Conservatives say they’re great for the economy. Are they?
ELECTION by Gregory Beatty
Come April 4, Brad Wall and the Saskatchewan Party have an opportunity to make history. Not since the CCF/NDP was first elected in 1944 has a centre-right party won three straight provincial elections.
The last to have a shot at it was the Grant Devine Progressive Conservative party which was elected in a landslide in 1982, then re-elected in 1986. But by the time the 1991 election rolled around, the Tories were floundering and Saskatchewan was adrift in a sea of debt and scandal, and the Roy Romanow NDP swept to power.
Wall was a junior staffer in the Devine government, so he remembers those days well. Happily for him, and his party, the province is in better shape today. Happily for Saskatchewan too, as the Devine PCs are considered one of the worst provincial governments in Canadian history and we don’t want to revisit those years [see sidebar].
With hare-brained schemes such as Fair Share Saskatchewan, a “giv’er snoose” attitude to megaprojects and other ill-advised business ventures, injudicious tax cuts and lavish election promises, and rampant corruption, the Devine government dug its own grave.
But, in fairness, they did deal with some tough economic conditions. The 1970s had been good to Saskatchewan. Commodity prices were high, and the Alan Blakeney NDP used abundant resource revenues to expand social programs and invest in oil, potash and other key industries.
By the early ’80s, though, inflation was rampant. Interest rates reached 20 per cent, resource prices plummeted, and agriculture was hit hard by drought from 1986-88.
Couple that with countless self-inflicted wounds and the Tories were D.O.A. on election day.
Like Blakeney, Wall has governed during boom times. Economists use the term “supercycle” to describe the demand effect China, India and other developing countries had on world commodity markets.
But for over a year now, resource prices have been weak, and that’s provided a major hit to the economy. Unemployment is up, and, counting the $700 million the government’s borrowing to pay for infrastructure, we’re on course for a $1.2 billion deficit which will boost our overall debt to $13.55 billion.
Those are Devine-like levels of red ink — although, again in fairness, the economy is much larger now, so the relative scale of the deficit and debt to overall GDP is much less. Still, Wall is on track for five deficits in nine years, so comparisons to the Devine years aren’t unwarranted.
“I was in opposition between 1986-91,” says former Saskatoon NDP MLA Pat Atkinson. “One thing that always struck me about the Devine government is they didn’t really care how much money they spent. They just spent it, regardless of whether it made sense.
“Since Brad Wall took over, this is something I’ve been watching. They spend money too. And they do that regardless of the need to be prudent. In Saskatchewan you need to be prudent because we’re subject to the ups and downs of the commodity market.”
Atkinson finds one number particularly alarming. “When the NDP left government in November 2007, the annual operating costs were $8.5 billion. According to mid-year estimates in November, so that’s eight years later, it’s $14.2 billion. That’s stunning!”
Boosted by the early days of the commodity supercycle, the Lorne Calvert NDP left Saskatchewan in good financial shape, says Atkinson. “The public debt was $10.5 billion; now it’s over $13.4 billion. The NDP left $1.5 billion in the fiscal stabilization fund and $1 billion at CIC [Crown Investment Corp.]. The fiscal stabilization fund is gone, and the debt has increased at a time of record resource prices.”
The Wall government deflects criticism by arguing it’s made substantial investments in infrastructure to improve Saskatchewan’s productivity and provide needed services for a growing population. But it’s also spent frivolously: smart meters, carbon capture, the Regina bypass, Global Transportation Hub, and lean come immediately to mind.
As politicians, Wall and Devine are renowned for their folksy populism.
Atkinson says running government isn’t a popularity contest.
“You have to be fiscally prudent when you’re making choices on behalf of citizens,” she says. “When you perform for every audience, and dole out public resources to every audience, it’s easy to be popular.
“It’s like the guy down at the local watering hole with a wad of money buying everybody a drink. He’s popular, and he does it for eight years, then the market collapses and he goes to the bar without any money. Suddenly, no one’s that interested in him. And he’s got some explaining to do at home, too.”
Birds Of A Feather
Devine and Wall have something else in common besides folksy charm — their centre-right politics. Typically, such governments tout themselves as good economic stewards. But evidence shows that’s not always true.
“I think the explanation for that is the close ties conservative governments have with business,” said University of Saskatchewan political scientist Charles Smith in a recent interview on the book Transforming Provincial Politics (about neoliberalism in provincial politics), which Smith co-edited.
“One reason I think social democratic governments tend to be better fiscal managers is they don’t have that close connection with business. Conservatives don’t get themselves in trouble overspending on social programs; they get in trouble through giveaways and subsidies to business, [and] privatization and reckless tax cuts which create deficits.”
Smith cites Alberta as a prime example. University of Alberta political scientist Steve Patten contributed that chapter to the book in which he examined the instrumental and structural ties between the PC government and oil industry.
“Business exerts its influence in two ways,” Patten said in an e-mail exchange. “First, individuals within the business community have instrumental ties (personal relationships and interactions) with government. This allows them to share views and influence policy decisions.
“Second, the business community has ‘structural’ power in that public statements of concern (hints that a policy will undermine business confidence and reduce investment and economic growth) put pressure on government to adjust their policies.”
Governments should welcome input from business, because it’s an important part of society. But if business influence is too overt, history suggests that ordinary citizens suffer.
The Saskatchewan Party was founded in 1997 by disgruntled Liberals, PCs and Reformers, and it relied heavily on support from Calgary’s oil patch in its early years.
Eventually, Wall rode the oil pony to power. And it continues to be his favourite mount.
Contrast his pleas for oil industry relief today with the casual axing of the film tax credit in 2012, which cost thousands of workers their jobs (with the devalued dollar, by the way, that’s an industry that’s BOOMING in Canada these days).
“In many ways, neoliberalism has been a step back economically because we’ve moved away from secondary manufacturing and value-added economic development to the old way of taking stuff out of the ground and selling it,” Smith says.
“As we’re seeing today in Saskatchewan and Alberta, that’s incredibly unstable.”
The Bad Old Days
The Sask Party’s NDP-bashing is unfair and arguably hypocritical
Sask. Party attack ads regularly harp on the theme of not returning to the bad old days of the 1990s when the NDP were in power and Saskatchewan was an economic basket case.
The irony, of course, is that the NDP were massively burdened by the mess the two-term Devine government left behind.
Before the 1991 election, says Pat Atkinson, the NDP knew there were problems, but the party had no idea what it was in for.
“We didn’t know how bad it was. We came into government and issued some bonds, and the market didn’t buy them. If it hadn’t been for Brian Mulroney’s P.C. government sort of helping us out, we would’ve been bankrupt.”
Still, the Romanow government was forced to make some agonizing decisions.
“I can think of tons that broke our hearts,” says Atkinson. “For those of us who were activists, we didn’t go into government to cut. We wanted to make people’s lives better, not worse. And here we were stuck with this mess from a government that couldn’t say no to anybody.”
To this day, the NDP pays a political price for its austerity measures — especially in rural Saskatchewan, where it was forced to close hospitals and consolidate other public services after the Tories spent recklessly to win rural support.
Now, for the first time since its 2007 election, the Sask. Party is facing rocky economic waters, says Atkinson.
“The gravy train is over, and Wall has to start making hard decisions. What I worry about is that he’ll do exactly what Devine did. He’s going to go into this election, he may win, and then he’s going to start selling off public assets to pay for his foolery in the last eight years.”
And just like the PCs in 1991, she adds, the Wall government is being less than forthright with Saskatchewan voters heading into the election.
“Grant Devine adjourned the legislature in June. They never passed a budget, and were using special warrants. Now, before this election, we don’t have a budget, so we’re going into the election blindfolded as citizens.” /Gregory Beatty