Ottawa's towering debt: What would Tommy Douglas do?

The federal government's budget deficit is estimated to be $381.6 billion this year alone and the federal debt is approaching $1 trillion. Commentators frequently write about whether these levels are economically sustainable. What is missing from the discussion is whether such massive deficits and debt are moral and fair. Put aside all arguments about feasibility: Even if running such deficits and accumulating such debt won't end up wrecking the economy, are they good policy? Is running them moral? Is it fair?

In thinking about these questions, it's useful to consider how Tommy Douglas, who in a 2004 CBC competition was voted “Greatest Canadian,” would have answered them. Many people in my generation (I am 35 years old) have never heard of Tommy Douglas. But all Canadians, and especially those of whatever age who keep voting for never-ending deficits, could learn from his example.

Douglas was premier of Saskatchewan from 1944 to 1961 — fully 17 years — and leader of the federal NDP from 1961 to 1971. In his time as premier, he created the publicly owned Saskatchewan Power Corporation, set up Canada's first publicly owned car insurance system, established several crown corporations, and passed legislation to allow public sector employees to unionize. And, of course, he created a taxpayer-funded program to provide health care to all citizens of Saskatchewan — the first socialized health-care system in North America.

In short, Douglas was a leader of his era's progressive left — though it didn't call itself that, “progressive” being reserved at the time for the Progressive Conservative party, which for most of Douglas's time in politics formed the federal opposition.

Perhaps the most incredible Tommy Douglas fact — and it will certainly be the most surprising for today's progressives — is that for every one of the 17 years he was premier, even as he expanded Saskatchewan's public sector, he ran balanced budgets or even surpluses.

When Douglas first took office in 1944, Saskatchewan's debt was $218 million — $3.3 billion in today's dollars (compared with net debt in 2019-20 of $12.3 billion, for a population only 40 per cent greater). As he told leftist writer Heather Robertson in a Maclean's magazine retrospective in 1975, “One third of the total provincial revenue was going to pay interest charges.” His Co-operative Commonwealth Federation government was under a lot of pressure as soon as it came to power. Bankers and the federal government were demanding repayment of debts owed to them. Douglas set aside 10 per cent of the provincial budget to pay off the debt.

By 1953, only nine years later, his government had entirely eliminated the province's debt. Though pressured into this he also believed very strongly that, with the debt gone, money that had been spent on interest could be reallocated to social services, which could be made more generous without taxes having to be raised. It is remarkable what the Douglas government accomplished even while spending 10 per cent of provincial revenues on debt repayment and running balanced budgets and surpluses for every year thereafter.

Canadians need to realize that if they want to continue to fund a generous social welfare state, their governments' finances need to be in order so an ever-increasing share of their tax dollars don't go to interest and debt repayment. In the 2019-20 fiscal year, the federal government spent $24.4 billion on interest. To put that in perspective, Ottawa spent $24.3 billion on Canada Child Benefits, $21.9 billion on national defence and $23.7 billion on equalization. Interest payments exceeded spending on all three of these key public responsibilities.

If Tommy Douglas were alive today (he died in 1986), he almost certainly would not approve of full-bore deficit spending. If people accused him of favouring “fiscal austerity,” he would probably remind them how unfair it is to pass on the burden of today's government spending to our children and grandchildren. If we want good things for ourselves, we should be willing to pay for them. And when government does live within its means, it can then in the long run afford more services. As Douglas himself told Heather Robertson, “We told people, if you're going to build schools or hospitals or roads, you're going to pay for it. Now!”

Let's hope Canada's politicians and voters consider the example of Tommy Douglas and return their governments to fiscal sustainability, so we can continue to fund the generous social services that in many ways are his legacy.

IF WE WANT GOOD THINGS FOR OURSELVES, WE SHOULD BE WILLING TO PAY FOR THEM.