COLUMN: Scorning a historic legacy

COLUMN: Scorning a historic legacy

The Kitchen Table Talk column featuring several MLAs speaks to how Saskatchewan paid down its debt

During the early years of the CCF/NDP in Saskatchewan, there was a government factory in Moose Jaw that churned out leather boots.

Premier Tommy Douglas and his MLAs used to run big ads in newspapers with bold headlines that said: “Buy Saskatchewan Government Boots.”

One old timer remembered that the boots had high tops and looked okay, but insisted that every pair had two left feet. Sure enough, the boot factory went under.

The CCF/NDP government had numerous other commercial start-ups (brickyard, fish plant, blanket factory, fur business, etc.) that all went broke or out of business. In 1946, Douglas created his government-run bus company. Known as STC (Saskatchewan Transportation Company), it maintained a kind of monopoly on routes within the province.

Peter Holle of the Frontier Centre for Public Policy said Douglas’ STC received more than $100 million in taxpayer subsidies. Brad Wall recently shut it down because another $85 million was needed to keep it going, and because every time somebody bought a ticket, taxpayers lost $94.

Investors were so uncomfortable with Douglas that private companies literally abandoned the province upon his election. One National Film Board production indicates that an earlier commitment to “eliminate capitalism” fuelled these fears.

The documentary states: “Big business in Saskatchewan was heading for the hills. Imperial Oil stopped exploration; Prudential Life withdrew financial support; the mortgage companies threatened to foreclose on the farms.” (Interestingly, Imperial Oil’s focus shifted to Alberta, and shortly thereafter, Leduc #1 was discovered.)

As odd as it sounds, Douglas never ran a deficit during 17 years as Saskatchewan premier. He said it was folly to run deficits because tax revenue would go to bankers in the form of interest rather than being spent on local programs to assist people.

Saskatchewan’s debt was $218 million (38 per cent of GDP) when Douglas was elected in 1944. By 1949, it was down to $70 million. In 1953, Douglas paid it off.

Douglas understood the tragedy of debt. But he wasn’t at all focused on private investment, and lacked appreciation for its vital and necessary role in the wealth creation process.

Historically, avoiding debt had been a priority for a number of NDP leaders. In Manitoba during the 1970s, Premier Ed Schreyer was a budget balancer, producing surplus budgets in eight of the nine years he served.

In the 1990s, Saskatchewan’s Roy Romanow also balanced budgets. Saskatchewan was deeply in debt when he took office. Things were so rocky that Romanow sent his finance minister to Ottawa to explain that the province was days away from bankruptcy. Deputy Prime Minister Don Mazankowski and the Bank of Canada engineered a bailout.

Romanow scrapped twenty government agencies/programs and cut program spending by 10%. He eliminated the province’s annual deficit within three years.

Ontario’s Bob Rae was the first NDP premier to dramatically rack up both taxes and debt. In one term of government, he moved Ontario’s debt from 13 per cent of provincial GDP to over 30 per cent.

Here in Alberta, rather than following the budget-balancing disciplines of bottom-line NDP realists like Douglas, Schreyer, and Romanow, Premier Notley is fully determined to lead Albertans in the debt tracks of Bob Rae.

She has committed the province to be $70 to $80 billion in debt by 2020, refusing even to acknowledge the impact such a burden will have upon Alberta businesses and families.

Kitchen Table Talk is a forum consisting of a small group of Official Opposition MLAs who each week, get together to talk through a legislative policy issue. As part of the process, a short commentary is compiled and edited. Editorial committee members include Grant Hunter (Cardston-Taber-Warner); Rick Strankman (Drumheller-Stettler); Scott Cyr (Bonnyville-Cold Lake); and Wes Taylor (Battle River-Wainwright).