Bill McCarthy

By Thomas d’Aquino

March 11, 2024

Brian Mulroney has left us. This has prompted much commentary on the astonishing range of relationships that he stewarded with such a masterful hand. One that has received little comment and that was crucial throughout his two terms in office was his relationship with the Canadian business community.

The year is 1981, Canada is mired in recession, inflation is soaring above 12 percent, unemployment is at close to 8 percent en route to 12 percent by 1983. With the Parti Québécois in office in Québec talking up independence, the politics of Canada are gravely unsettled. In early 1981, I took on the job as head of the recently formed Business Council on National Issues (BCNI) composed of the country’s leading CEOs and entrepreneurs. Our agenda was beyond bold – it was revolutionary.

We called for stronger action on inflation.  We called for a more open, investment-friendly Canada, dismantling of the National Energy Program, curbing the power of the Foreign Investment Review Agency, reform of the tax regime, modernizing competition laws, and liberalizing trade with the United States. The Liberal government of Pierre Trudeau was emphatically not onside. While strictly non-partisan in our approach to shaping public policy, we dreamed of a political leader and party that would find common ground with our agenda and the deep change that we believed was essential to putting Canada back on the rails. The change we had in mind could only be brought to fruition by a strong leader commanding a sizeable majority of Canadian electors.

With the election of Brian Mulroney as prime minister in 1984, we at the BCNI were cautiously optimistic that our dreams of reform just might come true after all, that Canada would reject the anti-business, dirigiste policies of the Trudeau government and embark on a more market-friendly journey. With Margaret Thatcher taking office as prime minister in 1979 and Ronald Reagan as president in 1981, the politics of the times were changing. A growing conservative narrative beyond our borders was challenging statism and big government.

Much about Prime Minister Mulroney appealed to us. He was a savvy lawyer and accomplished negotiator. He had some understanding of business drawing from his experience as president of the Iron Ore Company from 1977 to 1983. He was entirely at ease in Canada’s two official languages. He worked well with people. There was another aspect of his character that especially attracted me. His willingness to think big and to take risks qualified him in my mind as an ‘instinctive entrepreneur’.

The prime minister hit the ground running in 1984. With a record majority, he spoke of a more open and welcoming Canada. We warmly applauded his choice of Michael Wilson as minister of finance, given his outstanding economic and financial credentials and his credibility in financial circles. That autumn, the prime minister signalled to me his interest in the BCNI’s pro-free trade stance with the United States. It was clear that he was re- considering his opposition to the idea. The government moved quickly to dismantle the National Energy Program with an approach that was consistent with the BCNI’s recommendations tabled publicly on October 3, 1984.

The prime minister’s passionate pursuit of national unity was beyond admirable, and while timing and politics had other plans, we never regretted joining forces with him in support of such a worthy cause.

The Western Energy Accord followed in June 1985, permitting the full deregulation of oil prices. Also in June 1985, the government replaced the Foreign Investment Review Act with the more investment-friendly Investment Canada Act. The repeal of the Combines Investigation Act in favour of a new Competition Act, as the BCNI had recommended in a major study several years earlier, followed not long after.

With these stunning far-reaching reforms, business applause of the Mulroney-Wilson economic agenda was close to thunderous. One consequence – I found that I had to defend the BCNI’s non-partisan credentials. It was not an easy task at the time. My response simply put was that the Council would unreservedly support policies advocated by any party that turned things around for Canadians – that promoted investment and generated growth and jobs.

All was not clear sailing. The Mulroney government’s first budget in May 1985 was of signal importance – and it provoked a very public rupture between the government and the BCNI. The BCNI was in strong support of most of its provisions, save one – the failure to protect low-income seniors in its proposal to de-index public pensions. We were clearly on record on the need to protect these seniors. In the face of mounting public opposition, Wilson back-tracked and cancelled the whole idea of de-indexing public pensions.

My relationship with the prime minister was frosty for a brief time. A late evening call from him patched things up. We were both mindful that his government and the business community were seized of a vastly ambitious goal – free trade with the Americans. This had been heralded at the Shamrock Summit in Québec City earlier that year.

Before I address the seminal free trade issue, the prime minister’s introduction in 1991 of a national consumption tax deserves special note. Shepherded by Finance Minister Wilson, this initiative was brave beyond words. Replacing the hidden manufacturers’ sales tax of 13.5 percent, the very visible goods and services tax (GST) was introduced at a rate of 7 percent. Business in Canada had long argued for its replacement, but we knew full well it would be politically toxic. It represented a cornerstone of sound tax policy, brought to fruition at a high political price.

The greatest economic achievement of the Mulroney government was the Canada-United States Free Trade Agreement. The BCNI’s advocacy for such an agreement began in 1981 at a time when all federal parties were opposed. That the recently-elected prime minister was willing to reverse his opposition speaks to his agility in pivoting when warranted.  Here, he saw the danger of escalating American protectionism and seized the historic opportunity that lay before him.

The road to free trade was a very rough one, rocked by high emotions and sharp political divisions, culminating in the 1988 single issue federal election. The BCNI and the country’s CEOs travelled every step along that road arguing that Canadian enterprises and workers were indeed ready to compete in the all-important North American market. Reflecting on our contribution some years later, Mulroney thanked me and Council leaders including Rowland Frazee, David Culver, Paul Desmarais, Guy St. Pierre, and Ted Newall for speaking bluntly, saying that our support was unprecedented and indispensable to his government’s success. He noted that the results of the agreement exceeded even the estimates of its most ardent advocates.

While I welcome this fulsome affirmation, were it not for the bold leadership of the prime minister – his great courage and a willingness to take a huge risk in pursuit of a big idea – free trade with the Americans would have eluded us in 1988. This would have cost Canada dearly. His success in negotiating the most important bilateral free trade agreement in history led soon after to the North American Free Trade Agreement – an economic and geopolitical achievement of enormous significance.

On another front of national importance, we vigorously supported the Mulroney government in its quest for constitutional reform. Unprecedented in the annals of Canadian business history, the Council became deeply engaged in supporting both the Meech Lake and Charlottetown Accords. The prime minister’s passionate pursuit of national unity was beyond admirable, and while timing and politics had other plans, we never regretted joining forces with him in support of such a worthy cause.

We were at the same time grateful for the prime minister’s skills in the wider international arena. While his close friendships with Presidents Reagan and George H. W. Bush could be measured in progress for Canadians on files from acid rain to Arctic sovereignty, his other foreign policy triumphs elevated Canada’s stature in the world.

Brian Mulroney, in a speech he gave to the Business Council in 2016, memorably summed up our relationship: “I want to single out the historic role the Council played in supporting major economic initiatives of my administration, notably the FTA and NAFTA, the GST, privatisation, deregulation, and our low inflation policy.  These were the foundational policies for Canada’s subsequent growth…”

As the generous recognitions of Prime Minister Mulroney’s achievements come forward, in my view, he richly deserves the accolade as one of Canada’s most consequential prime ministers. My fellow CEOs who followed his indefatigable efforts at nation building are forever grateful for his inspired leadership.

Thomas d’Aquino is the founding CEO of the Business Council of Canada, formerly known as the Business Council on National Issues and subsequently as the Canadian Council of Chief Executives. Mr. d’Aquino headed the Council from 1981-2010.