EDITORIAL PAGE (August 19, 1991)

Canadians are being taxed into an economic grave. Perhaps it’s time to be taking a hard look at the likes of Algoma Steel.

We certainly don’t envy the task of Earl Joudrie, its new chairman trying to save the near-bankrupt iron ore mining and steel manufacturing empire, which was built up by the late Sir James Dunn at Sault Ste. Marie, Ont. It dwarfs that of Bill James’ struggle to rescue Denison Mines. One would have to be pretty callous not to hold sympathy for the big firm’s 6,000 employees whose jobs are on the line. But no government bailouts, Mr. Joudrie, please. That should be up to the union leaders who played a large part in getting the company into its mess. (It is $800 million in debt after a 4-month strike last year and a costly union contract it simply couldn’t afford.) And it’s faced with a $500-million expenditure to modernize the old plant with the hope of again making it competitive.

On the line, too, is its iron ore mining-sintering complex at Wawa, Ont. This is a high-cost underground operation and the only remaining iron mine in Ontario, which boasted seven producers in the booming 1970s. Algoma is in trouble, no question. But so is Ottawa. And Ontario is rapidly heading in the same direction. So let’s be realistic. Either the project is viable or it isn’t.

Dofasco says it is cutting the purse strings to its money-losing subsidiary, now owned by Algoma’s creditors who are being presented with a union proposal to turn the whole bundle over to the employees. It would cut 1,600 jobs and calls for a 20% cut in wages and salaries for a 5-year period. As well, it hopes to negotiate a deal with Algoma’s banks to cut a $500-million debt in half.

But here again, it is asking the federal and provincial governments to pay the cost of early retirement and provide generous tax credits that would underwrite a $225-million investment the employees would make. What are the realistic chances of success? And at what cost to taxpayers? They have just about had it, and can no longer bear the cost of these never-ending cash drains such as Sydney Steel and Cape Breton Development, federal Crown corporations chalking up huge losses. And Varity Corp. (former Massey-Ferguson), saved from bankruptcy by huge forgiven government loans, is now pulling up stakes and moving to Buffalo, N.Y.

Despite the so-called fiscal restraints, red ink continues to flow like a raging river from Ottawa which is spending $30 billion more each year than it collects. Most is politically motivated — jobs, jobs, jobs, no matter the cost. Example: the recent $363 million federal-provincial handout (equivalent to $121,000 per worker) to a floundering Quebec shipbuilding firm covering overruns on a frigate contract that should never have been awarded. It is big ticket items Mr. Brian Mulroney will have to address if he has any hope of bringing the budget even close to balance. Topping that list must surely be building those 12 redundant naval frigates at a cost now estimated to be more than $6 billion and soaring. Though incapable of operating in ice, the frigates, if and when completed, are primarily to track enemy submarines. We can see countless other places where major savings could and should be made, like cutting the bureaucracy stuffed ministries — 39 to run this country compared with 14 in the U.S. Is it really necessary to have both Tom Siddon’s Indian affairs department and that of Monique Landry, minister of state for Indian affairs; forced bilingualism and multiculturalism into which billions and billions of dollars continue to pour; and a multimillion-dollar space agency?