Thursday, 24 January 2013

NDP Swings to the Right under Roy Romanow

The CCF-NDP began as a broad popular movement of people and organizations who wanted to see the development of a more egalitarian and democratic society. They were elected with a strong majority in 1944, and down through 1964 they were able to introduce a progressive taxation regime, expand democratic and human rights, introduce a range of social policies, expand public utilities across the province, and introduce legislation to try to defend the family farm.
Political right demonstrated against Medicare

They were replaced by the “free market”  Liberal Party between 1964 and 1971. But little changed in the province. In the election of 1971, the NDP again swept back into office under the leadership of Allan Blakeney. This new NDP government engaged in “province building,” introducing policies which began to transform the ownership and control of the natural resource sector of the economy. Resource royalties were raised significantly, capturing more of the economic rent for the people of the province. A number of Crown corporations were created, demonstrating that the people of Saskatchewan were fully capable of running their own affairs.

From 1982 to 1991 Grant Devine’s Progressive Conservative Party formed the government. They reversed the course, implementing a neoliberal strategy modeled after that of Margaret Thatcher’s Conservative government in Great Britain and Ronald Reagan’s Republican administration in the United States. Devine’s government began to privatize most of the Crown corporations in the natural resources sector. But when they moved to split the natural gas sector from the Saskatchewan Power Corporation and privatize it, the general public rose in opposition. The Saskatchewan Coalition for Social Justice took a strong public stand against the Devine government, organizing actions and demonstrations, which boosted support for the NDP. The October 1991 election returned the NDP to government, backed by a majority of the voters.

The NDP Makes a Great U-Turn under Roy Romanow

The general public, and those who voted for the NDP, expected the new government to return to the progressive social democratic tradition of the Saskatchewan NDP. But the new leader, Roy Romanow and his key cabinet associates, had a very different agenda. It involved a radical departure from the policies of previous CCF-NDP governments.

First, the NDP government contracted with Westmount Research Consultants to poll the general public on attitudes on policy options. The results released in November 1991 were clear: the public expected a real change in direction from the Devine years. The top priorities were seen to be job creation and combating hunger and poverty. The majority opposed cutting public services. There was no concern expressed about the budget deficit or the provincial debt.

As former finance minister Janice McKinnon reports in her memoire, something had to be done to “curb the appetite” for new programs and spending.. The Romanow government was planning a “very tough 1992 budget,” and the public had to be warned. John Penner, the new Minister of Energy and Mines, proclaimed that there would be no increase in resource royalties and no attempt to take back public control of the privatized Crown corporations, a flat repudiation of NDP policy and campaign promises.

The Romanow government appointed the Financial Management Review Commission, headed by Donald E. Gass, an accountant with Deloitte and Touche. By employing accounting techniques never used before in an assessment of a government’s fiscal condition, Gass came up with a total accumulated debt of $8.9 billion, including Crown corporations, twice the estimate set by the Devine government. The report concluded that the economy of Saskatchewan “can no longer support the public sector infrastructure that we have built to serve the quality of life and standard of living we have come to expect.” This was just what the Romanow government wanted. The report was praised by all the prominent business organizations and the Fraser Institute.

Romanow crushes the democratic opposition

The Saskatchewan Federation of Labour and the Saskatchewan Coalition for Social Justice did not surrender. The trade unions hired Jim Sentance, professor of economics at the University of PEI, to review the Gass report. Sentance concluded that by using very unusual accounting techniques the commission had misrepresented the size of the debt. He argued that the provincial books “were not that out of line with other provinces and that the trends do not show all bad news.” He pointed out that there was no reason to believe that the Romanow government had to follow the taxation policies of Grant Devine’s Progressive Conservative government. Once there was a recovery in the Canadian economy, and provincial revenues again began to increase, the deficit would be resolved. It was a matter of the business cycle.

In March 1992 thirty representatives from the Saskatchewan Coalition for Social Justice met with the new NDP cabinet. They argued that the NDP government should reject the neoliberal program being advocated by the business community. The general public was expecting a return to the progressive policy direction of the historic CCF-NDP. They called for the NDP to implement the party’s platform and the policy set by party conventions.

The Saskatchewan Federation of Labour, a key organization in the Coalition, pointed out that when the government of T. C. Douglas took office in 1944 the province’s debt was much higher as a percentage of the operating budget than that facing the Romanow government. The CCF government chose to pay off the debt over 20 years, bring in a progressive taxation system, and put a high priority on establishing new economic and social policies. To finance the fiscal shortfall, the Douglas government issued Saskatchewan bonds, which proved to be very popular.
The NDP should follow this script.

The Romanow government meets with its allies
The political direction of the Romanow government was demonstrated over the weekend of April 23, 1992. While the Provincial Council of the NDP was meeting in Saskatoon, down the road Roy Romanow and his inner cabinet were hosting a secret meeting with 35 of the province’s top business leaders. The meeting to discuss economic priorities was chaired by Romanow and Harold MacKay, a prominent Liberal lawyer. As Janice Mackinnon has noted, the purpose of the meeting was to assure the business community that the the NDP government “would not return to the 1970s, with its high royalties and big government.” The Romanow government would “create the right climate for investment.” Two key people at the meeting, Roger Phillips of IPSCO and Paul Hill, wealthy Regina businessman, had been key advisers to the Devine government. They would become key advisers to the Romanow government as well.

The break with the NDP’s “province building” tradition was formally set forth in the new policy paper, Partnership for Renewal, released in November 1992. Aside from the rhetoric, the Romanow government again pledged to create a “regulatory environment in which it is easier for business to operate” and introduce “a competitive tax system for business.” A joint government-industry committee was created to review energy royalty rates.

The struggle over the first budget
The first NDP budget was released on May 7, 1992. In spite of the fact that unemployment in the province had reached 9.2%, the highest in history since the 1930s, it was a complete rejection of the pledges made in the January 1991 NDP caucus policy paper, Tax Fairness for the 1990s. There were a range of tax increases as well as draconian program cuts, even to medicare, education, and social programs established by the Blakeney government. There were major cut to grants to the municipalities and school boards. Public utilities would maximize profits and pass them on to the provincial government. The Romanow government pledged to introduce gambling casinos. The budget received high marks from the Fraser Institute.
The Saskatchewan Federation of Labour and the Saskatchewan Coalition for Social Justice argued that this was the worst possible time for the NDP government to be cutting government spending, right in the middle of a serious recession. But Roy Romanow told the Saaskatchewan  Chamber of Commerce on May 7, 1992 that “History tells us spending our way out of the recession is not a realistic option.”

There is no need to revisit here the record of the Romanow government in office. (See Study) The policies were consistent with the neoliberal package which followed the free trade and free market agendas set by big business. But it needs to be recognized that this dramatic shift to the political right was a strong repudiation of the CCF-NDP tradition of social democracy. It would have a major effect on the membership of the NDP and the support it received from the voters.

CCF election poster

What was the public’s reaction to the policy U-turn? 

Dale Eisler, political columnist for the Leader Post, wrote on June 4, 1992 that “You don’t have to scratch very deeply in NDP ranks these days to find those who are disillusioned with Romanow and his government. In fact, the strongest feeling against this government is actually amongst people who consider themselves New Democrats.”
A Leader-Star Services public opinion poll released on October 16, 1993 reported that 52% of respondents said the policies of the Romanow government made them less likely to support the federal NDP in the upcoming election, including 48% who reported that they normally vote for the party. Asked if there were a provincial election tomorrow how would they vote, only 26.9% said they would support the NDP; 34% were undecided.

On December 24, 1993 the NDP government released a public opinion poll they had commissioned. The poll asked: “What has the current government done so far that you particularly like?” Of those surveyed 49.3% replied  “Nothing.”

Murray Mandryk, political columnist for the Leader Post, declared that the Romanow government “governed like responsible Tories.” They were pro-business and put a high priority on cutting government spending. On September 21, 1994 he commented that “Roy Romanow will ask voters for his second mandate with his one and only agenda item fulfilled – a balanced budget.” As he concluded, “Compared to the Devine government ... this NDP government is arch-conservative.”

A month later his colleague Dale Eisler agreed: “The Roy Romanow government is far more conservative, especially in terms of fiscal and economic policy, than the former Tory government of Grant Devine. In fact, the issues on the agenda today - things like less government, economic deregulation, more targeted social programs, law and order – have traditionally been the policies of the Progressive Conservative party.”

The radical shift to the right by Roy Romanow’s government would have a dramatic impact on public support for the party. There has been a steady collapse in party membership and voter support in subsequent elections. The end result has been an NDP today which is a weak opposition party. Yet the party, and the four young men seeking to be its new leader, refuse to have an open discussion on why this has happened.

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