraduate degree in philosophy at the University of Toronto, he studied law, but he chose a career in business rather than law. Martin married Sheila Cowan, a friend of his sister, Mary Anne, and daughter of his father’s law partner, in 1965. They have three sons.

II

BUSINESS CAREER

Martin made his start in business as an assistant to the chief executive officer of Power Corporation, a Québec firm with large and varied interests. Martin quickly became a troubleshooter in Power Corp., developing a reputation as a person who could solve difficult problems. One of the firms he was asked to take on was Canada Steamship Lines (CSL), a shipping company engaged in cargo hauling on the Great Lakes and St. Lawrence River. In 1981 the head of Power Corp. decided to sell CSL, and Martin found a partner to join him in borrowing the money to buy it. Martin turned CSL into a major international shipping company. Ultimately he acquired sole ownership of the firm, expanded his business interests, and built a substantial personal fortune.

III

INTEREST IN POLITICS

Martin’s interest in politics was shaped by his close relationship with his father, who was a Cabinet minister in Liberal governments for nearly 30 years and who ran twice, both times unsuccessfully, for the leadership of the Liberal Party. Martin worked for his father in both leadership campaigns, which many commentators believe helped stimulate his own ambition to be a leader. But throughout his business career his political role was mainly that of a casual supporter of the Liberal Party. It was not until 1988 that he first ran for Parliament as a Liberal candidate in Montréal, Québec, where he and his family had made their home. He was elected that year as member of Parliament for the constituency of LaSalle-Émard, which he continues to represent.

IV

THE 1990 LEADERSHIP CONVENTION

When the Liberal Party called a leadership convention in 1990, Martin decided to run. There were four other candidates, but the campaign quickly became a contest between Martin and Jean Chrétien, a popular French Canadian who had been a minister in Liberal governments from 1966 to 1984. Chrétien won with 2,622 votes while Martin placed second with 1,176. The campaign created an enduring personal rivalry between the two men that influenced the internal politics of the Liberal Party from that date on.

The rivalry involved more than competition for leadership. There was also a significant difference between the two men over the emotionally divisive issue of how best to deal with the separatist movement in the province of Québec. Martin believed that the federal government could best reduce support for separatism by making an accommodation with moderate, nonseparatist, Québec nationalists who were committed to keeping Québec in Canada but wanted recognition of Québec’s uniqueness as a predominantly French-speaking province. Chrétien had been a leading figure for 15 years in the fight against separatism and believed that all forms of Québec nationalism should be resisted. Chrétien believed that even in its moderate form nationalism posed a threat to the effectiveness of the federal government in promoting national unity.

This issue played an important part in the 1990 leadership campaign. The campaign occurred at a time when the incumbent Conservative federal government and nine of the ten provinces were trying to secure ratification of the Meech Lake Accord. The accord was an agreement to give the province of Québec special constitutional recognition as the home of the French language and culture in Canada. Martin supported the Meech Lake Accord, while Chrétien opposed it.

On the day of the balloting at the Liberal Party Convention, it was learned that the accord had failed ratification. Many nationalists who were supporters of the Liberal Party felt Chrétien had contributed to its defeat. When Chrétien’s victory was announced, two of the nationalists, who were members of Parliament, resigned from the Liberal Party. Soon afterward they joined a former Conservative minister in forming a new separatist party—the Bloc Québécois—to speak for the separatist movement in the federal Parliament.

Martin remained firmly opposed to this extremist expression of nationalism, but a personal strain developed in his relationship with Chrétien due to critical comments he made during the campaign about Chrétien’s position. Martin believed Chrétien simply did not understand modern Québec and said so publicly. Chrétien particularly resented this criticism because he prided himself on his roots in French-speaking Québec. The criticism seemed to resonate with the frequent assertion by nationalists that Chrétien had “sold out” his fellow French Canadians.

V

MINISTER OF FINANCE

Despite their difficult relations Martin gave his full public support to Chrétien’s leadership, while Chrétien appointed him as one of the party’s leading spokespersons in Parliament and made him cochair of the group that drafted the Liberal platform for the next election. In 1993 the Liberal Party defeated the Conservatives. Chrétien became prime minister and appointed Martin to the senior Cabinet position of minister of finance.

In this role Martin had to deal with the biggest problem faced by the new administration. For two decades the government had been running budgetary deficits, which had driven up the size of the public debt so that interest payments were absorbing an ever-larger portion of the government’s revenues. This had narrowed the government’s ability to advance new policies and contributed to a weakening of investor confidence in the Canadian economy.

In his first budget in 1994, Martin tried to solve the problem through moderate adjustments. When this failed he decided the only solution was to make drastic spending cuts that would include even the most politically popular programs. He won the support of the prime minister for this plan, which helped ensure that other members of the Cabinet would go along with it, and introduced the cuts in his second budget in 1995. The plan had its intended result. In his budget in 1997 Martin delivered the first in a series of annual surpluses that enabled the government to begin paying down its debt, reduce taxes, and restore some of the spending cuts it had made. The wider effect of this achievement was to enable Canada to enter upon a period of sustained economic growth. During Martin’s remaining six years as finance minister, the Canadian economy outperformed those of the other leading industrialized countries.

VI

CONFLICT WITH THE PRIME MINISTER

Martin’s success could not have been achieved without the support he received from Jean Chrétien. Yet relations between the two men continued to deteriorate. In part this was because of their continuing disagreement about how best to deal with the separatist challenge in Québec. In the 1993 election, a majority of Québec seats had gone to the Bloc Québécois, and in 1994 the provincial separatist party, the Parti Québécois, won election on a platform promising to hold a referendum that would ask voters to approve separation. When the referendum was held in 1995, the separatist option won the support of 49.4 percent of those who voted, among them a majority of the voters whose first language was French. Martin believed that this result reflected the failure of the “hardline” Chrétien approach toward all forms of Québec nationalism.

In internal government policy discussions he continued to challenge the prime minister’s position on an issue that Chrétien regarded as the defining issue of his political career. Another reason for their estrangement was that Martin’s success had brought him a personal prominence rivaling that of Chrétien. Admirers in the Liberal Party and journalists began to speculate about Martin as a future prime minister, and Martin made no attempt to conceal his ambition to succeed Chrétien. As a result Chrétien and his supporters in the party began to see Martin as a potential threat to Chrétien’s leadership.

After the Liberal Party won a second election under Chrétien in 1997, in anticipation that the prime minister might soon retire, supporters of Martin began to build an organization that could be mobilized for a leadership campaign. This caused further strain in the relationship, particularly since there was growing evidence that Martin had become more popular than Chrétien, both with voters and with a growing number of party members, including a significant group in the parliamentary caucus. By 1998 the party was clearly dividing between pro-Martin and pro-Chrétien factions.

In the fall of 2000 the Liberals won a third successive election. After the election the prime minister said it would be his last, but he did not say when he would retire. This created a situation of increasing tension within the party caucus because there was now a large block of members of Parliament who felt Chrétien’s leadership had become a problem for the party. One reason was the growing feeling that Chrétien did not appear to have a clear sense of where he wanted to lead the government. Another was an accumulation of controversies about mismanagement of government programs and allegations of ethical misconduct, which Chrétien dealt with dismissively, refusing to acknowledge that they were significant. A third reason was that many members of the Liberal caucus felt Chrétien had centralized power within the staff of his own office at their expense. They believed he was increasingly disdainful of their views and had marginalized their role in his administration.

By early 2002, as discontent continued to grow within the caucus, Chrétien blamed Martin’s supporters. Although he had told ministers they could begin to organize for a change of leadership, at a Cabinet meeting in May he ordered them to shut down their campaigns in a move that was interpreted as a direct attack on Martin. This led to a public break between the two men, and in June Martin was forced out of the Cabinet.

VII

LIBERAL PARTY LEADER AND PRIME MINISTER

In forcing Martin from the Cabinet, Chrétien had actually given him an advantage over other ministers who wanted to run for leadership of the Liberal Party because it left Martin free to conduct a campaign. For more than a year all across the country Martin’s organization had been building support in constituency associations that would elect delegates to a convention. Martin was now free to pursue this strategy without challenge. By August 2002 it was apparent that Martin had control of a majority of these associations.

Faced with the likelihood that this support for Martin might now be turned directly against him, Chrétien finally asked the party executive to call a convention for 2003. Other candidates quickly discovered that Martin’s organization had built an insurmountable lead and withdrew. Only one candidate persisted to the end, but when the balloting occurred in November 2003, Martin was elected with more than 90 percent of the vote. On December 12, 2003, Martin became prime minister.

Martin brought a very different style of leadership to the party and government. While Chrétien was a managerial leader with no broad program of long-term policy innovations to achieve, Martin had always been intensely interested in policy. He steeped himself in the nuances of policy across a broad range of issues and sought to relate them to an underlying and defining set of national values. Martin believed it was his role as leader to set long-term policy objectives for the country and organize the agenda of government to pursue them.

In summarizing this aspect of the differences between Martin and Jean Chrétien, one of Martin’s advisers described his leadership style as “intellectual” and Chrétien’s as “intuitive.” Martin was also different from Chrétien in his approach to conflict. Chrétien had always described himself as a “fighter” who refused to back down in the face of adversaries. He believed that he should take a stand and defend it. Martin, on the other hand, was a leader willing to engage in discussion with those who held opposing views and to accept their ideas if he found them convincing. If he believed he had been wrong about a position, he was prepared to admit his mistake, apologize for it, and accept the political consequences.

A third difference lay in their approach to relations with members of the party caucus. Whereas Chrétien centralized power in his office and insisted on the primacy of loyalty to the leader, Martin believed members of Parliament who are not in the Cabinet should be given greater independence and increased responsibility. This view reflected his belief that the best decisions come from vigorous debate in which all of the participants, regardless of their positions, are treated as equals.

VIII

MARTIN’S GOVERNMENT

When Martin came to office, his political foes in the opposition parties wanted to stress the continuity of his administration with that of Chrétien. The purpose was to hold it accountable for the Chrétien government’s record, particularly its record on ethical issues. In contrast, Martin was determined to identify his administration as a new government. Both were trying to appeal to what polling firms had identified as a widespread public desire for change.

To put a new face on the government, Martin appointed 22 new ministers, retaining only 15 from the Chrétien Cabinet. He reorganized government departments and the administrative structure of the Privy Council Office (the PCO), which is the central agency governing the federal bureaucracy, to emphasize a new set of policy directions. In addition, he invested the second tier of the executive branch that sits in Parliament—parliamentary secretaries—with enhanced authority and gave its members special responsibilities for carrying out reforms to which he had committed himself during his leadership campaign.

Among the priorities Martin announced when he first met with Parliament were plans to rebuild the infrastructure of Canadian cities, improve conditions for Canada’s aboriginal peoples, reform Parliament to give its members more voice in the decisions of government, and appoint an independent ethics commissioner to build public confidence in the integrity of government.

Among the more significant changes in direction under Martin’s leadership was his approach to Québec nationalism. He signaled his desire to find an accommodation with moderate nationalists by appointing as his chief political lieutenant in Québec one of the Liberals who had left the party in 1990.

The difference in Martin’s style of leadership was reflected, as well, in his attempt to improve relations with the United States. He created a new branch in the Privy Council Office and appointed a parliamentary secretary to deal exclusively with Canada-U.S. relations. Martin did not disagree with the substance of the Chrétien government’s policy toward the United States. Rather, he felt that the resolution of disagreements between the two countries had been made more difficult by a lack of effective management and unnecessary problems in communication with the American government. His general posture in foreign policy was to pursue a multilateral approach to international conflicts, while working closely with the United States in defense of North American security and in pursuit of shared economic interests.

IX

CONTINUING ETHICAL ISSUES

Opposition parties discounted Martin’s innovations, arguing that he had been the most important minister in the Chrétien government until 2002 and, therefore, had to bear full responsibility for its failings. They found a common focus for their criticism in questions about ethical issues. Of these, the most serious were raised by the auditor general, Sheila Fraser, an independent official responsible to Parliament for conducting audits of government spending.

Following the 1995 referendum in Québec, the Chrétien government had established a program to sponsor cultural and sporting events in that province as a means to improve the federal government’s image among Québecois. As early as 2001, serious problems had been found in the management of this program, and the auditor general had been asked to make a complete investigation. In February 2004, the auditor general reported that $100 million of the $250 million spent on the program had been improperly authorized or accounted for and that significant portions had been diverted into the hands of advertising companies with close ties to the Liberal Party. Fraser described the handling of the sponsorship program as “shocking” and called for a criminal investigation.

On the day the auditor general’s report was made public, the Martin government moved to distance itself from the developing scandal. It announced the establishment of an independent judicial inquiry, appointment of a special counsel to take legal action to recover improperly diverted funds, and a complete review of the government’s system for maintaining financial accountability to prevent a recurrence of the problem.

But Martin himself came under direct attack from the opposition parties. They argued that as finance minister in the Chrétien government he must have known what was happening in the sponsorship program. Martin denied any personal knowledge of how the program had been managed, saying that he been excluded from participation in all political decisions about Québec. He promised to ensure full public exposure of all the facts, find out who had been responsible, and ensure that they were punished. To back up his statements, he fired a number of senior government officials who appeared to have been involved in the sponsorship program—all of them people who had been close to Chrétien.

There were two consequences from this episode. First, relations between Martin and Chrétien’s supporters in the party were further embittered, weakening party organization. Second, while newspaper editorials and columnists generally praised Martin’s direct and open approach, opposition party criticism succeeded in undermining Martin’s attempt to present himself as an agent of change. The harm that had been done was immediately apparent when Martin called an election for June 28, 2004.

X

THE 2004 ELECTION

Until the sponsorship scandal broke, the Liberal Party had held such a commanding lead in public opinion polls that it was expected to win the next election with a substantially larger majority. But the scandal led to a sharp drop in Liberal support. For the first time since 1988, the Liberals faced a strong opposition party that could effectively challenge its hold on power.

A significant factor in the Liberal victory in 1993 had been the collapse of the governing Progressive Conservative party and the growth of rival regionally based parties in Québec (the Bloc Québécois) and western Canada (the Reform Party). While the Bloc’s purpose was solely to pursue separatism for Québec, the Reform party sought to become a national party that could appeal for the support of conservative voters across the country. Through the 1990s efforts to unite the Progressive Conservatives and Reformers in a new Conservative Party failed, dividing the conservative electorate in the nine predominantly English-speaking provinces and contributing to the success of the Liberals in the elections of 1997 and 2000.

In the fall of 2003, however, the two right-wing rivals united to form a new single national Conservative Party. By 2004, under the leadership of Stephen Harper, this new party provided a credible alternative to the Liberals in the English-speaking provinces and became the official opposition party in the Canadian Parliament.

By mid-campaign Martin’s Liberals were trailing Harper’s Conservatives in the polls. But the Conservatives ran into difficulty, largely brought on by their own mistakes and by an effective Liberal Party advertising campaign that implied the Conservatives were too far to the right on some issues. As a result, the Liberals won 135 seats, 36 more than the Conservatives. This gave Martin enough seats to form a government, but one without an overall majority in Parliament.

XI

DEFEAT

The victory did not stem the tide of criticism for Martin’s government, however. Stephen Harper led the attack, charging the Liberal Party with corruption and calling for new elections. The charges centered on the sponsorship financial scandal involving alleged kickbacks and money laundering by members of the Liberal Party government under Jean Chrétien. The opposition finally forced a confidence vote on Martin’s government in May 2005. Martin skillfully lobbied for support leading up to the vote and his government narrowly won, but only after the House of Commons Speaker Peter Milliken cast the tiebreaking vote—an unprecedented event in Canadian history.

Further details about the financial scandal emerged in a government report released in October. A month later another confidence vote was held, and Martin’s government lost, 171-133. Martin immediately announced that new parliamentary elections would take place in late January 2006. In the elections Harper’s Conservatives won 124 seats while the Liberals captured just 103, ending 12 years of Liberal Party rule in Canada. Martin subsequently resigned as party leader, although he retained his seat in Parliament, and Harper became the country’s new prime minister.

XII

ASSESSMENT

Martin’s achievements during his career in government represent an important political legacy for Canada. As one of Canada’s most successful finance ministers, Martin ended nearly two decades of deficits, brought the national debt under control, and created a fiscal environment that left Canada well positioned to maintain long-term economic growth.

Martin came to the office of prime minister with an ambitious agenda of policy innovations intended to lead his party and Canada into a new era of progressive reform. But the financial scandals surrounding the 2004 election and the 2005 confidence votes left him little room to exercise independence in policymaking and eventually toppled his government before it could achieve its ambitious goals.