As the general election draws near, voters appear to be pondering the previously unthinkable: granting Gordon Brown another term in office.
The Conservatives’ lacklustre standing in the polls reflects the cloud of doubt swirling around David Cameron, what he stands for – or does not stand for. Tax cuts? Entitlement cuts? Spending cuts? Voters want a clear plan – and one that will not break what’s left of the bank.
If he can’t bring himself to find it in Britain, perhaps Cameron should consider crossing the pond for a source of political fortitude.
In Canada, he need look no further that Mike Harris, former Progressive Conservative (PC) Premier of Ontario. In 1995 and 1999, Harris won two back-to-back majorities by promising a no-nonsense recipe of tax reduction and spending cuts, and then delivering on his promises.
In 1995, Ontario’s economy was in crisis. Over the previous four years, in response to a serious economic recession, the socialist New Democratic Party (NDP) government ran up $10bn (£7bn) annual deficits, attempting to “stimulate” the economy through public spending. It didn’t work. They then hiked the provincial tax rate by nine per cent, to corral the ballooning debt. Another mistake. The economy stalled and unemployment doubled from five to 10 per cent, grossly inflating the welfare rolls.
COMMON SENSE REVOLUTION
Sound familiar? It should – but the conservative response was a far cry from David Cameron’s. Under Harris’ leadership, the PCs launched the “Common Sense Revolution” (CSR), pledging to cut taxes, balance the budget, enforce law and order and bring in workfare. On the campaign trail, Harris made bold statements, such as, “All able-bodied recipients will be required to participate in a mandatory workfare or ‘learnfare’ program. Those who refuse to participate will receive no money from taxpayers.” During a televised leaders’ debate, Harris pledged to resign if he didn’t fulfil his campaign promises.
Harris and his team came across as credible and committed to positive, taxpayer-friendly change – a winning recipe. On election night, the PCs took 82 of 130 seats with 44.8 per cent of the popular vote, the opposition Liberals went from 34 seats to 30 with 31.1 per cent and the governing NDP dropped from 69 to 17 seats with 20.6 per cent.
Once in office, faced with a projected $11.8bn deficit on a budget of $45bn, Harris directed his ministries to make cuts.
In its first financial statement, the government suspended future construction of subsidised housing, cut welfare benefits by 21.6 per cent, cut funding to school boards and subsidies to businesses, scrapped planned subway expansion and brought in a host of other restraint measures, reducing the deficit to $8.7bn. In three subsequent budgets, from 1996 to 1999, Harris held the line on health and education spending, two of the biggest budget envelopes, and cut the size of the public service by seven per cent.
CUT PERSONAL MARGINAL TAX RATES
Over the same period, the PCs proceeded to make good on their promises to reduce taxes and balance the books. They cut personal marginal tax rates to the lowest in Canada and turned their initial deficit into a budget surplus. In 1999, the PCs passed the Taxpayer Protection Act and Balanced Budget Act, legislation which prohibited the provincial government from running deficits and from raising most taxes, without first holding a province-wide referendum.
These actions rebooted the Ontario economy. Between 1996 and 2002, Ontario experienced the highest economic growth amongst Canada’s non-resource economies. An average 36 per cent cut in personal income taxes produced a 15 per cent increase in personal income tax revenues and a 37 per cent increase in the province’s own source revenues. Job creation boomed; over the same period, one million welfare recipients left the dole and found work.
Support for Harris remained strong throughout his first term. In the 1999 general election, the PCs were re-elected with a slightly greater plurality than in 1995, 45.1 per cent of the popular vote, garnering 59 of 103 seats in a newly streamlined legislature. The Liberals won 35 seats with 39.9 per cent of the popular vote, siphoning votes from the NDP, who garnered just 12.6 per cent and nine seats.
During their second term, however, the PCs waffled – and voters turned off. In 2001, Harris announced he would not seek a third term. The government then shelved a number of privatisation plans, including that of the province’s Liquor Control Board. Per capita spending rose to levels similar to those under the previous NDP administration. By 2003, economic analysts predicted a deficit budget, despite the government’s assurance that it would be balanced.
In the ensuant provincial election, Harris’ successor lost to the newly-elected Liberal leader (and now premier), Dalton McGuinty. The PCs have yet to return to power, though it remains to be seen if their new leader, Tim Hudak, a protégé of Mike Harris, can turn things around.
The lesson for David Cameron? You can cut public spending and win an election. Having the courage of your convictions pays dividends. It’s when you dwell in that cloud of doubt that you lose.
Tasha Kheiriddin is an editorial board member and columnist on the National Post newspaper and co-author of a chapter on the experience of Canada’s provinces in the new book How to cut public spending and still win an election (Biteback Publishing, out in UK on 31 March 2010). She was Ontario director of the Canadian Taxpayers Federation from 2004–06.