Ontario's Premier Walks a Tightrope New Democrat Pushes Reform While Trying to Woo Business

Article excerpt

HALFWAY through his besieged government's five-year term, the leader of Canada's richest and most populous province is fighting to save his social democratic party's vision - to right society's wrongs.

Ontario Premier Bob Rae is trying to walk the line between critics who say he isn't pursuing social reforms vigorously enough, and those who say his party's reforms are bankrupting the province.

Since its surprise election victory in 1990, Mr. Rae's provincial New Democratic Party (NDP) has embarked on massive social reform. It is the first time a social democrat party - whose core support comes from labor and social action groups - has governed Ontario. Part of a national ground swell in recent years, provincial NDP parties now govern Ontario, Saskatchewan, and British Columbia.

The problem in Ontario, observers say, is that the party's grand plan is now mired in deficits and sagging public support. Polls show a current approval rating in the mid-20 percent range, down from its 37 percent plurality in the 1990 vote.

At stake is a new social compact for 10 million Ontarians that includes reforms in pay equity for women, labor legislation, employment equity for minorities, children's rights, health-care, car-insurance, and a province-wide day care system.

"The basic challenge we face is that we're carrying out some of these reforms in the middle of a very, very serious recession," Mr. Rae said in a recent interview in Boston. Though Ontario's economy has begun to show signs of life, the unemployment rate is high at 11 percent.

In one key way, Rae has attacked his deficit just as United States President Clinton hopes to attack his - by keeping health care costs under control. By reaching understandings with physicians, and by refusing extra payouts to hospitals that exceed their budget, health care costs rose just 1 percent in the last fiscal year, compared with 12 in the previous year. Rae says his most significant achievement is "protecting the integrity of Medicare in the middle of a fiscal crunch."

Still, deficits have ballooned as recession brought falling tax revenues. With a fiscal year 1992-93 budget of $54.8 billion (Canadian; US$44.1 billion), the deficit reached nearly $12 billion, up from $10 billion a year earlier. (Under the Liberal Party, Ontario had a 1990-91 budget of $46 billion, a deficit of $3 billion.)

Rae, however, has run afoul not only of deficit hawks, but also critics in his own party who accuse him of sacrificing reforms in concern for the deficit. Car insurance reform, a campaign promise, has been shelved as too costly, and pension reform has been put on hold.

"I think the thing we've come up against is what all governments come up against - and that is you can't do everything at once," Rae says.

But critics in his own party say Rae has betrayed the party's fundamental beliefs, creating "public cynicism. …