Fiscal Lessons from “Combat Barbie”

Frontier Centre, Role of Government, Uncategorized, Worth A Look

Janice MacKinnon earned the nickname “Combat Barbie” as Saskatchewan’s New Democratic Party finance minister from 1993 to 1997. She did not mind the moniker “because it bespoke a toughness which I believe is absolutely essential for success in the rough and tumble world of politics.”

MacKinnon had to be tough. Saskatchewan’s finances had deteriorated sharply under the profligate (and venal) Conservative government of premier Grant Devine, one of the worst provincial governments in the past quarter-century.

The province’s credit rating had fallen from among the highest to one of the lowest. The provincial deficit was skyrocketing. Crown corporations had huge and bad debts. The New York money managers were not amused.

Reining in government is not what New Democrats generally want. Yet Saskatchewan in 1992 and 1993 had no choice. MacKinnon had to be “Combat Barbie,” and she was. The NDP cut government spending dramatically. The province’s fiscal situation improved. The money lenders upgraded Saskatchewan’s credit-worthiness. And the NDP got re-elected. It was precisely the formula later followed by the federal Liberals.

Minding the Public Purse is a record of those years, but much more. It is a book of hard-won wisdom, experience and prescription because MacKinnon offers lessons for governments, New Democrats and all Canadians. Her lessons, learned the hard way, should be heeded, but are already being ignored — with one exception.

That exception is fiscal prudence. For two decades, from the mid-1970s to the mid-1990s, Canadian federal governments ran nothing but deficits. Ottawa’s fiscal situation kept deteriorating, the national debt exploded, provincial deficits rose. As MacKinnon says, it was a march of folly because “running deficits to protect people from today’s hardships was merely handing the bills on to future generations.”

Saskatchewan and several other small provinces led the way back toward fiscal sanity. In retrospect, we can only shake our heads at the two decades of fiscal craziness in which Canadians demanded ever more from their governments; that, in turn, fed the deficit fires.

MacKinnon passionately makes the case for fiscal prudence, a position grounded in common sense and basic economics, both of which are often anathema to New Democrats. Even in Saskatchewan, where New Democrats tend to be more fiscally reliable than their cousins across Canada, fierce NDP opposition attended the attack on the deficit. There, as elsewhere, people and writers read by the left (Linda McQuaig, Neil Brooks, Maude Barlow) remained in la-la land about the perils of deficits and the need to curtail them.

MacKinnon, therefore, had to battle elements of her caucus and rank-and-file, but she won most of those fights, although some of her tough choices left her “heartsick.” She stoutly argues that Saskatchewan’s cuts were tougher, but more humane, than Alberta’s under Premier Ralph Klein. Readers can judge that argument for themselves.

MacKinnon chose not to run for the NDP leadership upon Roy Romanow’s retirement, or even to remain in the legislature. She quit politics, and it’s not hard to understand why.

The NDP, she argues, remains locked in a 1970s mentality, clinging to out-dated ideas about the role of governments, its limitations and fiscal constraints. Not many New Democrats federally, and only some provincially, would accept and act on her credo: “No longer able to be all things to all people, governments, like other organizations, [have] to be strategic and make choices.”

She is among those New Democrats who had all but given up on their party. This is an enormous pity for the NDP and for Canada, since her kind of hard-headed, soft-hearted social democracy would make the NDP a serious national force in Canada (outside Quebec), instead of a party receiving half the share of the national vote it did a generation ago.

All governments must make tradeoffs; finance ministers make more than any minister. Perhaps for that reason, MacKinnon has publicly broken with her former boss, Romanow, over health care. Those who don’t care to parse the ins and outs of Saskatchewan affairs in the 1990s might usefully read, however, her book’s arguments about health care.

Those arguments are straightforward: Keep spending at current rates on health care and watch everything else get squeezed, from social welfare to universities to economic development. This is the argument she had privately with Romanow before his report was published, and publicly thereafter. There has to be more room for private delivery, as in every other country, or health care will eat governments’ budget alive.

She, and those who think as she does about health-care financing, lost the debate inside the Romanow commission, with political actors and the general public. Canadians wanted, and Romanow delivered, Medicare plus: more public health-care with no additional taxes and no loss of other government programs.

This illusion will be revealed, in due course, when budgets for many other programs are squeezed. At which point, governments will need new versions of “Combat Barbie:” smart, focused and tough.

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