Saskatchewan's Social and Economic Accomplishments—An Example for an Alternative National Agenda

Head Table Guests

Marnie McGarry, Director of Development, Adventure Place, Calico School and a Director, The Empire Club of Canada; Benjamin Lord, OAC student, Oakwood Collegiate; Jim Estey, Joint Managing Director, Bunting Warburg (born and raised in Saskatchewan); Bruce Rivers, Executive Director, The Children's Aid Society of Metropolitan Toronto; David Wilson, President and Deputy CEO, ScotiaMcLeod Inc.; Janet Ecker, Ontario Minister of Community and Social Services; Steve McGirr, Vice-Chairman, Wood Gundy Inc.; Larry Stout, CTV Journalist and Broadcaster and a Director, The Empire Club of Canada; Rosemarie Popham, Executive Director, Campaign 2000--a coalition of 50 groups across the country that are monitoring the progress of governments in eliminating child poverty; The Rev. Canon Timothy Elliott, Rector, Christ Church Deer Park; Peter Warrian, Former Chief Economist, Province of Ontario and Senior Research Fellow, Centre for International Studies, University of Toronto; and Reay Mackay, President and COO, RBC Dominion Securities Inc.

Introduction by Julie Hannaford

If the province of Saskatchewan is known for one thing, it must be known for its resilience to extremities, for in its career since Confederation it has weathered the great extremities for which our Canadian environment is known. As the agricultural bread basket for Canada, Saskatchewan has weathered its way through drought, pestilence, flood and every other imaginable barometric extremity that Mother Nature could dish up.

Most recently, however, Saskatchewan's environmental extremities have been less of a challenge, and more of a metaphor for the economic extremities that have confronted the province.

In 1991, our guest, The Honourable Roy Romanow became Premier of Saskatchewan. For those of us following the news over the last two weeks, we know that Premier Romanow has confronted an economic situation that latter-day psychologists (dedicated to positive verbal spins) would brightly call a "significant challenge," and which more pragmatic realists would tersely describe as a "crisis."

The story of how our guest managed the province through its most significant fiscal extremity in history is already becoming a part of Canadian economic history, and might well serve as a blueprint for both business and government confronting similar challenges today and in the future.

Premier Romanow was born, raised, and educated in Saskatchewan, having received his degrees in arts and in law from the University of Saskatchewan. He began his political career with his first election to the Saskatchewan Legislature in 1967, after which he was re-elected in 1971, '75, '78, '86, '91, and '95. In the government of Allan Blakeney, Premier Romanow served as the Deputy-Premier of Saskatchewan as well as Saskatchewan's Attorney General, during which time he introduced reforms of the judicial system including legal aid, the development of a Human Rights Code and a Human Rights Commission and the creation of the Ombudsman's Office. Our guest played a key role in the federal-provincial negotiations resulting in the Constitutional Accord of November, 1981.

Our guest was acclaimed Leader of the New Democratic Party, succeeding Allan Blakeney on November 7, 1987. In 1991, Mr. Romanow led the Saskatchewan New Democratic Party to a 55-seat majority government.

Today, the Premier offers an overview of the fiscal reforms and philosophy that led Saskatchewan out of the economic wilderness. But it is important to remember that in addition to his fiscal steerage, the Premier also has been dedicated to the development of a comprehensive programme to address the role of the child in society, including a Child Action Plan, the creation of a Children's Advocate, and legislation to protect victims of domestic violence. Saskatchewan has set an example for fiscal and social leadership, and The Empire Club of Canada is honoured to have as its guest, the pioneer of that new model.

Please join me in welcoming to The Empire Club of Canada today, the Premier of Saskatchewan, The Honourable Roy Romanow.

Roy Romanow

Mr. President, members of The Empire Club, and friends. I want to begin by thanking you for inviting me to address you.

I want to speak today about three topics. First, I would like to give you a brief report on Saskatchewan's most recent provincial budget, and on our economic situation. Second, I want to speak to you about some of the principles and values that underpin that budget and our vision for our province into the 21st century. And third, I want to speak very briefly about how our approach might point the way to something like an alternative Canadian agenda, an agenda at least worthy of national debate.

Let me begin by telling you briefly about our provincial budget and our economy. We've been in office for nearly six years--to be exact, five years, five months, and two days. But hey, who's counting? Sometimes, some days, I did. In 1991 our province was running, on average, a billion-dollar deficit each and every year. In the result, the provincial debt was run up to $15 billion--costing our treasury at its peak over $880 million in annual interest costs. Back then, my trips to New York to visit with our bankers and bond raters were not quite as pleasant as this one.

Just to give you a flavour of those days, here is a quotation from a report issued just last April by the Bank of Canada: "...Saskatchewan, where debt accumulation was particularly rapid, stands out as the province that experienced the largest number of downgrades as well as the largest cumulative reduction in rating (of any province in Canada). Based on Standard and Poor's ratings, the long-term debt of Saskatchewan was downgraded in five steps between 1986 and 1992 from AA+ to BBB+. The number of prospective institutional buyers of Saskatchewan bonds is estimated to have fallen from 125 to 140 when the province's rating was AA+, to about 25 to 30."

So, as you can see, this was a situation that called for immediate and bold action. We opened the books. We told the people of Saskatchewan about the challenge. And we laid out a four-year plan of recovery. Tough decisions about government spending and services were made. In some cases, we had to cut; in some cases, we had to redesign; and in some cases, we had to increase revenues. Through it all, however, the people of Saskatchewan showed their mettle-pulling together, sacrificing, and rebuilding. And so today, I have a different and much happier story to tell.

This year, we presented our fourth straight balanced budget. No other government in Canada can say this. Let me give you some of the highlights.

The banner news was a dramatic two-point cut in our sales tax. From nine per cent to seven per cent. This new seven-per-cent rate, charged on the narrowest tax base of products and services in all Canada with the exception of the province of Alberta, means that our families now pay the second-lowest sales tax. Although Alberta has no sales tax, they do charge their citizens annual $860-per-family health premiums. So, one might say, what you win on the oranges, you lose on the bananas.

We are also adjusting our business-tax regime to make it as competitive as possible. For example, Saskatchewan now has the lowest effective tax rate on manufacturing and processing in Canada, for both small and large firms. And two years ago, we introduced an income-tax reduction which removed over 6,000 taxpayers from the rolls.

Tax cuts were a good place to start, but we are doing more. Today, we're able to envision a programme to improve the quality of life of our citizens. We call that programme or vision "investing in people." How?

• First, investing in jobs, our top priority. A five-year blueprint to increase employment. The tax cuts just outlined are central to that strategy.
• Second, investing in education. More for work force training; for better university training; and for better elementary and secondary education to give our kids a "head start."
• Third, investing in health care--more for seniors' care; for modernising the system; and for better community-based services;
• Fourth, investing in infrastructure, particularly in transportation to maintain our transportation system--a critical investment in our economy, given the on-going erosion of Western Canada's transportation network; and
• Fifth, investing in our children, and particularly in combatting child poverty.

Just an extra word on this issue. Friends, in 1995, the Canadian Conference of Catholic Bishops said: "Almost one Canadian child in five lives in poverty in one of the richest societies in world history, a damning indictment of the present socio-economic order." They're right. This begs for a national response--and as soon as possible. But we're not waiting. At the provincial level, this year we doubled funding for Saskatchewan's unique Action Plan for Children, an integrated set of services targeted at child poverty. Our Action Plan has been recognised by the Children's Welfare Society as the best of its kind in Canada.

At the national level--where the real solution must be found--we're strongly and repeatedly urging the integrated National Child Benefit. Ottawa responded with a slow start in the right direction in this year's federal budget. Their initiative is welcome but is delayed by 18 months and has no road map to reach our destination. I want to stress that Canada has an opportunity to demonstrate again our values of compassion and opportunity if we have the courage to arrive at an early agreement on this issue. Successfully implementing a National Child Benefit would be good for kids, and good for Canada--demonstrating that our nation still works, and still cares. That's why Saskatchewan is going to continue to press all governments to act, nationally, on this urgent social need.

Finally, our budget continues to pay down the public debt. We've captured a patch of dry land in the ocean of red ink we inherited. Our plan will get provincial debt as a percentage of GDP down from a staggering 70 per cent in 1993 to 48.8 per cent this year to 36.4 per cent by the end of the year 2000-2001.

Although we advocate a strategy of "investing in people," the days of runaway government spending are over in our province. We're re-inventing programmes to meet today's circumstances. So, we'll spend less on programmes in absolute terms this year--and for each of the next three years--than we did in 1991, and we will still end up with a modern, forward-looking vision for the 21st century.

So, to sum up, these are the key elements of our budget:

• Tax relief.
• Strategic investments in people. • Paying down debt.
• A balanced approach.
So economically, what's the picture? In 1996:
• resource exploration set a new high;
• business investment was up 18 per cent;
• manufacturing shipments were up 10 per cent, the highest increase in Canada;
• retail sales were up eight per cent, triple the Canadian average;
• housing starts were up more than 40 per cent;
• our unemployment rate is the lowest in Canada; and
• our population has increased every quarter for 13 straight quarters.

I think you get the picture. All in all, there is a remarkable spirit of confidence, hope and optimism in my province. Take a look at us. It's spring time in Saskatchewan. So what, if anything, can be applied to Canada as a whole from what I've told you about our approach? Three things, I think. First, let's define and stick to our values--accommodation, community, sharing, opportunity, and fairness. Second, let's work as a team--whether it's on trade missions, debt management, or new social services like the National Child Benefit. And third, let's avoid extreme solutions.

For example, some say we should focus exclusively on reducing taxes. Well, if we did, what about:

• the need for a world-class education and training system?
• the need for a competitive transportation infrastructure?
• the need to get people specially children--off welfare?
• the need to ensure a modern, effective, sustainable public health-care system--Saskatchewan's gift to Canada?

Canada should not be--cannot be--in the business of competing in the global economy at the low-wage, low skill, low-value, low end. We should strive for the high end. That means all partners in the economy have to pull their weight, including government. That's why a "balanced" budget strategy must include, as one of its core components, investing in people.

Some say spend every available penny paying down the public debt. Well, the answer here is the same. This approach means government fails to pull its weight in the great task of building a prosperous, competitive, and decent society.

And then, some say spend every available penny on more government spending, on every conceivable public service. Keep things exactly as they were 10 and 20 years ago, no matter what the cost. Well, there is nothing "progressive" about blindly defending the past, in my view. The world is changing. Society's needs are changing. New priorities and challenges lie before us. And so do new solutions. Good, balanced government is about positive change, about renewal.

That's my basic point. Government is about balance--about carefully balancing seemingly competing, but actually complementary and mutually reinforcing priorities, and so arranging the affairs of state that society makes steady progress towards all of them. I believe the same "balanced approach" can be applied to many of the daunting challenges facing our federation--which brings me to my third topic.

I've been talking recently about a six-point "alternative national agenda." What would it look like?

• First, a commitment by all Canadians to a strong social safety net, a publicly delivered health system, and an accessible post-secondary educational system. In many ways, social programmes define us to each other, and our nation to others.
• Second, a co-operative, national fiscal management plan that would allow governments to tackle the debt problem in a co-ordinated way, and restore integrity to our nation's public finances for all orders of government.
• Third, a comprehensive taxation review to ensure our tax system is fair, effective, and properly coordinated.
• Fourth, a nationally co-ordinated investment strategy to help build a skilled, literate, and innovative work force.
• Fifth, a gradual levelling up of labour, environmental and other standards to balance greater trade liberalisation and capital mobility.
• Finally, a modernised federation, with more collaborative and effective federal-provincial decision making, and a constitution which recognises the role of the Quebec government in protecting and promoting Quebec's identity.

Let me conclude my talk by saying a few extra words about this last, important matter. The Acts of Confederation created a new nation called Canada. A new nation which represents more than the sum of its parts. A new nation which represents a commitment by all of us to share a common future, based on shared values of accommodation, community, sharing, opportunity, and fairness. We have developed a unique society through our social programmes and economic development--one of the most tolerant, progressive and democratic nations on earth. Saskatchewan is intervening in a pending Supreme Court reference case on Quebec's supposed right to secede. We will make this point about Canada being more than the sum of its parts, and we will stress that this file involves more than the government of Quebec and the federal government. It involves all Canadians. It is time to clarify the guidelines for the future debates to come.

Having said that, it is obvious that we need to continually work at modernising the federation, in order to ensure our nation remains true to the values I mentioned a moment ago. Our federation faces some tough issues:

• Inefficiencies caused by overlap and duplication of services and policies, which in turn produces unnecessary entanglement between the two main orders of government.
• Inequities in terms of transfers from the federal government to the provinces for social programmes and immigration services.
• The unfairness of the tax system.
• Continuing erosion of our social programmes, stripping away the opportunity for many in our society to live up to their fullest potential.
• The remaining need to recognise and accommodate the collective aspirations of Quebeckers, within Canada.

Almost all of these issues can be remedied without constitutional amendment, through common-sense arrangements. Much has already been done, through recent initiatives on issues like manpower training and immigration. This is not a call for massive decentralisation--which is not a panacea for all of our problems. Balance is required. Doing the above represents 80 per cent of the solution.

Still, the remaining 20 per cent must deal with Quebec's role within our nation. This will require constitutional change, which at its heart must recognise the distinct, unique and historical position of the province of Quebec. Not enough attention is being paid to this last, vital remainder, in my view.

Some see Mr. Bouchard's current struggles with his public finances and economy as hopeful signs that he and his colleagues will somehow abandon their profound commitment to taking the province of Quebec out of this great country. Others say the timing is not correct. For whatever reason, federalists outside Quebec in particular have so far refused to engage in the development of a package of initiatives which would be acceptable to that large majority of Quebeckers who still see Canada as the best option. We must not be lulled into wishing this away. We must do more.

We don't need full-blown constitutional conferences or discussions.

We do need an intelligent discourse about alternatives, and movement towards a sensible and fair package which--exhibiting one of Canada's great values of accommodation--embraces Quebeckers' hopes and aspirations.

Given the pending federal election, right now may not be the correct time to begin this dialogue, but we must engage in it as soon as possible thereafter.

When that inevitable day arrives, when Quebeckers are forced to decide once again, we must have demonstrated through common-sense arrangements and constitutional arrangements that Canada works and that, as the United Nations has said, it is the finest place in the world in which to live.

Thank you.

The appreciation of the meeting was expressed by Larry Stout, CTV Journalist and Broadcaster and a Director, The Empire Club of Canada.