Manitoba History: The Origins of Autopac: An Essay on the Possibility of Social Democratic Government in Manitoba

by Daniel Blaikie

Montreal, Quebec

Number 59, October 2008

As the title suggests, this article will concern itself with the question of whether or not social democratic government is a real possibility in Manitoba. On the one hand, the question may seem odd. The New Democratic Party (NDP) of Manitoba is a social democratic party. It is currently in power in Manitoba, has governed the province for nearly twenty-five of the last forty years, and will continue governing in Manitoba for the foreseeable future. Clearly if the possibility of social democratic government were defined solely in terms of the electability of social democratic parties, the main question of this essay would be absurd. On the other hand, since the 1980s right up until today, the fundamental insight of democratic socialism—roughly, that a democratically elected government should play an active role in the economy to protect the interest of all members of society, not just a small, élite cross-section thereof—has been losing more and more political currency in Canadian society. [1] Not even social democratic parties have been immune from this phenomenon. Thus by 2001, Doug Smith argues, the NDP government in Manitoba—unlike in the 1970s, where the government “had taken over a number of manufacturing concerns”—found itself in a context where it was unwilling even to consider nationalizing the Versatile tractor plant to save the jobs of the 250 members of CAW local 2224. [2] This was true even though Gary Doer’s NDP has been a strong advocate of maintaining existing public infrastructure like Manitoba Hydro, and vigorously fought the privatization of the Manitoba Telephone System in the 1990s.

This does not mean that supporters of democratic socialism have given up on the idea that electing social democratic governments holds value, but it has led to a certain malaise in the social democratic movement. [3] A large part of the problem hinges on how to reconcile the “democratic” component of democratic socialism with the “socialist” component at a time when socialism holds very little popular (and therefore electoral) appeal, and there is as yet no clear way forward. For its part, the current NDP government in Manitoba seems to hold that this question is best contemplated from the government benches— thus erring on the side of populism—than those of the opposition. In the apparent absence of any obvious and politically viable alternative, Manitoba’s social democrats have typically—whether tacitly or overtly—endorsed the strategy.

There is a view, however, that says the question of how to reconcile democracy and socialism is unanswerable in principle. James McAllister, the only one to publish a sustained scholarly analysis of an NDP government in Manitoba, maintains that the social democrat faces a dilemma. She must choose either democracy or socialism because parliamentary democracy is inherently conservative and as such, cannot be the vehicle for any major political, social or economic changes. [4] The present article intends to grapple mainly with this claim, by arguing that the implementation of public automobile insurance in Manitoba by the NDP government of Edward Schreyer presents a counterexample to McAllister’s thesis. [5] The aim here is not to answer the question of how to reconcile democracy and socialism in the twenty-first century, but simply to establish the legitimacy of the question.

Despite massive protests on the steps of the Manitoba Legislature, public automobile insurance became a reality in 1971.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, Winnipeg Tribune, 31 December 1979, 18-3681-17.

Evidence Against Democratic Socialism

Manitoba’s history of social democratic government began in 1969 when on 25 June, Manitobans sent enough NDP candidates to the Legislature to form, with the help of Larry Desjardins, a then-independent, ex-Liberal Member of the Legislative Assembly, a precarious minority government. With Desjardins’ tentative endorsement, Schreyer’s government enjoyed the support of twenty-nine MLAs in a fifty-seven seat legislature. If the NDP’s victory came as a surprise to the province’s establishment, one can hardly blame them. [6] At the start of the 1969 campaign, the NDP was the third party in the Legislature and without a leader. Schreyer was elected leader only two weeks before Election Day and would remain Premier of Manitoba until 1977, when Sterling Lyon’s Progressive Conservatives defeated the NDP.

If it can be said that there is a scholarly consensus on a topic with so little academic publications devoted to it as the Schreyer government, the consensus appears to be that it was not a radically transformative government. [7] Nelson Wiseman sums it up best when he says: “Although the Manitoba of the 1970s was certainly transformed from the Manitoba of earlier decades, the changes were not so much a result of NDP government as of broader, national, economic and social trends.” [8] In other words, the Schreyer government’s program was not significantly different from what its Liberal and Conservative counterparts were undertaking in other parts of the country. These changes included an exponential increase in the size and spending of the civil service through the 1960s and 1970s and readiness on the part of all parties—albeit with varying degrees of enthusiasm—to use public ownership as a policy tool. [9]

McAllister’s study of the Schreyer government concurs with this appraisal. He suggests the financial restraints faced by any provincial government would limit its capacity to institute thoroughgoing social programming. However, he does not believe that those constraints can explain:

what was perhaps even more significant than the Schreyer government’s reforms or its failure to innovate in certain areas … the marginality of the programs and policy changes, which were introduced. Even where a need was recognized and the government was determined to take action, the end product of the policy process was slight; changes were at the margin, resulting in the least possible dislocation. [10]

Examples of this occur in a number of policy areas. For instance, in the Schreyer government’s first term, there was a shift in the taxation system from regressive, flat taxes to a more progressive tax regimen. The flat Medicare premiums were reduced by 88 percent while personal income taxes in Manitoba were raised by six percentage points and the corporate income tax was raised by two percentage points. According to McAllister, this was the Schreyer government’s “most dramatic measure to redistribute incomes in Manitoba,” but by the time, the NDP was defeated in 1977 “both the NDP government of Saskatchewan and the Conservative government of Newfoundland had enacted higher personal income tax rates.” [11] Moreover, other governments had comparable personal or corporate income tax regimes. Despite constant upward adjustments of the minimum wage during the Schreyer years, high inflation meant that the benchmark set by the province’s Minimum Wage Board was never reached. The minimum wage hovered between 50 to 55 percent of the average weekly earnings of the industrial composite index, five to ten percent below the recommended 60 percent. Thus, there was “very little change in the lives of Manitoba’s low-income citizens … despite the legal power of the government to change their standard of living.” [12]

Citing the centralization of power between 1970 and 1977 in the structure of municipal government— particularly in light of the Unicity initiative—as well as a lack of discussion surrounding the question of some form of workers’ control at the work place, McAllister concludes that “efforts by the NDP government of Manitoba to increase public participation in government decision making were few and far between.” [13] He also contends that housing initiatives undertaken by the Schreyer government were largely due to the significant funds made available by the Liberal federal government. Moreover, these initiatives did “not touch the dominant position of private contractors, land developers, or landlords.” [14] This reluctance to challenge established private interests was consistent with an almost total lack of government planning of the economy, “except for the [wage and price] controls program and a few side-effects of programs like Autopac and mineral exploration.” [15]

This reluctance to challenge established private interests went hand in hand with a reluctance to extend government ownership and control of the economy. The Schreyer government’s eventual takeover of Churchill Forest Industries, McAllister says, “was accomplished with very little preconceived, ideological planning” after the government had exhausted every other possibility. [16] The Schreyer government’s Manitoba Development Corporation is criticized as having been a “lender of last resort” that usually took on business projects that could not secure funding elsewhere. This led the government to take “an equity position in firms which were more likely to generate losses than profits” rather than securing public ownership in profitable industries. [17]

In February 1970, Premier Schreyer announced that the government would commission a feasibility study on the idea of establishing a publicly owned drug manufacturing company in Manitoba. The Advisory Committee on Central Drug Purchasing and Distribution was set up within the year, but its terms of reference were restricted to considering a central drug purchasing and distribution plan. In March 1972, the Committee proposed that a crown corporation be established for central drug purchasing and distribution and that doctors and pharmacists be able to substitute generic brand equivalents for their brand name counterparts. What materialized was a twofold initiative. On the one hand, the pharmacare program was implemented to make drugs available to everyone. On the other, drug substitution was enacted as a means to control costs somewhat. The crown corporation to purchase and distribute drugs never came to be, let alone a corporation to manufacture the drugs. The original vision of restructuring the pharmaceutical industry, where “[l]ower prices to consumers and jobs in local drug manufacturing and distribution plants were to be achieved through universal pharmacare, government purchasing and distribution, local manufacturing, and drug substitution,” had practically been abandoned. [18] The plan actually implemented, while it reduced the burden on consumers and contained a moderate measure for price control, left “[p]roduction, purchasing, distribution, and the attendant activities like research … in the hands of the private sector.” [19] McAllister borrows a phrase to describe the phenomenon: “socialization of costs and the private appropriation of profits.” [20]

With examples such as these, McAllister argues there was a recurring pattern of unwillingness to challenge private capital directly, or even indirectly, as “the NDP government moved only the minimum distance possible into the domain of the private sector.” [21] McAllister’s view is that the government’s willingness “to incur tremendous costs to the public sector” through the socialization of costs was “to avoid a loss of electoral support.” [22] The perception of what it would take to be re-elected meant—and means— that “enemies could not be made, opponents had to be bought off with public funds, and the wrath of any interest group which felt threatened had to be stilled.” [23] McAllister even goes so far as to suggest that a Conservative, Liberal or Social Credit government may have been more willing to increase the scope of the public sector because they would not have been encumbered with the burden of having to show the “respectability” of social democracy for electoral purposes. [24] As a result the “overall evaluation of the Schreyer government, in terms of how close it came to achieving the ideals of democratic socialism, must be rather negative.” [25] This in turn, he argues, shows that radical changes to society cannot take place within a system governed by parliamentary democracy and thus vindicates the dilemma he puts to the social democrat.

The present goal will be to show that the Schreyer government’s nationalization of automobile insurance (a) did not represent the least interventionist option for reform of the automobile insurance industry in 1970s Manitoba; (b) did not involve major financial or ideological concessions, and; (c) represented a risk to the NDP government’s electoral success in the political climate of the day. If these three facts about the nationalization of automobile insurance in Manitoba can be demonstrated, this will be sufficient to dissolve McAllister’s dilemma.

The Manitoba Automobile Insurance Committee at a public meeting on 4 November 1969. L-R: Ronald Duncan Blackburn, Howard Pawley, Frank C. Pagan, David Randall.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-21.

Low-Intervention Alternatives

Public auto insurance had been a long-standing commitment of the CCF and NDP and correspondingly “was one of the key promises of the NDP during the election campaign and there was no question that it would be brought in.” [26] Herb Schulz notes that the roots of this policy went back at least as far as 1945 when the CCF government in Saskatchewan implemented a publicly owned monopoly in auto insurance. [27] Ever since then it had been a key feature of CCF and NDP policy across the country. [28] Sid Green reports that from “1966 to 1969 it was almost automatic for the party to introduce an amendment to the Throne speech resolution, calling upon the government to institute a public automobile insurance scheme.” [29]

On 29 October 1969, a committee was struck to investigate the state of automobile insurance in Manitoba. The terms of reference for the Manitoba Automobile Insurance Committee (MAIC) were to “investigate the feasibility of instituting a program of public automobile insurance and to hear and consider representations respecting all aspects of automobile insurance; to make recommendations deemed to be in the interest of the general public[, and]; to submit draft legislation.” [30] The three member committee—composed of former chief executive officer of the Saskatchewan automobile insurance plan R. D. Blackburn, Frank Pagan, and the Hon. Howard Pawley, who chaired the committee and was the minister responsible for the auto-insurance file—toured the province, visiting Brandon, Flin Flon, Thompson and Winnipeg over nineteen days of public consultation during November and December 1969. [31] The MAIC heard from insurance companies, agents and adjusters, the Chamber of Commerce, Labour Federations, and others including “a vigorous response from the general public by way of various communications.” [32] The presentations made to the MAIC show that there was a widespread dissatisfaction with the automobile insurance industry in Manitoba prior to the NDP’s rise to power, and a variety of suggestions on how to improve the industry.

Private citizens complained that they often received less compensation than they were entitled to under their policy. [33] The Report of the Manitoba Automobile Insurance Committee (RMAIC) tells one story of a man still in hospital that was approached by an insurance adjuster to sign for a compensation package much lower than he was entitled to, in order that he would receive his compensation money without delay. [34] Under the private insurance system, the victim of a car accident had to prove the negligence of the offender in order to receive any compensation at all. In the worst cases—where potential compensation was highest and most needed—the emotional and financial costs of resolving a claim could be very high. In all cases, the litigation process meant that claims could drag out over a very long period of time before being settled by the court. “Hostile” was the word used by the MAIC to describe the private insurance industry as “[t]hose motorists who possess a valid claim and the persons against whom the claim is made are by virtue of the system itself, antagonists.” [35] Given that 75 percent of all motor vehicle accidents involved two or more vehicles, well over the majority of persons making claims had to navigate this claims atmosphere.

Members of the Schreyer government were not the only ones suggesting there were problems with the auto insurance system in Manitoba. Rod Lawrence, of Murphy & Lawrence Insurance of Winnipeg, recognized the industry as having needlessly high premiums, but saw the cause as being poor drivers making the road an unsafe, accidentprone environment. The remedy, according to Lawrence was to have stiffer penalties for delinquent drivers. [36] In this, he was supported by a former Winnipeg police officer who suggested a similar approach to dealing with the high price of auto insurance. [37] The Insurance Bureau of Canada also suggested that insurance premiums could be lower than they were by reducing the number of accidents, modifying liability for bodily injury claims of a doubtful validity, eliminating or severely restricting liability for property damage claims and reducing repair costs. [38] G. C. Trites, managing director of The Wawanesa Mutual Insurance Company, also felt that some improvements could be made to the system. [39] The Manitoba Federation of Labour insisted the government should adopt the auto insurance scheme developed in Saskatchewan. They argued that the existing system was inefficient and that the profit motive drove up premiums while driving down payouts. [40] The Manitoba insurance law section of the Canadian Bar Association presented an eleven-point plan for auto insurance reform in Manitoba. [41] Most telling of all was the testimony of Sylvan Leipsic, a vice-president of Aronovitch and Leipsic Limited, described by the Tribune as a “leading Manitoba insurance executive.” He is quoted as saying: “[I]t has become necessary to investigate automobile insurance by government bodies throughout the world. … Far too long government and industry have complained about the present system. It is up to them now to make the adjustments. … [I]mprovement is necessary and desirable and in certain ways quite possible.” In the same presentation, the Tribune reports, Leipsic declared that “[c]o-operation between government and private industry can lead to reduced auto insurance premiums.” [42] Recognizing the dissatisfaction with auto insurance in Manitoba, Opposition Leader Walter Weir also brought in a program for auto insurance reform. [43]

Neither the industry nor the opposition parties were short on ideas to reform the auto insurance sector in a way that would allow for the continued participation of private insurance companies in the market. For the Progressive Conservatives, competition between private firms in a regulated industry would ensure the lowest possible premium rates and address the worst elements of the industry as it was in 1969. The Liberals were willing to allow a crown corporation to enter the auto insurance industry, “but on one basis only, and that was in competition with free enterprise, or the private companies that were in the business previously.” [44] The industry preferred that the government not enter the insurance business at all, but was adamant that if it did, it should be on a competitive basis only.

Any of the reform packages advocated by the opposition parties and the insurance industry as an alternative to public monopoly would plausibly have modified the industry enough to address the most egregious aspects of the industry experienced by the electorate. A political strategy aimed at minimizing government intervention in the private sector would likely have sought to steal the middle ground from the government’s opponents. The result might have been the introduction of more government regulation in an industry that would remain in private hands and continue to generate profit for its owners. Such a strategy would have been consistent with that of most other provinces, where similar dissatisfaction with auto insurance industry existed. The Schreyer government chose to proceed with the nationalization of Manitoba’s automobile insurance industry despite the fact that there were less interventionist solutions on the table.

The Empire strikes back. Private insurance agents protested the Schreyer government’s imposition of public auto insurance, 25 April 1970.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-31.

No Concessions

Almost forty years after nationalizing automobile insurance in Manitoba, Edward Schreyer is adamant that his government made no concessions to the industry:

We conceded nothing to the industry because the fact of the matter is we did implement publicly owned automobile insurance and had there been any concession to the industry, the industry would have basically continued … It was not the kind of thing that you could have a little bit of both. [45]

This stands in contrast to McAllister’s analysis, which sees three components of the government’s implementation of public automobile insurance as an example of “financial concessions” to the industry. These three components were (i) compensation for insurance agents who lost part of their business because of Autopac; (ii) allowing private agents to sell basic coverage, and; (iii) allowing private firms to compete with the government for additional insurance beyond the government mandated basic coverage.

McAllister interprets the government’s decision to allow agents to sell the government plan and provide compensation to those who preferred to quit the auto insurance industry as a political strategy calculated to achieve two goals. First, it was meant to drive a wedge between the insurance firms who wanted to stop Autopac and the insurance agents that wanted to achieve the best possible working conditions and compensation under the new plan. [46] Second, it was meant to secure Larry Desjardins’ support of the proposal. Desjardins, whose vote was needed in order for the legislation to pass, made compensation for the agents a condition of his support for the Bill:

There is no way that my conscience would permit me to say, “To hell with these people; let them take care of themselves.” Without revealing what happened in caucus, I think that you can be reasonably sure that this [compensation for the agents] is something I argued for, and I can assure you now that I’m committed to this principle. On this, Mr. Speaker, there can be no compromise. [47]

Schreyer himself admits that Desjardins’ support was one of two reasons why the government chose to offer compensation to the agents. In his words:

There is no doubt that we needed all the support we could get to get the measure passed … and since we had something less than a full majority it was necessary to get the cooperation and support … of not just Larry Desjardins, but also Gordon Beard who was an independent MLA and unless you factor him into the equation, you don’t have the numbers. [48]

He denies, however, that the motivation for the compensation package was to divide opposition to the plan, and he maintains that providing support to the insurance agents, who were predominantly small business people, was not out-of-step with the government’s ideological heritage.

Desjardins touched on this matter early in the debate. In May of 1970, he said in the Legislature: “No matter what, this [the issue of compensation] to me is a question of conscience and I believe it is the same with the First Minister and many others.”49 This comment is in keeping those of Schreyer who recounts:

It wasn’t just Larry and Gordon Beard … there was also at least half of the … NDP caucus [who] were happy to accommodate the agents. Our fight after all was not with the agents at the local community level. They are after all, for the most part, almost entirely what you would call community based small business. … So it’s very easy for me to emphasize that really we had no quarrel, we had no fight with the agents and therefore, making that change was not difficult, not difficult at all. [50]

This does not seem to have applied only to the idea of compensating agents for loss, but also to the idea of allowing private agents to sell the government plan. Recalling the debate around the issue of whether or not the government should allow private agents to sell the public plan or move everything into the public sphere, Cy Gonick reports:

I don’t think there was a very large contingent [within caucus] supporting that the entire operation be placed in the public sector. Although that was the perception that the media put on it and as a consequence, during at least a critical period of time, all the small little insurance agencies were up in arms, because they thought they would be eliminated … the party and the government had a hard time persuading the general public that that was not really an issue. … I won’t say it was never meant to be, but it was quickly dismissed as part of the system. [51]

Thus, while the idea of compensating the agents does not appear to have been part of the original plan, it seems most members of the NDP caucus quickly accepted the argument that the agents should be compensated for the dislocation caused by government policy. The compensation component was not an ideological concession because the agents, understood as small business people—a constituency traditionally claimed by the CCF/NDP along with farmers and labourers—were not seen as the real enemy in the Autopac debate. While the government did provide financial compensation to the agents, it understood the compensation as a just, fair component of the plan. As such, it would not be appropriate to characterize the move in the language of concession.

Giving private firms the right to sell supplementary insurance in competition with the government was a not a concession, simply because the industry was not asking for it. On 23 April 1970—the day after the RMAIC was tabled in the Legislature—the Free Press reported that: “H. B. Vannan, chairman of the Insurance Bureau of Canada’s western advisory committee, lambasted proposals for compulsory automobile insurance in Manitoba Wednesday and said “there would be no point in picking up the crumbs left by the socialists.”“ [52] He estimated that private companies would only be able to collect somewhere under five percent of the premiums they were collecting prior to Autopac if they could sell only supplementary insurance, an amount he called “inconsequential.” Clearly, the industry was not interested in selling supplementary insurance alone, in large part because there was hardly any money to be made at it. Though the government may have opened supplementary insurance in a tactical bid to guard against being seen as dogmatic state monopolists, it did so knowing that the industry would neither want nor benefit from the gesture. Such an act can hardly be called a concession to the industry.

The Schreyer government’s approach is vulnerable to criticism on social democratic grounds insofar as “little or no attempt was made to promote Autopac as part of a general expansion of government control and ownership … a portion of the private sector was transferred to the public sector. But little was learned that would have promoted demands for even greater expansion of the public sector.” [53] For instance in his speech introducing the legislation, Howard Pawley was quick to insist that “all is not right in auto insurance under the present private system … [and] this government is introducing this bill at this time not for dogmatic reasons, not because of ideology … we believe that the system we are proposing is the most practical way to solve the auto insurance problem.” [54] In a speech to the Legislature on 5 August 1970, Premier Schreyer made sure to single out the auto insurance industry as being a particular situation with its own particular problems, problems that public ownership was best suited to fix:

No other insurance system operates in such an inherently inefficient and illogical manner. The competition that exists in auto insurance today is a competition based not nearly so much on price or service but rather a competition to see who can get out of paying as much as possible. With automobile insurance, because of the need to prove fault, time and money are wasted. It is not as rational an arrangement as could be. [55]

The tactic was a point of contention within caucus. Cy Gonick remembers arguing the minority position that the focus of the argument for Autopac should not have been on the reduced premiums. Rather the focus should have been on the idea of the profits generated by the crown corporation being used to generate public services within the auto industry and beyond:

I made a strong case for it to be the latter strategy, and not simply a matter of saving some money, in the belief that this could, if it was promoted this way and sold this way, it could promote this concept of moving … some parts of the private sector into the public sector, to promote that in a more general way, to move from auto insurance to other sectors. But it was certainly not the view of the Premier and I don’t know, once the Premier states a position, none of the cabinet in general caucus will contradict him. [56]

Given that there are even fewer nationalized industries in Manitoba today than in the 1970s, it is easy to say with hindsight that the government failed to lay the groundwork for an expansion of government ownership in the economy. However, the tactic of arguing for nationalization by demonstrating how it best realized the commonsense virtue of efficiency was not unreasonable in an ideologically polarized, politically charged atmosphere. Moreover, the tactic could have been replicated for other initiatives comprising an overall social democratic strategy. The fact that this did not come to pass does not mean that it could not have come to pass.

The idea that the government position somehow “permitted supporters of private enterprise to maintain their beliefs unchallenged. None of the norms of the private enterprise ethic was challenged. Indeed, one of its bases—economic efficiency—was being promoted by the supporters of public auto insurance,” however, is clearly wrong. [57] It is wrong at least insofar as efficiency has long been a value of socialism.58 However, it is also wrong in that Manitoba’s supporters of private enterprise obviously felt that their core belief in the power of private markets was being challenged by the government. In response, they escalated the conflict with government and promoted their view of what the dispute was about; namely, whether the government has the right to intervene in the private economy in the interests of all members in society, even though it may hurt the interests of a small political or economic élite. The result was a highly charged political environment with support mobilized against the government, presenting a risk to the government’s political fortunes.

Rural protest. Anger over the nationalization of auto insurance spilled onto the streets of Wawanesa, Manitoba in this photo from the Winnipeg Tribune of 1 December 1969.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-18.

Risky Business

McAllister has argued that Autopac could be implemented because less than half the insurance agents and an even smaller proportion of insurance firms depended upon auto insurance for their livelihood. Half the insurance agents in the province received less than $2,000 a year from auto insurance and for most of these this was less than 25 percent of their annual revenue. On the insurance firm side, there were only four companies that received more than a million dollars in net premiums in the province. [59] Thus, there was a “diffuse pattern of business within the automobile insurance industry” and for that reason few players whose primary revenue source was jeopardized by the introduction of Autopac. [60] If this is taken at face value it is difficult to explain the vehement opposition to the Autopac Bill, particularly in light of the compensation package for insurance agents hurt by the transition from private to public insurance. While the issue of potentially dislocated insurance agents played a prominent role in the arguments of those opposed to public auto insurance, opposition to Autopac stretched well beyond the insurance industry and the main objection was to the principle of a government-owned monopoly replacing an existing private market.

There were two main arguments in this regard. The first was a slippery slope argument contending that if government was willing and able to takeover the auto insurance industry, then no industry would be safe from government expropriation. The other was a pseudopatriotic, but mainly libertarian argument that contended that Manitoba was built on the value of personal freedom and it would be wrong for government to restrict the choices of its citizens. For instance, Elaine Smith—a stenographer in the private insurance industry for 35 years and demonstrator at a small rally on 25 April 1970 outside the Centennial Concert Hall—is reported to have said: “the government shouldn’t enter into everybody’s business and take it way from them. … If they go into one, they’ll gradually go into all the others and soon nobody will have a job.” [61] On 27 April 1970, the Insurance Agents’ Association of Manitoba ran a nearly full-page ad in the Free Press asking:

WHO WILL BE NEXT? Will it be the automobile body shops, the drug business, the tractor manufacturers, banks and trust companies, the insurance claims adjusters, the life insurance salesmen, the real estate brokers and their salesmen? The list could go on and on and with it the jobs of many TAX PAYING citizens will go!— with an increase in government bureaucracy.

The advertisement clearly portrays the issue as being one regarding the principle of government ownership:

Manitoba was built by free enterprise. The majority of our citizens are totally supported by free enterprise. Fortunately, Manitobans have enjoyed an ever-increasing standard of living. This is due to our free enterprise system. … We believe Manitobans want a free enterprise society and reject the idea of a state controlled system. If Manitobans don’t stop this NOW where will it end?—How secure are YOU? [62] A done deal. Howard Pawley (left), the provincial cabinet minister responsible for auto insurance, and James Dutton, the first general manager of Autopac, inspect a claims centre in this photo from the Winnipeg Tribune of 2 February 1972.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-01.

The president of the Insurance Agents’ Association reinforced this message in the lead up to the 29 April 1970 mass rally called for in the Free Press advertisement. For him the issue was a matter of choice: “At the moment a motorist has the choice of hundreds of agents but when the government takes over, if it does, there will be no choice, only compulsion and this is not the basis that has made Manitoba.” [63] On the day of the rally, the slippery slope argument appeared on placards in slogan form. “Are You Next on the Schreyer List?” the placards asked.

Both arguments were raised in the Legislature. One of the arguments’ most colourful proponents, Gordon Beard, who eventually went on to reluctantly support the bill, was adamant at the beginning of the Autopac debate that:

there is a disturbance in the minds of many Manitobans over whether they are facing one issue of car insurance or a sign of creeping government nationalization of private industry, picking them off one at a time. … If this Bill 56 is accepted by the public, then I say others will follow and I’m sure that our creeping socialism will become walking and running nationalization. … I am wondering if Manitobans are really prepared to accept their loss of personal freedoms that can be brought about through the domination by government taking over almost any part of our industrial life, but I warn you that to a great extent most Canadians come from families that left their home country to get away from too much government. If we stand by and let government become more and more a part of our life and become more dependent upon them, we will wake up some day to find them our masters. [64]

Beard’s rhetorical flights of fancy provide the template for many other speeches by opponents of public auto insurance.

The emphasis on these arguments by opponents of Autopac strongly suggest that the “diffuse pattern of business within the automobile insurance industry” had little to relevance to the government’s proceeding with and succeeding in establishing a public monopoly in the automobile insurance industry. The many opponents of the plan saw the issue not as a question of dollars and cents, but of power. The question was whether or not government would be able to takeover an entire market in the name of the public interest, and Autopac was a potentially dangerous precedent that could have had application outside the automobile insurance industry. For that reason, opposition to the plan was not limited to those whose business interests were directly affected by the Autopac Bill. Opponents of the initiative were able to mobilize a rally estimated by the Free Press to have been “the longest parade in Winnipeg since the general strike” with an attendance of approximately 7,000 people. [65] Although many companies and agencies released their employees to attend the rally, this demonstration was a clear signal to the government that there was a large, well-organized opposition to their program and therefore a political risk in proceeding as planned. [66]

Hustle and bustle at the Motor Vehicles Branch on Portage Avenue, as motorists line up to renew their auto insurance, October 1971.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-23.

Conclusion

By the end of 1970, the Schreyer government had negotiated its solution to the problems of the automobile insurance industry through the Legislature. The solution adopted was not the least interventionist solution available and was consistent with the government’s social democratic ideology. Opposition to the initiative, which encompassed many more than those who were directly implicated in the industry, felt the prevailing “free enterprise” ideology was under attack and mobilized considerable numbers of people against the government. Despite this opposition, the government was able to argue successfully for public automobile insurance and retain enough support in the Legislature and the province to survive until the next election and win re-election. In other words, when it came to the question of automobile insurance, the Schreyer government did not have to choose between democracy and socialism.

The idea of public automobile insurance did not first come from government policy rooms. It was a longstanding part of the NDP’s political platform and over time a variety of arguments were deployed to show its merit. Some arguments were grounded solidly within a general social democratic vision, while others made a direct appeal to people’s pocketbook. In hindsight, it is tempting to say that because of arguments of the latter type, the government was not able to transform its success in the automobile insurance industry to other areas of the economy. However, there is no reason to say that “efficiency arguments” could not have been made in favour of other social democratic initiatives. If democratic socialism is to expand its following, it will probably have to continue to show how particular initiatives will benefit average people. In so doing, democratic socialism guards against government intervention for its own sake and remains accountable to itself, particularly its own requirement that government intervention in the economy be for the benefit of all citizens. The kinds of arguments used to justify government policy are important and the argument which projects the vision of a social democratic society must always be heard. However, if social democrats are able to mount other compatible, independent lines of argument for their policies, so much the better for democratic socialism.

Sunny Manitoba. Motorist Lisa Unrau installs her auto insurance renewal sticker, 13 October 1971.

Source: University of Manitoba Archives & Special Collections, Tribune Collection, 18-3681-28.

Notes

1. This is only a rough characterization of democratic socialism and has no pretence of being its definitive articulation. With apologies to experts in the literature on social democratic theory, this paper will not make any sustained effort to define democratic socialism, and will use the terms “democratic socialism” and “social democratic” interchangeably.

2. Doug Smith, Stickin’ to the Union, Halifax: Fernwood Publishing, 2004, pp. 120–30.

3. Indeed, “despite their unhappiness about the government’s inability to intervene effectively in the strike,” certain CAW local 2224 members continued to support the NDP after the strike had ended. Ibid., p. 165.

4. James McAllister, The Government of Edward Schreyer, Montreal: McGill-Queen’s University Press, 1984, p. 172.

5. For this reason, aspects of the Autopac narrative are invoked only insofar as they are pertinent to the argument. For an account of nationalization of automobile insurance with a more complete narrative, see: Joy Cooper, The Politics of Automobile Insurance: A Case Study, MA thesis, University of Manitoba, 1978.

6. And surprised they were. The Winnipeg Free Press headline the day after the election read: “NDP Registers Stunning Upset.” Conservatives perhaps least of all expected the “stunning upset.” Walter Weir, Conservative Party leader and Premier heading into the election, was quoted as saying: “If they (Manitobans) have made a mistake this time—and I frankly believe they have—they’ll correct it next time.” The Free Press also reported the reactions of some rank and file Conservatives at their election night party. Comments ranged from ‘We’ve been shafted!’ to the “dear, little pensioner in the corner” saying ‘I never thought I’d see this day’, to the somewhat more philosophical ‘Boy, they’ll be whooping it up in Transcona tonight’, a comment that brought to the Free Press reporter’s mind “visions of jubilant railroaders bathing in capitalist bubbly.” “NDP Register Stunning Upset” Winnipeg Free Press (hereafter WFP), 26 June 1969; “Weir Feels Manitobans Will Correct ‘Mistake’” WFP, 26 June 1969; “PC Group Despondent” WFP, 26 June 1969.

7. Much more often than not, the Schreyer years in Manitoba are referred to in passing, or are examined as a part of a larger historical or political question. Authors that have broached the subject of Schreyer’s government in this way include Desmond Morton, Nelson Wiseman and John F. Conway. Desmond Morton, N.D.P.: Social Democracy in Canada, 2nd edition revised, Toronto: Hakkert & Co., 1977; Nelson Wiseman, Social Democracy in Manitoba, Winnipeg: University of Manitoba Press, 1983); John F. Conway, The West: The History of a Region in Confederation, 3rd edition revised, Toronto: James Lorimer & Company Ltd., publishers, 2006. Apart from McAllister’s book, the other main source of information on the Schreyer years is the few memoirs published by New Democrats from that time. Russell Doern, Wednesdays are Cabinet Days, Winnipeg: Queenston House, 1981; Sidney Green, Rise & Fall of a Political Animal, Winnipeg: Great Plains Publications, 2003; Herb Schulz, A View from the Ledge, Winnipeg: Heartland Associates, 2005.

8. Wiseman, p. 141.

9. Between 1961 and 1977 the Manitoba GPP expanded from $1.9 billion to $8.6 billion while the size of government increased considerably more; the government budget ballooned from slightly over $100 million to over $1.5 billion. These increases in size, however, took place during an era of remarkable inflation and new development of natural resources. In fact, the Schreyer government was responsible for less government growth than the preceding, Progressive Conservative government. Wiseman, p. 141. One outstanding example of the degree to which other parties would tolerate public ownership for political reasons was the Liberal Party in Saskatchewan, who by 1969 was governing that province. After having been a determined opponent of public auto insurance in opposition, Minister D. Bolt is quoted as having said that “I’m an advocate of private enterprise, but … I would suggest to the auto insurance industry that in their continued attack on the Saskatchewan [public auto insurance] plan, they are taking the wrong approach. They are simply not on valid grounds in their criticism of the Act and of its administration.” Manitoba Hansard, 12 May 1970—Howard Pawley.

10. McAllister, p. 79.

11. Ibid., p. 55.

12. Ibid., p. 58.

13. Ibid., p. 76.

14. Ibid., p. 79.

15. Ibid., p. 71.

16. Ibid., p. 61.

17. Ibid., p. 63.

18. Ibid., p. 68.

19. Ibid., p. 68.

20. Ibid., p. 68. He attributes the phrase to James O’Connor.

21. Ibid., p. 70.

22. Ibid., p. 70.

23. Ibid., p. 70.

24. Ibid., p. 70.

25. Ibid., p. 163.

26. Cy Gonick, 2007. 00:21 See also, Schreyer 2007—1:10; Green, pp. 101–2; Schulz, pp. 51–2.

27. Schulz, p. 51.

28. This remains true in Nova Scotia today. The Nova Scotia NDP have come very close to forming government in that province for the first time in its history, and auto insurance has been a key issue in the province’s recent elections.

29. Green, p. 101.

30. Report of the Manitoba Automobile Insurance Committee (RMAIC), p. 3. The purpose of the committee would remain an issue of political contention. A Winnipeg Tribune article from late 1969 demonstrates how the issue was framed. It reports: “The role of the NDP government’s special committee investigating auto insurance apparently means different things to different people. … Municipal Affairs Minster Howard Pawley said: ‘If this feasibility study showed an even-cost benefit between government and private insurance, then I think the arguments and submissions from Wawanesa would probably tip the scales.” … Finance Minister Saul Cherniack said: ‘The automobile insurance industry has reached the stage where government should become involved … my feeling is we should become deeply involved.’ … Premier Ed Schreyer said: ‘If the findings … show substantial savings to be had by putting in a government plan, we have an obligation to the people to put in a governmentoperated car-insurance plan.’” “NDP split on insurance” Winnipeg Tribune, 3 December 1969. The insurance industry, through one of its main spokesmen—H. B. Vannan, President of the Canadian Indemnity Company and chairman of the western advisory board of the Insurance Bureau of Canada—maintained that Premier Ed Schreyer was “speaking with a forked tongue—saying one thing and doing another.” “Dogmatic socialism: executive” Winnipeg Tribune, 23 April 1970. In his presentation to the Standing Committee on Public Utilities and Mines and Natural Resources—the Legislative Committee to review the bill after first reading—Vannan said that in “August 1969 when we were first advised that the government intended exploring the possibility of their going into … the automobile insurance business. … we made representation to the Premier of this Province and asked for a meeting, and at that meeting we were told by Mr. Schreyer: (1) that we are not necessarily dedicated to going into the automobile insurance business. We do want however to explore automobile insurance and we are prepared to, in one form or another, sit down around a table with the members of the insurance industry and discuss ways and means of getting a better program of automobile insurance in this province. We felt at this point that we were probably on the eve of a breakthrough in terms of co-operation of the government. … We then had a period of what I would suggest was ominous silence for many months, and then the first we knew about the government’s intention was when in approximately October we read in the paper a government notice to the effect that they had set up a committee [to address the auto insurance question].” H. B. Vannan, Transcription of Hearing by Standing Committee on PUBLIC UTILITIES AND MINES AND NATURAL RESOURCES, 27 June 1970, p. 42. The Opposition was adamant that the Schreyer government was determined to implement a public auto insurance scheme. “Auto insurance group ‘kangaroo court’: Weir” Winnipeg Tribune, 20 November 1969. Some members of the government certainly reinforced this view: “Agriculture Minister Sam Uskiw says the government auto-insurance committee was biased … because ‘it was the declared purpose of the NDP government to implement a publicly-owned and operated auto-insurance scheme.’” “Insurance committee was biased: Uskiw” Winnipeg Tribune, 11 June 1970. While the official position of the government was that they would consider the continuation of private insurance in Manitoba if the evidence supported the conclusion that this would be to the benefit of Manitobans, it is also clear that there was a strong feeling on the part of government members that the evidence would support government takeover of the industry. The Winnipeg Tribune is hereafter referred to as WT.

31. Ibid., pp. 1, 3, 4.

32. Ibid., pp. 4, 5. Just over 2,900 written submissions were received by the MAIC from members of the general public.

33. Ibid., p. 10.

34. Ibid., pp. 12–13.

35. Ibid., p. 12.

36. “Disguising of premiums dangerous …” WT, 13 November 1969.

37. “Guts required in success formula …” WT, 13 November 1969.

38. “Industry suggests 4 ways to reduce costs” WT, 20 November 1969.

39. “Insurance executive says province must compete” WT, 27 November 1969.

40. “MFL urges province adopt Sask. Auto insurance program” WT, 12 December 1969.

41. “Retain right of suit suggests legal section” WT, 16 December 1969.

42. “Premiums can be lower says insurance man” WT, 22 November 1969.

43. “Weir proposes ‘people-auto’ insurance plan” WT, 17 June 1970.

44. Gildas Molgat (Ste. Rose), Manitoba Legislative Assembly Debates, 13 August 1970: 4628. Gildas Molgat was leader of the Liberal Party of Manitoba at this time.

45. Ibid., 5:25.

46. McAllister, p. 67.

47. Larry Desjardins, Manitoba Legislative Assembly Debates, 13 May 1970: 1909–10.

48. Schreyer interview 2007, 4:35.

49. Larry Desjardins, Manitoba Legislative Assembly Debates, 13 May 1970: 1910.

50. Schreyer interview, 2007, 5:10.

51. Gonick interview, 2007, 5:50.

52. “No Point Getting ‘Crumbs’” WFP, 23 April 1970.

53. McAllister, pp. 66–7.

54. Howard Pawley, Manitoba Legislative Assembly Debates, 12 May 1970: 1881.

55. Edward Schreyer, Manitoba Legislative Assembly Debates, 5 August 1970: 4219–20.

56. Interview, Cy Gonick 2007, 1; 9:15.

57. McAllister, p. 66.

58. McAllister himself notes in his introduction, where he says that one of the motivating values of the British democratic socialist tradition was to “protest against the inefficiencies of capitalism.” Ibid., p. 4.

59. Ibid., pp. 65–6. These companies and their earnings for 1970 were: Wawanesa Mutual ($5.4 million); Co-operative Fire and Casualty ($2.4 million); Portage la Prairie Mutual ($1.6 million); and Allstate Insurance Company of Canada ($1.2 million).

60. Ibid., p. 65.

61. “Schreyer Duck Pickets” WFP, 25 April 1970.

62. WFP, 27 April 1970.

63. “Agents Organizing Insurance Protest” WFP, 27 April 1970.

64. Gordon Beard, Manitoba Legislative Assembly Debates, 15 May 1970: 1981–2.

65. “$200 Deductible”; “7,000 Protest Govt. Plan” WFP, 30 April 1970. Indeed, according to Cy Gonick “it was the largest crowd, or demonstration, in my memory. … I’ve never seen a political demonstration as well orchestrated and powerfully presented as that one. “ Interview, Cy Gonick 2007, 2, 1:20.

66. Cooper, pp. 213–14.

Page revised: 18 October 2015