Inside a crisis that shook the nation

Hushed conversations about politics are nothing new at Toronto’s venerable Albany Club. The downtown redoubt of old-style partisan skulduggery even boasts John A. Macdonald as a founding member, back in 1882. The conversations that matter, typically among well-heeled Conservatives at this oak-panelled incubator of Tory ambitions, usually stay confidential. Occasionally they turn very public, though, like the time Dalton Camp chose the club for a speech launching the revolt that ultimately deposed John Diefenbaker as party leader. The latest chapter in the club’s lore came in the aftermath of the Oct. 14 federal election, and, for a change, there wasn’t a Tory at the table.

A week after Stephen Harper’s triumph, a post-election breakfast panel discussion was held in the club. It brought together two backroom veterans: Brian Topp, who had run Jack Layton’s New Democrat campaign, and Senator David Smith, the organizer of many Liberal campaigns who had worked this time on Stéphane Dion’s wobbly run. What Smith didn’t know was that Topp had served on secret NDP “scenario committees” during the past three federal campaigns that studied potential outcomes, including coalitions. After the most recent campaign, Layton assigned him to put out feelers to Liberals on the possibility of forming a coalition should Harper’s government ever look vulnerable.

That morning, Topp and Smith lingered beneath the stained glass windows of the club’s main dining room. They traded war stories, Smith’s going back to Lester B. Pearson, Topp’s from his days in Saskatchewan working for NDP premier Roy Romanow. Topp broached the idea of co-operation. Smith noted that the Liberals were presently preoccupied with their leadership race. But Topp was encouraged enough that he thought their conversation was worth picking up again after the new Liberal leader was chosen in a planned convention in Vancouver in early May.

And that was that, or so it seemed. Topp and Smith couldn’t have guessed, of course, that only a month or so later Harper would undertake such a risky move against their parties that the coalition concept they touched on so tentatively would crystallize in just three days of bargaining in Ottawa hotels. They would be back in contact, as part of a flurry of behind-closed-doors bargaining, all against a backdrop of parliamentary crisis. By trying to strip all federal parties of a public subsidy—an audacious frontal attack on his opponents—Harper drove the Liberals, NDP, and even the separatist Bloc Québécois into each others’ arms.

The sudden emergence of a united opposition front, bent on defeating his minority at its first chance, led Harper to make a series of desperate counter-thrusts. He revived the moribund national-unity debate by making the separatist Bloc’s support for the coalition his main grounds for attacking it, even accusing Dion on the floor of the House of Commons of plotting to “destroy the country.”

Harper then pushed the country to the brink of a full-blown constitutional crisis by asking Governor General Michaëlle Jean to suspend Parliament to prevent the coalition from felling his minority this month. By granting the request, she set a precedent that seems to hand future prime ministers heading besieged minority governments a powerful new tool for delaying being voted down in the House. Finally, after a blur of ploys and stratagems inside the Liberal party, the crisis hastened Dion’s exit, ended the race to succeed him, and assured Michael Ignatieff’s ascension to the party’s leadership.

It was a year’s worth of political headlines packed into less than two weeks of behind-closed-doors deal-making, parliamentary histrionics, and high-stakes leadership jockeying—plus one lousy video and a timely fall of hailstones. Not since the demise of the Meech Lake accord in June 1990 has the nation’s political playing board been given such a shake.

HARPER’S GAMBLE

Apart from the Albany Club prelude, the saga began with rumours of nothing more worrisome than a government gambit to make parliamentary perks a focus of its fall economic update. All last month, Finance Minister Jim Flaherty was sending signals that he wasn’t ready to announce significant new spending. The annual fall update usually serves as a report on the state of the economy, but sometimes gives governments a chance to push out new tax or spending measures before their next full budget, which typically comes in February.

Without a whole lot to say about steps to confront the world economic crisis, the Tories signalled that they would fill the vacuum with symbolic belt-tightening on Parliament Hill—freezing MPs’ salaries, perhaps, and curtailing their expenses.

In hindsight, almost everybody missed what should have been a clear hint that something more dramatic was in store. It came when Harper sent out his communications director, Kory Teneycke, who more often speaks off the record, to do a series of TV interviews laying the groundwork for the update. “There will be much bleating from political parties, but it will hit the government disproportionately,” Teneycke warned. “It will be deeper and broader than anyone expects.” Yet nobody guessed that he meant that Flaherty was about to announce a proposal to yank away the $1.95 per vote subsidy the federal parties are paid every year, a taxpayer underwriting of party costs that amounts to less than $30 million.

That subsidy was introduced in 2004, part of Jean Chrétien’s landmark reform of political financing. Chrétien eliminated corporate and union donations to parties, and limited personal contributions to $5,000 (Harper later cut the individual limit to $1,000). In return, the parties would gain taxpayer money, doled out in quarterly payments based on the number of votes they received in the last election. For the 12 months that ended last Sept. 30, the Conservatives collected about $10.5 million, the Liberals $8.75 million, the NDP $5 million, and the Bloc $3 million.

But the importance of that public money varies according to the parties’ capacity to raise their own funds—and therein lay the problem for Harper’s opponents. The Tories’ mighty fundraising machine pulled in $19.7 million in the 12 months that ended Sept. 30, the Liberals a paltry $5.7 million. Considering they have a much smaller voter base than the Liberals, the NDP did better, also raising $5.7 million. The Bloc’s backers contributed $861,000. So the Tories are the least reliant of any party on the taxpayer support, and what’s more, Harper has never liked the concept. And he calculated that Canadians wouldn’t like it much either—if they were prompted to think about it. That was a reasonable guess. But why would the government imagine that the opposition parties, who together control a solid majority of House seats, would go along with a brazen bid to cripple their operations?

A Conservative official told Maclean’s that a key assumption was that the NDP would side with the Tories, seeing a chance to bankrupt their shared historic adversary—the Grits. Although NDP fundraising is not as robust as the Tories’, it’s markedly healthier than the Liberals’. “We thought,” said the Tory insider, “the NDP would see that the Liberals would be hurt more than them.”

The Prime Minister’s Office also assumed that the Liberals, more than five months away from the convention where they would select a new leader, were in no position to bring down the government and force an election. As for banding together with the other opposition parties, Dion had ruled out a coalition with the NDP during the fall campaign, and as the bitter foe of separatists in his home province, few could imagine him coming to terms with the Bloc.

Left to sort out the situation themselves, the Liberals might never have pressed for a coalition. But they didn’t have to act first. On the evening of Nov. 26, the night before the economic update, the government leaked news of the plan to strip away the parties’ public subsidy, and the NDP quickly contacted Dion’s office to open up lines of communication. Layton’s schedule for the following morning was cleared.