By Howard Schneider
Washington Post Foreign Service
Wednesday, September 24, 1997; Page A23

Exports are booming, interest rates are low, and economic growth is expected finally to make a dent in unemployment. The federal budget not only is balanced but may soon show a surplus that will allow Canada to start spending more money again on its social programs. There are even polls showing the Quebec separatist movement is losing steam.

But good times do not make for easy politics. When Parliament opened today and the government delivered its agenda-setting Speech from the Throne, the reaction illustrated just how divided the summer's parliamentary election left the country.

Five parties now share the 301 seats in the House of Commons, and their opening positions showed not only regional divisions but a deepening ideological divide. From the right, the growing Reform Party, now the official opposition and a recognized voice for the western provinces, is clamoring for tax cuts and a more decentralized government; from the left, a rejuvenated New Democratic Party demands more funding for social programs and more government activism.

In the middle, the governing Liberal Party, which emerged from the June vote with the barest of majorities, is left to broker what promises to be a significant debate over the country's direction.

In a sense, it was easy to chart a course when Canada had proportionately the highest government deficits in the developed world. Government spending had to fall if bankruptcy was to be avoided, so Prime Minister Jean Chretien spent most of his first term chopping, restructuring and dismantling some of Canada's most cherished social programs, from health care to unemployment insurance and old-age pensions.

What the country must face now is how to divide the spoils of prosperity, and that is boiling down to a more fundamental fight between those who want Canada to renew its social democratic traditions and those who feel the size of the central government clogs the private economy.

In the throne speech, a remnant of colonial days that starts with cannon fire and requires various officials to wear tricorns, Governor General Romeo LeBlanc signaled that the government will try to ride right down the middle. As the queen's representative and titular head of state, LeBlanc opens each Parliament by reading a speech prepared by the government of the day. In this year's version, the pledge was to pump billions of dollars more into health care, youth job training and investment in technology, while also committing half of any surplus to tax cuts and a reduction in the country's accumulated debt.

It's a formula Chretien hoped would satisfy all sides, but it was promptly rejected by his opponents. "It's the throne speech of a government that has run out of steam," said Reform Party leader Preston Manning. "They are going back to spending. . . . What they ought to do is pay down debt and cut taxes."

"The government is quite prepared to continue with the 'pizza economy,' where some people get a very big slice and some people get a small sliver, and there is nothing in this speech that will change that," countered New Democrat leader Alexa McDonough.

In other contexts, it might seem like a debate politicians would enjoy having, one that lends itself to compromise. In Canada, however, debates over money always become debates over power-sharing, complicated as they are by the wide division of power between Ottawa and the provincial governments, and by the implications any federal policy has for separatist sentiments in French-speaking Quebec.

In his first term, Chretien made a point of handing substantial authority to the provinces, partly because of complaints in the west that Ottawa held too much power and partly in hopes of defusing the Quebec separatist movement by showing how adaptable Canada can be. Now there are signs that Chretien is changing course and is seeking to show that the national government can set standards for the country.

He has negotiated a new, $600 million child tax benefit that will take effect next July, and today's speech announced initiatives on technology investment and an expansion of medicare. In addition, far from handing over more powers to Quebec or the other provinces in hopes of unifying the country, the speech emphasized the importance of national values and the costs and "complexity" of a Quebec secession.

Canada "is too precious to lose by misunderstanding," LeBlanc said, pledging that the government will bring "frankness and clarity to any debate that puts into question the further existence or unity of Canada. . . . It will create a better understanding of the complexity of severing ties."

In the last few months, the federal government has been aggressive in trying to counter the separatist movement, encouraging, for example, the idea that sections of Quebec could choose to remain in Canada if the province declares independence; filing a case in the Supreme Court to clarify the rules of any future referendum on Quebec's status; and supporting efforts by the premiers of the nine predominantly English-speaking provinces to develop their own overture to Quebec's citizens.

There is evidence that this may be working. Recent polls suggest less support for sovereignty in Quebec and more recognition of how difficult the process would be. Yet at the same time, any move by Chretien to increase Ottawa's power always risks a backlash -- not just in Quebec, but in the other provinces as well.

Today's speech, said Gilles Duceppe, leader of the separatist Bloc Quebecois, "is a big propaganda document with a big maple leaf."