Canada may pull its belt even tighter
In an effort to end Canada's worst economic crisis since the Great Depression of the 1930s, the ruling Liberal government has presented to Parliament an austerity budget calling on Canadians to tighten their belts even more.
The budget is part of an attempt by Prime Minister Pierre Trudeau, who is suffering severe political damage on economic issues, to focus the full weight of the country's leadership on Canada's foundering business situation.
The budget proposed June 28 by Finance Minister Allan MacEachen calls for voluntary wage restraints in the private sector and a 6 percent ceiling on all wage increases for civil servants over the next year. Mr. MacEachen urged Canadians to curb inflation by moving ''from the 12 percent world of recession to the 6 percent world of recovery.''
In addition to releasing a new budget, Mr. Trudeau has invited the premiers of Canada's 10 provincial governments to an emergency, one-day economic conference June 30.
The budget, which lays out the government's economic program, is traditionally presented once a year. The unusual and somewhat humiliating decision by the Trudeau government, to produce a new one only eight months after the previous budget announcement reflects the deepening sense of economic crisis that has overtaken Canada.
A deluge of bad news in recent weeks has made everyone aware that the country is in its worst postwar business slump. For Mr. Trudeau, the situation represents one of the rockiest periods in his 12 years as prime minister. Many of his own Liberal Party members of Parliament have privately said he should resign to save the party from lasting harm.
''This year's a write-off,'' was the description of the 1982 economic picture by Thomas Maxwell, chief economist at the noted business research group, the Conference Board of Canada. ''We're in a mess and things could get worse,'' he said.
Normally sedate bankers, worried by the widespread bankruptcies caused by a combined business slowdown and the effects of 18 percent borrowing rates, have been raising an urgent alarm.
Bill Mulholland, chairman of the Bank of Montreal, one of the country's largest financial institutions, recently predicted widespread debt problems among many companies, leading to an ''economic collapse'' unless interest rates are lowered.