The “hidden report” uproar: what it really means

BLAIR FRASER March 1 1958


The “hidden report” uproar: what it really means

BLAIR FRASER March 1 1958




The “hidden report” uproar: what it really means

ONE ISSUE OF 1958 will be remembered and debated here in Ottawa long after most Canadians have forgotten it. It is the production by Prime Minister Diefenbaker of a so-called “hidden report” on the economic outlook last year, a survey that forecast a slackening of activity and a rise in unemployment during 1957. The report was given to the Liberal government last March, classified as “Secret.” The prime minister brought it out in answer, and a devastating answer it was, to Liberal charges that the present unemployment is the fault of the Conservatives.

The Liberals certainly invited this rejoinder, and most people here think they got what they deserved. Their national convention resounded with loose talk about unemployment, some of it from former cabinet ministers who knew better. Jimmy Sinclair said with a straight face that “as a consequence” of Tory policies, the number of unemployed had risen to “the staggering figure of 754,640," and he added: “The Tories didn't inherit unemployment from us, they’ve created it.” Walter Harris noted that “in seven short months trade is already languishing, employment is falling”; he urged Canadians to “vote for a restoration of good conditions” under a Liberal regime.

Lester Pearson was more careful in his choice of words than some of his colleagues, but even he bemoaned “three-quarters of a million out of work.” In fact, as all ministers and ex-ministers know, the 754.640 was the total number registered with the National Employment Service, a notoriously flabby figure which at the time was almost double the number “without jobs and seeking work.” This latter, smaller figure is the one the Liberals themselves put out, until last June, as the true measure of unemployment.

To all this Liberal bombast the prime minister’s reply was crushing. In the greatest debating performance of his life, and one of the greatest in living memory here, he produced sentences from the “hidden report that rang like sledge-hammers on an empty barrel:

“A higher average level of persons without jobs and seeking work is likely in 1957 . . .

“Percentage increases over the previous year can be expected to widen for most of 1957 . . .

“An average crop in 1957 would involve a decline in net (farm) income from last year . . .

“The lower level of exports anticipated is likely to result in a decline in cash income in the prairies again . . .

“Housing construction is expected to drop . . and so on.

Liberals squirmed as these quotations were tolled out in the Diefenbaker courtroom manner, and the famous finger pointed at them with the terrible questions: “Why didn’t you tell the people these things?” and “What did you do about them?” They could think of no better reply than to attack the PM for publishing a secret document.

That’s why they made so much fuss about “something omitted” from the copy tabled in the House. The original report had a blue cover and a frontispiece, both marked “SECRET” in bold capitals. These two pages were torn off the copy given to parliament, though the blue cardboard still adhered to the staples; the rest of it is marked only “Confidential.”

Actually, the Liberal talk about secrecy is mostly hokum. To compare this document with the secret files of the RCMP, as some Grits did in the House, is ridiculous. If there was impropriety in tabling the report it was much more subtle than that.

But the prime minister himself drew a long bow when he called this routine economic analysis a “hidden report” which, he implied, had been deliberately and wrongfully concealed from the public. He drew an even longer one by presenting it as if it were

a consensus of advice from all the government’s economists. In fact it was just the opposite—a minority report, in effect.

The Liberals can hardly complain, for the distortion is no worse than their own. They are like a man who, ineptly trying to gouge an opponent’s eye, has had his own thumb bitten. The grievance, if any, lies with the civil servants who prepared the report.

These appraisals have been annual since 1946, when they were begun by W. A. Mackintosh, now principal of Queen's University but then deputy minister of reconstruction. They are a product of consultation among economists of several departments and others from private business, invited here each December or January to talk to the bureaucrats about the outlook for the new year. The report bears the name of Mitchell Sharp, now deputy minister of trade and commerce, but was written by the economics branch of that department. The same men are now at work on a forecast for 1958, which will be labeled “Secret” like all its predecessors—unless the government orders otherwise, in which case the report itself will be of a somewhat different nature.

One reason for secrecy is that blunt, sharply worded official predictions have a tendency to accentuate whatever trends they foresee—to inflate an inflation, depress a depression. This reason is valid only while the report remains a prophecy; once time has proved it right or wrong, the danger evaporates.

However, there is another reason that doesn't lapse. These reports are ordered as confidential advice, and the writers are asked to be blunt. Economists are cautious folk who dislike being wrong, and who know too well the perils of a prophet; if they are ordered to prophesy in public they become as ambiguous, open-ended and unintelligible as the Delphic Oracle. To make them talk plain English and give judgments without hedging, one must let them talk privately. It is this privacy, rather than secrecy in the ordinary sense, that the prime minister chose to ignore.

This was particularly embarrassing because the 1957 report, unlike any of its predecessors, expressed a minority opinion. The rest of the government’s advisers—economists of the finance department, the privy council office, the Bank of Canada—all thought the main threat was inflation, not recession, and some of them still think so. Walter Harris took the majority’s advice when he framed his anti-inflation budget.

Civil servants feel uncomfortable about the publication of one half of a private argument. But what bothers them most is the way it was published —the dramatic use of this routine forecast as a political weapon. One thing a civil servant really dreads is being drawn into political warfare, Washington style. Some think they see a danger of it in this precedent.

Not all civil servants hold this view. Many, perhaps most of them, think the prime minister was wholly within his rights, both legal and moral, and that these scruples and fears are over-nice. It would be an exaggeration to say that relations between the Conservative government and its officials have been widely or permanently impaired.

There has, however, been some impairment. The mutual trust that good government requires has been somewhat damaged, at least for the moment. Unluckily, too, the “hidden report” incident was followed within a few days by another episode even more important to the relations between minister and official.

When Finance Minister Donald Fleming announced on a Saturday that the provinces would get thirteen instead of ten percent of personal income tax, he produced a set of figures showing what each province would receive. On the Monday, to his own great embarrassment and the greater embarrassment of his officials, he brought in another quite different set.

Obviously, one of two things had happened. Either the officials, whose pride is in their accuracy and precision, had made a grave mistake in their arithmetic, or else the minister had done his own arithmetic without consulting them. The officials are loyally silent, but most people take it for granted that the latter explanation is the true one—one Press Gallery wag is taking up a subscription to present an abacus to Mr. Fleming, and he is canvassing the cabinet ministers among others.

To the officials, though, it is no joke. They’ll need a little time to recover their normal composure. ★