Tag Archives: Grant Devine

Grant Devine 2.0?

It’s really odd to hear Alison Redford use the same rhetoric in Alberta that Grant Devine did in Saskatchewan during the late 80s.

In a series of interviews following her televised address to the province Thursday night, Redford said that she wanted Albertans to understand that the province should no longer rely on its resource wealth to balance its books, pointing to a $6-billion “bitumen bubble” that will cut the province’s anticipated resource revenue almost by half in 2013-14 fiscal year.

“We can no longer continue to rely on oil and gas for 30 per cent of our revenue,” Redford said Friday. “It’s a fundamental change. It’s the sort of thing a province has to deal with, I think, once in a generation, and this is our opportunity to do it this year.”

The provincial government has received plenty of advice in recent years urging it to wean itself off a practice of using resource royalties to balance its books.

The Premier’s Council for Economic Strategy, a panel of experts established by Premier Ed Stelmach, tabled a report in May 2011 that asked Alberta to divert non-renewable resource revenue instead into a new “shaping the future” fund dedicated to helping diversify the province’s economy.

The council’s chairman, former federal cabinet minister David Emerson, said Friday it sounds like Redford is looking to make that kind of shift.

“She’s looking at establishing a new fiscal regime and that’s essentially what the premier’s economic strategy council was calling for: To stop treating non-renewable resource revenues as a form of operating revenue to be spent on, in effect, buying the groceries and to become more strategic separating natural resource assets,” Emerson said.

“If that’s the case, my congratulations,” he said.

But while Redford said Friday that a “different” budget will be forthcoming, she also said will not be a disruptive document. The government has already sent some signals about what some of those changes might look like, she said, pointing to the government’s plans to borrow to fully twin a 240-kilometre stretch of Highway 63.

“The Highway 63 announcement signalled to people that we’re going to think differently about long-term infrastructure plans,” Redford told The Canadian Press. “We’re going to finance that differently. We’re prepared to go out to capital markets and to really put out stellar fiscal reputation out there and ask people to invest in our province in some of our public infrastructure.”

As of right now, however, Redford said tax reform is not part of that financial restructuring.

Right now it looks like a lot of talk without the deep cuts and probably tax increases needed to bring the budget back in line.  

Mount Royal University political scientist Keith Brownsey said Redford needed to make a case for a fiscal crisis in her televised speech. She did that in a reasoned, effective manner, he said.

Such a statement was needed, he said, because Albertans thought financial problems were something that were a thing of the past because of its resource wealth.

“I think she prepped us for both cuts and tax increases,” Brownsey said. “Now, she may not have said that today, she may have said, ‘No taxes,’ but the current revenue structure in the province is unsustainable. We cannot exist as a modern industrial state living off of revenues from non-renewable natural resources. It’s simply too volatile.”

The truth is that Alberta spends money like no other province in the confederation.  Even during the Klein crisis, they spent more money than everyone else.  People talk of the deep cuts he made but ignore the fact that in Saskatchewan, the NDP made even deeper cuts (and had to raise taxes).  Whatever the solution is that it should be a combination of taxes and spending cuts and it is going to take a bit of time.  

I have no doubt that Redford is serious about making cuts (and who knows, she may even raise taxes) but when the oil prices go up, will they stay the course and remake the economy, especially when the opposition will be calling for restored spending and tax cuts (it’s always going to be like that).  I really hope she sticks with it because the oil and natural gas won’t be there forever.  I know the oil sands are a massive reserve but not all of that is recoverable and there is a point where it gets more too expensive to go after it.

If her hero Peter Lougheed brought in Alberta 2.0, then Alison Redford will need to be the one to bring in Alberta 3.0.  I hope it’s more than Devine era rhetoric.

The Devine Generation?

Grant DevineSomeone is planning a 30th reunion for the Devine Generation in Regina.  This should be spectacular. I can see it now.  Megaprojects, caucus funds going missing, a significant deficit and instead of the event being just in Regina, it will be moved all over the province and be called, Fairshare Devine Generation.  The event starts on July 7th with an RCMP probe of the event to start on July 11th. 

Any thoughts on if any of the Saskatchewan Party cabinet shows up?  I am going to say no.

That being said, I still say that I would like someone to write the definitive history on the Devine years in office.  I think it would make for a fascinating read.

What went wrong for the Saskatchewan NDP?

The view from Calgary (and the Toronto Star)

“The NDP grassroots won’t even go door knocking anymore . . . the party only appeals to the mushy middle,” says Mitch Diamantopoulos, head of the journalism school at the University of Regina, a longtime activist and observer of Saskatchewan politics.

For Diamantopoulos, the problems began in the 1990s when then premier Roy Romanow swung the party to the right. “Saskatchewan shifted away from a cooperative, public enterprise approach and as a result a lot of longtime NDPers lost their enthusiasm for the party.”

At the same time, farmers were giving up on agriculture and moving to Saskatoon or Regina. As the province became urbanized, the NDP lost its traditional rural base.

In many ways, 62-year-old Lingenfelter personifies the confusion about what the party really stands for. He grew up in southwestern Saskatchewan on a large family farm. First elected as an NDP MLA in 1978, Lingenfelter managed to survive the near sweep by the Progressive Conservatives in 1982 and served as opposition house leader.

When the NDP was returned to power, he became a cabinet minister and eventually deputy premier and was seen as a likely successor to Romanow.

But in 2000 Lingenfelter abruptly resigned and accepted a senior position with an oilpatch heavyweight, Calgary-based Nexen Inc.

Not surprisingly, Lingenfelter became something of a trophy head in corporate Calgary — the former NDP cabinet minister who had joined the fold. So much so that in 2002 when a group of Calgary businessmen and politicians organized a fundraiser for the Saskatchewan Party at the Petroleum Club, Lingenfelter attended on behalf of Nexen and when introduced was given a special round of applause.

There are four things that I see going on in this election.  I am not an NDP insider or supporter although I have a good working relationship with many of them.  The first is Brad Wall.  He just hasn’t screwed up that many things.  If the old line is true that governments are so much elected but rather defeat themselves, the Saskatchewan Party haven’t made that many mistakes which makes it really hard to gain any traction against them.  Along with that is that I think the NDP elected Lingenfelter because they thought Wall would be a one term wonder and they would be back in power this election.  The choice of Lingenfelter as leader was an odd one because it was a return to the past, a past that Saskatchewan voters had just soundly rejected in 2007.

Next up is that I don’t think the NDP are any good in raising money.  NDP candidates are sharing campaign offices in ridings they should be competitive in the cities.  During the drive out to Arlington Beach, we drive through Watrous, Nokomis, and then from there we went to Regina through Craven and Lumsden.  We only saw one NDP sign the entire three hour drive.  One sign.  Even if they were not getting any traction with voters, you would have expected to see signs in the ditches and other public spaces.  There were none.  Meanwhile there was a lot of Saskatchewan Party signs (all on public land) but even in traditional NDP ridings in Regina.  What does it mean?  Signs cost money and I don’t see any of that in rural ridings.  I am assuming that the reason that Judy Junor is using office space downtown rather than in our her (hotly contested) riding is money as well.  This isn’t a couple of blocks outside her riding but is across the river from her riding.  C’mon.

You can blame that on the leader but raising money is also backend process that involves cultivating thousands of relationships and then understanding what buttons to push to get them to cough up $20 or $100 when you need it.  The federal Conservatives are masters of this and have been going back to the PC Canada Fund.  Whether it is direct mail or email, the NDP need to find a better way to cultivate, understand, and benefit from those relationships because the Saskatchewan Party can outspend them anytime in the election cycle.

Thirdly, the NDP are terrible users of new media.  Look at the video the Saskatchewan Party has produced versus the media the NDP are putting out.  Look at how Brad Wall is using Twitter vs. how Dwain Lingenfelter uses Twitter.  Why do I care how Link uses Twitter?  Social media allows voters to connect to a leader and if you are just posting links to some photos posted to Facebook and never send an @ reply, you aren’t connecting.  Wall understands that, Link doesn’t.  Not connecting to voters isn’t always fatal (like Stephen Harper) but it normally is (Elwin Hermanson, Michael Ignatieff, Stephane Dion).  Link didn’t connect to anyone online.

Finally, as much as Ryan Bater needs to win his seat in North Battleford, the NDP need him to win even more.  The NDP don’t do well against the unified right in Saskatchewan, they never have.  Brad Wall, Grant Devine, Ross Thatcher… when a third party (whether it be the PCs or the Libs) get 15% of the vote, the NDP win.  When they don’t, the NDP lose.  Their votes doesn’t grow enough to beat back the centre right challenger (for a contemporary example see Frank Quennel who is about to lose to Roger Parent in Saskatoon Meewasin).  It is why I was so surprised that the NDP didn’t want Ryan Bater in the debate.  A collapse in the Liberal vote benefits the Saskatchewan Party and no one else.  If I am the NDP I am hoping and praying that Bater wins, even at the expense of their own seat for the long term prospects of the party.

I don’t believe that the NDP are staying home and off the doorsteps because of what Roy Romanow did, I think there are elections that you win and some that you lose and this is one that the NDP are going to lose.   Wall’s performance is out of their control but if they don’t get the other three things solved, they are facing an uphill battle no matter what happens and no matter who the leader is.

When do you stop spending?

Jim Flaherty said today that he would spend to defend Canada from another recession

Under questioning from opposition MPs, Flaherty said for the first time that the Conservative government would move in with another round of stimulus spending if the world economy suffers a double-dip recession.

“We would obviously do what is needed” if there was a “dramatic deterioration” in the economies of the United States and Europe, he told the committee.

But for now, Flaherty said, the government is not changing its budget plan despite the turmoil on financial markets and debt crises in the United States and Europe. The plan calls for spending cuts of $4 billion a year to eliminate the annual federal budget deficit — now $32-billion annually — in a few years.

Pressed by opposition MPs about how Ottawa would react to a renewed global slowdown, Flaherty said he would change course and develop a pro-growth spending plan as the Conservatives did during the recent recession.

Here is my problem with this problem.  Do any of us think that the United States/Europe is going to fix their problems in the next recession.  I am not saying Flaherty is wrong but does this look like it’s going away.  Jeff Rubin points out that with global demand the way it is, as we come out of a recession, prices will increase and drive the economy back into it which means, how many of these recessions will we be able to afford to ride out until we are looking at Mulroney-esqe debt loads and Devine type deficits again.

We are looking at a default or massive bailouts for Greece, Italy, Spain, Portugal, and the too big to fail banks in Germany.  There is a dysfunctional governance system in the United States, and even China has some long term economic problems.  Does anyone think this next recession is going to be a quick one or we won’t be experiencing a triple or quadruple dip recession before this is all said and done?  No, me neither.

I know Jim Flaherty has been seeking out the advice of economic experts like former Calgary Flames captain Jim Peplinski but may the alternative might be figuring out ways to reinvent Canada’s economy to thrive in a world where recessions will be the norm, not the exception.

The Shape of Things To Come

60 Minutes had a feature on the budget crisis’ that are happening at the state level.  Stay with me on this one.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft

Whitney made her reputation by warning that the big banks were in big trouble long before the 2008 collapse. Now, she’s warning about a financial meltdown in state and local governments.

"It has tentacles as wide as anything I’ve seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy," she told Kroft.

Asked why people aren’t paying attention, Whitney said, "’Cause they don’t pay attention until they have to."

Whitney says it’s time to start.

California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.

Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.

Then there’s New Jersey. It has the highest taxes in the country, a $10 billion deficit and a depressed economy when first-year Governor Chris Christie took office. But after looking at the books, he decided to walk away from a long-planned and much-needed project with New York and the federal government to build a rail tunnel into Manhattan. It would have helped the economy and given employment to 6,000 construction workers.

Gov. Christie acknowledged that’s a lot of jobs. "I cancelled it. I mean, listen, the bottom line is I don’t have the money. And you know what? I can’t pay people for those jobs if I don’t have the money to pay them. Where am I getting the money? I don’t have it. I literally don’t have it."
Asked if this is going on all over the country, Christie told Kroft, "Yes. Of course it is. It’s not like you can avoid it forever, ’cause it’s here now. And we all know it’s here. And the federal government doesn’t have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That’s it. And it’s gonna arrive everywhere. Timing will vary a little bit, depending upon which state you’re in, but it’s comin’."

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

"This is the state of affairs in Illinois. Is not pretty," Illinois state Comptroller Dan Hynes told Kroft.

Hynes is the state’s paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

"How many people do you have clamoring for money?" Kroft asked.

"It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," Hynes said.
Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, "Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them."

"They’re subsidizing the state. They’re giving the state a float," Kroft remarked.

"Exactly," Hynes agreed.

"And who do you owe that money to?" Kroft asked.

"Pretty much anybody who has any interaction with state government, we owe money to," Hynes said.

That would include everyone from the University of Illinois, which is owed $400 million, to small businessmen like Mayur Shah, who owns a pharmacy in Chicago and has been waiting months for $200,000 in Medicaid payments. Then there are the 2,000 not-for-profit organizations that are owed a billion dollars by the state.

Lutheran Social Services of Illinois has been around since 1867 and provides critical services to 70,000 people, mostly the elderly, the disabled, and the mentally ill. The state owed them $9 million just before Thanksgiving, and they nearly had to close up shop.

Asked how long his organization can go on like this, Rev. Denver Bitner, the president of Lutheran Social Services of Illinois, told Kroft, "Well, we wonder that too because we really don’t know."

He says they were forced to tap their entire line of credit and all their cash reserves before the state would finally pay them as a hardship case.
"It has to be that you’ve sold off all your assets, you have borrowed from everybody that you can borrow from, and then, we’ll think about it," Rev. Bitner explained.

And according to Bitner, that’s even though the state owes his organization the money.

"The first words out of my mouth are usually an apology, because they have been you know put in this situation, that is really unacceptable. And you know there is very little I can do or say other than apologize," Comptroller Dan Hynes said.

It’s not just the social safety net that Hynes has to worry about: there have been Illinois legislators that have been evicted from their offices because the state didn’t pay their rent, and stories about state troopers being turned away from gas stations because the owners refused to take their state credit cards.

"The state’s a deadbeat," Kroft remarked.

"Yeah. I mean, the state of Illinois is known as a deadbeat state. This is a reputation that has taken us years to earn and we’ve reached, you know, the heights of, I think, becoming the worst in the country," Hynes said.

In the early 1990s, Saskatchewan was on the verge of bankruptcy because the Grant Devine governments of 1982-1991 would not curb government spending and the deficit for a province under a million people grew to over one billion dollars.  The incoming NDP government of Roy Romanow was more pragmatist than idealistic and spent almost a decade trying to get the province on solid financial footings.  That journey was documented in the book Minding the Public Purse by the Hon. Janice MacKinnon, who was the Finance Minister during the most of the cuts.  Like I said, it was a decade of austerity.  There was funding cuts to healthcare, almost no building on the University of Saskatchewan or University of Regina campuses, a higher number of students in classrooms, longer waiting lists, rural hospitals closing, decaying highways, and it was really a lost decade.  Yes Saskatchewan did grow a bit during this time but with our financial house in disarray, growth was hard.

MacKinnon talks about how close Saskatchewan was to defaulting on it’s loans.  With the precarious state of the Canadian economy (pre-Chretien and Martin), there was some legitimate concerns that this could lead to an IMF bailout and intervention.  Luckily it never came to that but it did mean higher tuitions, higher taxes, more fees, a lot of lost opportunities that we are just now seeing as a province.

What’s scary is that the deficit numbers coming out of the U.S. states are worse and for all intents and purposes, the US economy is soon going to be in as bad or as worse shape as the Canadian economy was in the early 1990s.  I keep looking at the debt crisis that is swamping the EU economies and I can’t help but wonder until how long it is that you see places like Michigan, Illinois, and California needing massive financial bailouts.  Good grief, California has even looked at dissolving as a state and becoming a territory again (I don’t think it was a serious option).

How many lost decade will the United States go through to pay for wars in Afghanistan, Iraq, and the greed of the banks?  It took over a decade to recover from Vietnam and the state and cities economies weren’t in such tough shape.  This could either take decades or it could be the start of the long decline of the United States as a economic power.

The good news is that from Saskatchewan and Alberta’s experience is that as voters, we understood that it had to be done.  Whether it was the right wing Ralph Klein in Alberta or the centre-left Roy Romanow in Saskatchewan, we knew it had to be done and as a whole, we stood by them as they did the heavy lifting and hard cutting.  The  bad news for many states is that Saskatchewan has a natural inclination to support the NDP and Alberta has a natural inclination to vote Progressive Conservative which means that during the tough times, the provinces returned (or in Alberta’s case, they only ever elect Conservatives) what they knew and trusted during rough times.  If you don’t have you could have a series of one term administrations that moved from spend to cut to spend to cut for short term partisan advantage which could derail or destroy the entire process.  Too make spending cuts that are needed, you need a really strong majority which is not a strength of the American system which features a lot more checks and balances.

I can’t see many states turning themselves around.