Canada's Conservatives are losing ground - and wonder why. Mulroney dips in polls, despite successes on economic front

The Progressive Conservative government of Prime Minister Brian Mulroney has suffered a significant political setback. The Conservative Party trailed in third place in provincial elections last week in Ontario, Canada's most populous province. It was not the first such defeat for the Conservatives, nor was it unexpected.

In July, the left-of-center New Democratic Party (NDP) won three by-elections for seats in the federal House of Commons.

And, Mr. Mulroney has fallen on hard times in the public opinion polls. Both Mulroney and his party obtain only a 25 percent approval rating, far below ratings for the two opposition parties or their leaders.

A few months ago the Prime Minister replaced his communications director in an effort to boost his rating. Bruce Phillips, a former Canadian Broadcasting Corp. television newsman, was asked to return to Ottawa from an assignment as minister for public affairs at the Canadian Embassy in Washington.

That change so far has not shifted public political sentiment.

In Ontario, the Liberal Party was returned to power with 95 seats in the 130-seat legislature. After defeating a Progressive Conservative government that had reigned in Ontario since 1943, the Liberals two years ago formed a minority government in the province. The NDP did not join in coalition with the Liberals, but gave the new government the necessary support in the legislature.

Canadians often vote differently a federal election than they do in a provincial election. To win a federal election, however, any party must win Ontario or nearly sweep the rest of the country - a difficult task.

The election lifts the prospects of Ontario Premier David Peterson as a possible contender to lead the federal Liberal party. The present leader, John Turner, has been under severe political attack within his own party and also stands low in opinion polls.

The government has two years to go before it must call a federal election. With a huge majority in parliament, the three-year-old government is in no danger of falling in a no-confidence vote.

But the two opposition parties are preparing for an election as early as next June.

A few blocks from the Prime Minister's office, the left-of-center New Democratic Party (NDP) has just moved into modern offices offering twice as much useable space as its previous national headquarters in a renovated old house.

Party executive secretary Dennis Young says he isn't counting any political chickens before they hatch, noting the ``dynamics and volatility of a three-party system.''

Campaign funds, though, have become easier to raise. The NDP now expects to spend $6 million (US $4.5 million) in the next federal election, compared to $2 million in 1984.

``The by-elections made believers of some people who were skeptics,'' says Mr. Young.

Sen. Alasdair B. Graham, co-chairman of the Liberal's Campaign Committee, says the next election will be a ``three-way fight'' because of the surge in the strength of the NDP. And, he notes that most Canadians no longer vote automatically for one party, but switch their allegiance quickly.

He maintains the Liberals will overcome its recent squabbling over issues and its leader when an election is announced.

The Conservative government is somewhat puzzled by its unpopularity. The Canadian economy is doing well, growing faster than any other industrial nation.

The government also claims several political achievements. It managed to reach a constitutional accord with the provincial premiers that will bring French-speaking Quebec voluntarily under its 1982 Constitution. It also successfully negotiated an energy agreement with the Western provinces that gave them a larger share of the revenue from oil and gas production. It helped prairie farmers with lots of money.

Mr. Phillips maintains the bad public image of Prime Minister Mulroney is unjustified. He says: ``There is a perception of the Prime Minister abroad in the land which is unflattering to him, which is misleading and ``unrepresentative of either his character or his competence.''

Mr. Mulroney ``is an exuberant political spirit who enjoys partisan combat. He is an Irishman who enjoys political oratory ... extravagant speech,'' Phillips admits. These ``less attractive'' qualities, he maintains, have been blown out of proportion in the public mind.

Phillips says he is trying ``to bring the public a more balanced appreciation of the government's overall record.''