An Open Letter To Brad Wall

December 1st, 2016 | J. Hodgson
to brad wall

“Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may make you feel like you're flying high at first, but it won't take long before you feel the impact.” ~ Barack Obama

I’ve been a Saskatchewan Party supporter since the Elwin Hermanson days. I volunteered for my local candidate in the 2003 election and sat in my car listening in disappointment to the results on November 5, 2003. I attended Brad Wall’s kick-off upon becoming the new leader a short time later, but for me it was too late. I was young and ambitious and I did what so many others were doing in that era and I moved to Alberta. I thought Saskatchewan was a socialist lost-cause and Alberta was a conservative shining-light. (Wow how times have changed.)

Brad Wall and the Saskatchewan Party proved me wrong in 2007 and turned Saskatchewan into a prosperous and dynamic province. The population boomed and business flourished. Some at Poletical still had a pessimistic view of the situation, but for most conservatives, not being the NDP proved to be good enough. The problem is that the province rode a commodity-induced wave of good times, without anticipating the inevitable downturn that followed. This is a timeless tale and one that the Saskatchewan Party is now scrambling to deal with.

A $1 billion deficit has been announced. The worst since 1986-87. I’ve warned in these pages before that Brad Wall could go the route of Grant Devine...another good Saskatchewan guy that started out a hero and ended up despised. Perpetual deficits lead to Grant Devine’s rise and fall and we spent the 90’s in Saskatchewan suffering with the consequences.

For people of Brad Wall’s vintage, the 90’s in Saskatchewan has been burned into the psyche. The consequences of 20 years of borrowing-to-buy at both the federal and provincial levels of government came to a head and caused ferocious suffering. Bankers issued their orders and governments of all stripes did as they were told. For conservatives of this era, the lesson learned was loud and clear...avoid deficits or austerity will soon destroy your wealth and freedom. It was this ideology that won prominence throughout Canada for a period of about 8 or 9 years. Conservatives thought the issue of fiscal conservatism had been conclusively settled and proceeded neglect the issue. The boom times leading up to 2014 (with a brief exception in 08-09...which was perceived to have been solved with deficits) ended with an oil crash. 90’s-style conservatism was officially shown the door with the defeat of budget-balancing Stephen Harper to a deficit-promising Justin Trudeau. 

Here’s the worry…

The 90’s so scarred conservatives that came-of-age during that era that they are conditioned to recoil from deficit spending. Being fiscally conservative is so matter-of-fact in conservative circles, that many good leaders like Brad Wall, are surrounded by an ideological bubble from a bye-gone era. If Brad Wall and the Saskatchewan Party turn to austere measures in order to balance Saskatchewan’s books, they’re going to find a hostile populace that will turn on them with a vengeance.

“But that’s not what happened in the 90’s!” conservative critics might say.

Well, I hate to inform them...but it’s not the 90’s anymore.

Fiscal conservatives need to get over their obsession with balanced budgets, eliminating deficits and paying down debt. Without fail, over many decades, at every level of government, Canadians have sold their votes to the highest bidders. They only ever embrace fiscal conservatism temporarily, to be jettisoned as quickly as possible when a crisis passes. Preaching and practicing fiscal restraint for its own sake is pointless when you know your opponent is going to defeat you by calling you a tight-fisted meanie and promising caviar in every pot. And then spending every nickel of budget surplus or borrowing room you created.”     – Jeff Hodgson, Give the People What They Want

Click the above link. It’s one of the best things I’ve ever written and clearly outlines the problem that conservative governments face in a centre-left country like Canada. For a practical set of principles enabling the solution in the above article, check out this follow-up article called, A New Strategy for Fiscal Conservatives.

What’s the basic message?

Canadian citizens aren’t fiscal conservatives. If you force cuts on them they’ll make you pay at the ballot box. Even if you succeed in balancing the budget with tough decisions, nobody will respect it and you’ll seal your own fate. Even’ll simply create capacity for a newly elected leftist government to go crazy with the government credit card.

Instead of front-loading deep cuts, go in the opposite direction. Use this crisis to create some big projects and radical policy initiatives that will get big exposure and pay bigger dividends. What kind of stuff am I talking about? How about…

#1. Building a nuclear power plant. Saskatchewan residents are open to the idea. It would support Saskatchewan’s uranium industry. You could spin this off by increasing funding to the Fedoruk Centre and build a bigger nuclear research hub around the University of Saskatchewan. SaskPower would also have a whole new wing.

#2. Send out “Brad bucks”. People loved it in Alberta when Ralph Klein sent everyone a $400 dividend cheque. The biggest criticism was that he did it during a time of economic expansion and it added to inflation. If the Saskatchewan Party cut everyone in Saskatchewan a cheque for $1000.00 it would cost $1.13 billion. Left-wingers keep advocating a guaranteed income program...start with Brad bucks!

#3. Or raise the basic personal exemption on income tax to $20,000.00 which would cost roughly the same amount. Saskatchewan Party helping poor working people where it counts: the pay cheque. Everyone has extra cash in their pocket...which they’ll immediately spend in the economy...because they’re 21st century Canadians. It’ll grease the economy at the grassroots level.

#4. Get Saskatoon a CFL team. Regina’s new stadium dumped hundreds of millions of dollars into the local economy. Pitch a CFL team to your business buddies and promise a massive grant to build a stadium. Lot’s of votes in Saskatoon. Four years is plenty of time to break ground and set up an expansion team.

#5. Eliminate the PST. This would cost $1.3 billion a year. People would love it. They would LOVE it. Look at Alberta. It’s a third-rail issue that even Rachel Notley won’t touch.

There’s five ideas free of charge. I’m sure your army of staff could come up with loads more. It would be a lot more fun doing this stuff than nickel-and-diming poor people living on SAID. Why piss off people bit-by-bit in order to balance a budget that nobody wants balanced anyway?

I know what you’re thinking: but someone is going to have to pay the piper.

Saskatchewan’s debt-to-GDP ratio is low. Congratulations, you made it that way! Now use up the capacity over the next four years and easily win a fourth-term. Right now the debt-to-GDP level is only 11.6%. For comparison, Ontario’s is 40.3% and Quebec’s is 48.1%. Even if Saskatchewan moved the debt-to-GDP ratio up to British Columbia’s measly 15.6% level; Saskatchewan would have over $12 billion to play with in the interim. This is easily affordable, especially when interest rates are low and (despite “experts” telling us every year to the contrary)...likely to stay that way.

(In the 90’s we didn’t run into much trouble until we hit about 30% debt-to-GDP, at a time when interest rates were around 8%.)

I believe that despite some recent missteps, the Saskatchewan Party is still the best option to govern Saskatchewan. A Saskatchewan headed by some new-left NDP government blowing provincial savings on green schemes and union gifting is a horrible thought. A fourth Saskatchewan Party term is easily possible so long as Wall avoids austerity and instead thinks big.