Meet a western NDPer who could teach Paul Martin a thing or two
Published by the Ottawa Citizen, November 29, 2003
This week’s headlines suggested Paul Martin would chop HRDC, but anyone who’s read Janice MacKinnon’s Minding the Public Purse could have seen this coming. In a comprehensive yet up-close-and-personal look at the deficit-cutting era of the 1990s, she argues that Paul Martin’s 1995 budget had already determined Canada’s future. In fact, as a former Saskatchewan finance minister, MacKinnon knows so much about the era of deficit-cutting and its implications for Canada, it’s a wonder no one — Liberal or new Conservative — has drafted this erstwhile New Democrat for a key position in their future governments.
The 1990s was a watershed period in which decades of overspending by governments came home to roost and the era of deficit reduction began. Ahead of the pack were two western provinces. Alberta had a ballooning $3-billion deficit, an oil-primed Heritage Fund and a strong sense of fiscal rectitude when Ralph Klein took office in 1992, while Saskatchewan, unable to sell its bonds in New York and facing fiscal meltdown, acted out of dire necessity. “Shock, disbelief, and despair overwhelmed the cabinet at its planning session at Government House …(in) January 1992 as the Department of Finance laid out the full dimension of Saskat-chewan’s financial situation,” writes MacKinnon. She describes how a debt-free province in 1982 turned into a $14.8-billion debt-ridden basket case in the ’90s. This, plus a $1-billion deficit, says MacKinnon, meant Saskatchewan led all of Canada in debt per capita.
Under notice from the credit rating agencies and with an imminent downgrade to BBB category by Standard & Poor’s, Saskatchewan’s ability to borrow diminished precipitously. On top of that, an early frost in 1992 killed hopes for a bountiful harvest. So it was that, in early 1993, with a conflicted NDP caucus still harbouring orthodox views and an electorate still expecting, and often dependent upon, government spending, Janice MacKinnon became the country’s first female finance minister.
Formerly of Etobicoke, Mac-Kinnon was teaching at the University of Saskatchewan when she was recruited by Roy Romanow to be an NDP candidate in the 1991 provincial election that decimated Grant Devine’s Progressive Conservatives. Starting in the social services portfolio, she became minister of Crown Investments Corporation before moving to finance. The magnitude of the fiscal crisis was nothing short of terrifying, she says.
Besides the debt and the deficit, the Romanow government had to reckon with the new economy and the new battles that went with it. This meant defining a new, strategic role for government. It also meant a four-year deficit-reduction plan, plus at least one tough budget. In 1993, in one fell swoop, she closed 52 hospitals. Instead of selling government holdings for the sake of selling, Saskatchewan sold when the price was right. On the social front, it removed disincentives, to get people off welfare and into work. By 1995, Saskatchewan, along with Alberta, presented its first balanced budget.
By taking hard decisions, MacKinnon argues, Saskat-chewan and Alberta laid the groundwork for Paul Martin’s 1995 deficit-cutting budget. As a result, the Canada Health and Social Transfer changed the Canadian federation. With massive cuts to health, education and welfare, the federal government was no longer the major player in these programs. In return, the provinces were given more autonomy in service delivery. Federal-provincial relations would never again be the same.
At first fiercely opposed to the health and social transfer, MacKinnon came to understand the economic context that made it necessary. By offloading these responsibilities, Martin bought fiscal room to invest in other crucial areas such as the National Child Benefit and the Innovation Strategy, so necessary to Canada’s lagging international competitiveness.
Having embraced the changes of the 1990s, MacKinnon says both she and a colleague of the same era had a shot at leading the Saskatchewan people after Romanow retired. But neither, she says, could lead the NDP. Too many New Democrats in 2001 harked back to the 1970s. After three weeks in the newly elected government of Lorne Calvert, she left to resume her work in academe.
Today, she readily admits she never would have run for public office if she hadn’t been recruited. Citing the perils of being a woman in political life, she says, “You need a very strong reason to do it.”
Margret Kopala writes weekly on western perspectives.