By Ryan McGreal
Published November 24, 2006
Received wisdom in political circles is that Bob Rae, a major contender for the Liberal leadership, is weighed down by the legacy of his former premiership of Ontario under the NDP banner. The common argument is that his legacy of recession, 'reckless spending', and Rae Days will scutter any attempt to become Canada's next Prime Minister.
However, a look at his actual record in office, rather than the rhetoric that surrounds it, paints a much different picture.
The Ontario NDP is routinely crucified for their star-crossed 1990-1995 term, but the cards were stacked against them from the start. Just as Bob Rae came into power, the Bank of Canada was jacking the Canadian prime rate six points higher than the US prime, ostensibly to fight inflation but really to shock-treat Canada into the FTA.
This had a number of mutually reinforcing effects:
It was a total disaster. The 'made-in-Canada' recession threw a million people out of work, decimated the manufacturing sector, and left the Rae government deep in the red. They were attacked viciously in the media for running deficits over which they had no control.
The deficit ballooned into the ten billions, and the Rae government tried some Keynesian counter-cyclical spending to soften the blow for families being thrown out of work, which of course made the deficit worse (but what else could they have done?).
After the worst of the recession was over, the NDP set about reducing the deficit, albeit without eliminating public sector jobs. Rae went to the unions and asked them to agree to renegotiate their contracts to save money. He called it a "social contract".
The unions flat-out refused to bargain, so the Rae government unilaterally implemented the changes they were hoping to make. No one lost their jobs, but the dreaded "Rae Days" came into effect, in which public sector workers were required to take occasional unpaid days off.
At the same time, the economy was recovering and the deficit was falling, but the damage was done. Vilified from all sides for their efforts to soften the recession and balance the books without laying anyone off, the NDP were almost universally hated.
In 1995, when the NDP lost to the Mike Harris Tories and their "Common Sense Revolution", the deficit was falling steadily. Harris, an economic conservative and therefore "fiscally responsible", immediately reversed the downward trend in Ontario's deficit by implementing a series of tax cuts that overwhelmingly benefited corporations and the rich.
The Harris Conservatives also laid off public sector workers, cut welfare payments by over 20 percent, reduced funding for education, health care, and the environment, and dumped cyclical expenditures onto cities with the notorious Omnibus bill.
Over the next eight years, a period of non-stop economic growth in Ontario, the Tories managed to balance the books only by selling off a chunk of Ontario Hydro and then selling off Hwy 407 ETR.
Now, any economist will tell you that if you have to sell off capital assets to balance your budget, you're not running a sustainable operation.
By the time the Tories handed power to the McGuinty Liberals, Ontario's deficit stood at $5.5 billion, comparing rather poorly with the deficit eight years earlier, when the NDP were trying to bring Ontario out of the worst recession since the Great Depression.
(The size of the deficit was not revealed until after the Liberals had taken over the government. Prior to the election, the Tories had claimed the deficit was in the $1-2 billion range.)
Even taking inflation and population growth into account, that's a heck of an accomplishment for a party that is supposed to stand for "conservative" - i.e. prudent - fiscal management.
It's a shame that the legacy of the Rae government has been so hijacked by the business-friendly newsmedia that Ontarians can't see just how good a choice Bob Rae would make as Prime Minister. He's smart, savvy, experienced, pragmatic, socially conscious, and has a very good track record. History has been quite unfair to him.
Far from the dogmatic leftist caricature that dogs him, Bob Rae was actually a very competent 'Liberal' Premier. He would make a very competent Liberal Prime Minister as well.