TORONTO -- Robert Keith Rae, the newly elected head of the only socialist government in North America, was trying hard to reassure 1,500 skeptical business people from Ontario, Canada's biggest and richest province, that their worst nightmares hadn't come true with his election as the province's premier.
Rae, who had campaigned on a promise of deficit financing to pay for costly social programs, brought tentative but relieved smiles to the faces in his luncheon audience when he said, "Canadians know that they have to account for what they spend. They know the difference between responsible financial management and paying their Visa bill with a cash draw on their MasterCard."
But there were fewer smiles in an audience of 200 trade unionists five days later, when Rae, a populist who likes to be known as "Premier Bob," said, "People say you should just let 'er rip and really spend. You know yourselves, the simple reality is, if you spend too much money that you don't have, you get into trouble... . If you're borrowing from your MasterCard to pay Visa ... that's a recipe for bankruptcy."
The 42-year-old, boyish-looking Rae, whose New Democratic Party won power Sept. 6, has been working overtime trying to define his agenda to business people. Some of them are still shaking their heads at the emergence of a socialist government in Canada's financial and industrial heartland at a time when socialist principles are giving way to free market economies in Eastern Europe and even the Soviet Union.
At the same time, he is trying to keep at bay many of the social-action groups that helped elect him, rejecting suggestions that he get as much as possible in social programs while he still has a sympathetic constituency.
"Look, I was surprised as anyone when we won this election. I think we can make it, but if I believed in predictions, I wouldn't be here," Rae said in an interview in his oak-paneled office in the Gothic Queens's Park Ontario legislature building.
Rae makes no apologies for his political ideology, describing himself as a "deeply committed social democrat facing the same challenges as our friends in all of the Western world today." But the word "socialist," he acknowledged, has taken on a meaning that could cause him image problems.
"I feel very strongly that the word has become something of a swear word that some people associate with communism, or Joseph Stalin or something, and it's not useful to go around using it too loosely. It's lost its value as a term of reference, or a term of anything," Rae said.
The new premier said he is committed to a mixed economy, and observed that Ontario already has a tradition of government ownership, with universal health care, state-owned industries and a government-run utility that provides electricity at cost.
"This is the kind of balance we are trying to come to terms with, creating stronger democratic institutions that are more responsive to the needs of the working people, but one in which the markets have a role to play. Where governments have ignored this, we're trying to learn from those experiences," Rae said, citing the first government of French President Francois Mitterrand as an example.
Rae's agenda, as spelled out Tuesday in the traditional Throne Speech at the opening of the provincial legislature, was interventionist in tone, but in substance it appeared designed to put to rest fears in the business community.
The speech promised some changes with relatively small price tags, including instituting a government-run automobile insurance program; boosting the minimum wage; tightening rent controls; and expanding pay equity provisions. It also included plans for an environmental bill of rights and increased protection for workers facing layoffs because of the recession that has gripped Ontario.
However, while promising a moratorium on new nuclear power facilities, Rae dropped his campaign promise of a phase-out of existing nuclear plants. The speech made no mention of his campaign threats to ignore the U.S.-Canada free trade agreement, which labor unions have said has helped cause a loss of 19,000 jobs in the province this year.
In contrast to the New Democratic Party's policy of public ownership of utilities, Rae has also approved a proposed $1.1 billion (U.S.) takeover of Consumer's Gas Co., Canada's largest natural gas distributor, by British Gas Ltd.
During the election campaign, when they thought they were inheriting a slight budget surplus from the Liberal Party government, the New Democrats said their reforms would cost an additional $4.2 billion over the next two years, but that they could generate an additional $2.4 billion in revenue, leaving an annual deficit of $900 million.
However, since then Rae has discovered that the Liberals actually left him with a projected $2.5 billion deficit, and he has been increasingly cautious in his estimates of how much he can spend.
"We must be as candid as we can about how much things cost and how they are going to be paid for," the premier has said. "I'm under no illusions about our obligations to fiscal responsibility."