Not Your Prairie NDP
Too often in politics, particularly during election campaigns, citizens conflate political brands with policy. That is, too often we make assumptions about the policies of political parties based on a perception rather than the reality of experience. Many assume, for example, that Conservatives care deeply about and pursue policies based on tradition, balancing budgets, and competitiveness while the NDP focus more on the poor and disadvantaged, strengthening unions, and restricting trade. The reality, however, is that policies are never that tightly woven with specific parties.
Consider, for example, the difference between the BC Liberals, whose policies have generally focused on making the province attractive for investment and the Ontario Liberals, whose policies have led to a marked deterioration in the provinces investment climate.
Another example is the difference between the experience of the Prairie NDP and that of their BC and Ontario cousins. Adrian Dix, the leader of the BC NDP, has put forth policies that resemble the policies of the past BC NDP and Ontario NDP.
This doesnt need to be so. Dix could embrace a Prairie NDP vision that has served those provinces and the NDP themselves well.
Two key economic issues highlight this intra-NDP divide: deficits and taxes.
The BC NDP have proposed eliminating the provinces balanced budget law and extending deficits for at least two years longer than the Liberals have proposed. In addition, the BC NDP have recommended increasing the corporate income tax and top personal income tax rates.
This means additional debt and higher interest costs than would otherwise be the case, and a markedly less competitive tax system. This is generally in line with the BC NDP policies of the past and the Ontario NDP starting in the late 1980s under Bob Rae.
It would be a mistake, however, to correlate the BC and ON NDP acceptance of deficits, higher debt, and higher taxes as a blanket view of debt by the NDP. The history and experience of the Saskatchewan NDP offers a marked alternative.
What many Canadians have forgotten including members of the NDP is that the Saskatchewan NDP under Premier Romanov was the first province in the 1990s to genuinely tackle its deficit. In 1991, the SK NDP took steps to reign in their deficit by both cutting spending and increasing taxes. In 1994-95, Saskatchewan and Alberta were the first governments in Canada to balance their budget, paving the way for the federal government and others to follow.
The SK NDP used balanced budgets to improve their competitiveness by lowering taxes, which strengthened the economic incentives in the province for work effort, savings, investment, and entrepreneurship, all of which are needed as a foundation for economic prosperity.
Specifically, in 2000, the SK NDP announced a major overhaul of their personal income tax system, which included simplification and the lowering of all three tax rates, including the top rate. This meant SK had the third lowest personal income tax rate for high-income earners.
The SK NDP followed up on these reforms with a major overhaul of business taxes in 2006. They massively reduced the use of corporate capital taxes and significantly reduced its corporate income tax rate from 17 per cent, which at the time was the highest in the country to 12 per cent, one of the lowest at the time.
The SK NDP understood that in order to provide the services to citizens they wanted to, they needed a prosperous economy. They also understood the risks of deficits and debt, and the importance of incentives like tax rates. In many key ways, it was the NDP in SK that laid the foundation for the provinces current prosperity.
These policies also led to political success for the SK NDP. They enjoyed four consecutive governments from 1991 to 2007, three of which were outright majorities.
Unfortunately, the BC NDPs policies thus far reject this Prairie approach and instead revert to the historical policies favoured by the BC and Ontario NDP. Whats striking is that such policies have failed to lead to robust economic growth or political success. Both the BC and Ontario economies struggled under similar sets of policies in the past and the tenure of the NDP in both provinces was short-lived compared to the Prairie experience.
Learning from the past can help avoid repeating mistakes in the present and increase the chances of success. The BC NDP and the province they very well may lead later this month would be well served by understanding the successes of their Prairie NDP cousins.
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