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Saskatchewan NDP Needs to Reclaim Its Legacy to Regain Power

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The Saskatchewan NDP suffered one of the most crushing blows in the party's history Monday night. The once dominant party was reduced from 20 to nine of the 58 seats in the legislature. NDP leader Dwain Lingenfelter lost his own riding, a long-time NDP stronghold, and stepped down soon after.

The Saskatchewan Party cruised to victory with 64 per cent of the vote, doubling the NDP total, and increasing their seat count to 49.

The Liberal Party, which ran only nine candidates, received only 0.6 per cent of the popular vote, and the Greens, who managed to field a full slate of candidates, garnered three per cent of the vote.

The NDP ran a campaign characterized by placating its union base. However, if the NDP wants to avoid becoming a permanent protest party, they need to expand their appeal beyond staunch NDP supporters. In order to do this, they should take a page from their party's policy playbook during the 1990s. At the time, the Romanow government undertook many of the fiscal reforms that have set Saskatchewan on its path to prosperity. If the NDP fails to present a credible, mainstream alternative to the dominant Saskatchewan Party, Saskatchewan will be in serious danger of becoming a virtual one-party state.

The NDP success during the 1990s was largely due to the Romanow government's embrace of a resolutely centrist policy agenda. Then, as now, the party was emerging from a crushing defeat by a party that was perceived as being far more fiscally conservative The PC Party led by Grant Devine, now virtually extinct, won 55 of 64 seats in the 1982 election. The Tories went on to form government for a second term, albeit with a reduced majority. Due to a number of dire policy mistakes, the ruling PCs brought the government to the brink of bankruptcy.

By 1987, the NDP had chosen Roy Romanow as its new leader. Unlike many of his predecessors, Romanow was very concerned with fiscal responsibility. He embraced the "Third Way" philosophy commonly now associated with Bill Clinton and Tony Blair, which involves using fiscally conservative means to achieve socially progressive ends. The linchpin of the philosophy is that harnessing market forces is a more effective way to fund and deliver the services that progressives favour than the top down social democratic economic approaches. The approach led the NDP to trim some services to balance the budget, while making pro-growth tax changes such as cutting the top income tax rates and corporate taxes. While these policies irked some of the party base, particularly the unions, the broader electorate realized that these policies were necessary to kick start the economy. Otherwise the province was destined for default and decades of continued slow economic growth. The full benefits of these reforms are now quite apparent as the province is destined to lead the country in economic growth for the foreseeable future.

The danger of a long-term NDP decline can be gleaned by looking west to Alberta. While things have been quite good in the province, the PC party's unchecked rule for the past four decades has led the government to become bloated, overly complex, and out of touch with the provinces economic realities. The 2007 Royalty Review, which dealt a major blow to the provinces oil and gas industry, as well as the current scandal over $14.5 billion of transmission line construction, are but two examples of the type of decision making that happens without a strong opposition. Were it not for the resultant emergence of the Wildrose Alliance as a prospective threat to power, the latter scandal may well have flown entirely under the radar. A strong democracy requires a credible opposition party that can form government in the event that the governing party loses the confidence of the electorate. When a party can perpetually win by default, good governance is unlikely.

In order to return to the glory days of the 1990s, the NDP needs to distance itself from several of the policy initiatives announced during this election. First, the party needs to disavow the idea of bringing back any form of rent control. Lingenfelter himself was instrumental in abolishing rent control in the first place. Even the Manitoba-inspired "second-generation rent control" would be a mistake. Instead, they should focus their efforts on reforming regulation and taxation measures stifling the construction of rental units, and consider innovative means of easing the burden of escalating housing costs on low income individuals. A variant of a rental voucher scheme would be worth investigating.

Second, the party needs to reassure voters that it will not stand in the way of the resource industry. Resources, particularly potash, are fundamental to the provinces prosperity. Announcing a "review" of potash royalties while specifically budgeting for an increase of royalties in their policy platform was disingenuous and dangerous. It wasn't a proposal for a royalty review. It was a proposal for a royalty increase. Since Saskatchewan potash companies already paying higher combined tax and royalty rates than equivalent companies in any jurisdiction on earth, the province cannot afford to antagonize the industry. Australian mining giant BHP and other companies haven't wavered in their commitment to open new mines in the province, but that might not have been the case if it looked as though the NDP could win. Other jurisdictions in North America and the rest of the world are competing with Saskatchewan for potash investment, and the existing commitment of potash companies to the province will only go so far. Alberta got a taste of how ill-conceived attempts to raise royalties can backfire. It may be tempting to try to suck more money out of resource companies, but you can't tax them when they aren't here.

While things look bleak for the NDP, there will likely be opportunities to turn things around in the near future. It may require more than one election cycle, though. The opportunities will stem from the very play-it-safe approach on which the Wall government thrived. The provincial government has a spending problem. Between 2006 and 2007, when the Saskatchewan Party formed government, and 2009 to 2010, spending in the province increased by 34 per cent, a substantially higher rate than the NDP government was increasing expenditures in its last three years. Much of it has been driven by boutique tax cuts, more properly categorized as tax expenditures. Like the federal Conservative Party, the Saskatchewan Party has a fixation on using tax credits to privilege their preferred lifestyle choices. These credits range from the $2,000 per child tax exemption, to tax credits for enrolling children in sports. The party promised to add tax credits for first time home buyers, and an increase in the film employment tax credit. Some tax credits are more justifiable than others, such as the disability tax credit and low income tax credit. However, it would make more sense to write cheques to these people rather than further complicating the tax code. A tax credit here and there doesn't sound like much, but these costly spending programs add up. The unchecked growth of such spending initiatives could get the Wall government into trouble during future economic fluctuations.

The key for the NDP to move forward will to be focusing less on the size of government, and more on getting value for money. The party brain trust will need to determine whether policies that re-distribute income from single people to married people under the guise of tax credits truly reflect the party's values. Instead, the party should focus on simple and transparent transfers to people who are truly in need. Ideas such as a low-income rental voucher would be a place to start. The party will also need to focus on increasing government revenues, rather than tax rates. It's all well and good to say your party will boost royalties on potash, but chasing away potential investments would cause the government to forgo new tax revenue. Taxes can only be increased so much before investment leaves. Most importantly, the NDP will have to determine whether it wants to be a political front for the province's unions, or a party representing citizens across the province as it was during the Romanow years. A strong legacy is a terrible thing to squander.

Steve Lafleur is a policy analyst with the Frontier Centre for Public Policy (www.fcpp.org).

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