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In the 1990s, Canada was on the brink of a fiscal crisis, with budget deficits piling debt onto both the federal and provincial governments. On Tuesday at AEI, some of the players in Canada's fiscal transformation discussed how the country's successful taming of its debt can serve as a model for the U.S. today.
Janice MacKinnon and Stockwell Day, members of provincial governments during Canada's budget crisis, explained how they helped communicate to Canadians the enormity of the debt problem in order to gather public support for spending cuts. Day described the political difficulty of making those tough cuts, while Ron Kneebone of the University of Calgary said that public opinion morphed to the extent that "'deficit' is now a four-letter word."
Former prime minister Paul Martin then discussed how Canada's federal government was able to make collective, real changes to spending to bring its budget under control, a process that both the U.S. and Europe should take heed of. MacKinnon concluded by advising that the U.S. tackle its problems now before the inevitable budget crisis arrives.
-- Emma Bennett
In the 1990s, Canada suffered from the same economic malaise that plagues the U.S. today: slow economic growth, heavy government spending and a rising national debt. Canada’s remarkable turnaround relied relatively little on raising taxes; instead, federal program spending was cut by nearly 10 percent over a two-year period to restore its budget to balance. Its federal government also devolved greater responsibility to provincial governments, leading to a decade of strong growth in employment, gross domestic product and investments. Despite the political challenges of reform, the governments responsible were consistently re-elected both federally and provincially.
This joint AEI/ Macdonald-Laurier Institute event will feature a distinguished group of Canadian politicians who managed the difficult politics of this period of powerful reform. The keynote speech will be provided by the Right Honorable Paul Martin, former Canadian finance minister and prime minister, under whose leadership many of Canada's reforms were enacted.
If you are unable to attend, we welcome you to watch the event live on this page.
Full video will be posted within 24 hours
Brian Lee Crowley, Macdonald-Laurier Institute
Stockwell Day, Stockwell Day Connex
For more information, please contact Veronika Polakova at [email protected], 202.862.4880.
For media inquiries, please contact Véronique Rodman at [email protected], 202.862.4871.
Andrew G. Biggs is a resident scholar at AEI. Biggs was the principal deputy commissioner of the U.S. Social Security Administration in 2007, where he oversaw the agency’s policy research efforts and led its participation in the Social Security Trustees working group. He worked on Social Security reform at the National Economic Council in 2005 and was on the staff of the President’s Commission to Strengthen Social Security in 2001.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute (MLI), which is the only think tank in Ottawa, Canada, that deals with the full spectrum of issues falling under the jurisdiction of the federal government. He also founded the Atlantic Institute for Market Studies in Halifax, one of Canada’s leading regional think tanks. Crowley is also a former Heritage Foundation Salvatori Fellow and is currently a senior fellow at the Galen Institute, a health care policy think tank also based in Washington, D.C. In September 2009, Key Porter Books published Crowley’s fourth book, “Fearful Symmetry: The Fall and Rise of Canada’s Founding Values,” which quickly found its way onto the Canadian bestsellers lists. Crowley likewise co-authored two projects on the Canadian health care system, both of which won the Sir Antony Fisher Award. Crowley has taken leadership roles in the policy areas of equalization, Canada-U.S. relations, public school performance and accountability, employment insurance reform, natural resources and public finances and regional development policy. From 2006 to 2008, Crowley was the Clifford Clark Visiting Economist in Canada’s Department of Finance. During his time in Ottawa, Crowley worked on a broad range of policy files and redesigned the pre-budget consultation process. In 2007, he was ranked one of the 100 most influential people in Ottawa by The Hill Times.
Stockwell Day was successfully elected 9 times over 25 years at two levels of Canadian government and in two separate provinces. From 1986 to 2000, Day represented Red Deer North in the Alberta Legislature, where he served in the Progressive Conservative Government in a variety of senior roles, including chief whip, government House leader, minister of labour and minister of social services. From 1997 to 2000, he was provincial treasurer (minister of finance) and acting premier. In 2000, he won the leadership of the Canadian Alliance and became leader of Canada’s Official Opposition. In the general election that followed, the Canadian Alliance increased the Official Opposition seat count to 66 and increased its popular vote by over a million. In 2002, Day was appointed foreign affairs critic, vice chair of the Standing Committee on Foreign Affairs and International Trade as well as chair of the Subcommittee on Human Rights. In 2006, Day was appointed minister of public safety and member of the Cabinet Committee on Priorities and Planning. Upon his re-election in 2008, he was appointed minister of international trade, minister for the Asia-Pacific Gateway and regional minister for British Columbia (BC), advancing the economic and trade interests of BC. He was also appointed chair of the Cabinet Committee on Afghanistan. In 2010, Day was appointed president of the Treasury Board, but he did not seek re-election in the 2011 general election.
Ron Kneebone is a professor of economics and director of economic and social policy in the School of Public Policy at the University of Calgary, Canada. His research interests surround the macroeconomic aspects of public finances and fiscal federalism. His published research addresses the issues pertaining to government budget financing in a federal state, the political economy of government deficit and debt reduction, the history of government fiscal and monetary relations in Canada and the characteristics of Canadian federal, provincial and municipal fiscal policy choices. Kneebone is a co-author of two undergraduate textbooks in economics: a bestselling economics principles text (with Gregory Mankiw and Ken McKenzie) and an intermediate-level text (with Andrew Abel, Ben Bernanke and Dean Croushore). For his work with Ken McKenzie, in 1999, he was awarded the Doug Purvis Memorial Prize for the best published work in Canadian public policy. From 2002 to 2006, Kneebone was an associate editor of Canadian Public Policy. An eight-time winner of a Superior Teaching Award in the University of Calgary’s Department of Economics, he was also awarded the Faculty of Social Sciences Distinguished Teacher Award in 1997 and again in 2003.
Janice MacKinnon is a professor of fiscal policy at the University of Saskatchewan, Canada, and a fellow of the Royal Society of Canada. Between 1991 and 2001, she was a cabinet minister in Saskatchewan and held various positions including minister of finance, minister of social services, minister of economic development and government house leader. During her tenure as finance minister, Saskatchewan became the first government in Canada to balance its budget in the 1990s. She is the author of three books, “The Liberty We Seek: Loyalist Ideology in Colonial New York and Massachusetts” (Harvard University Press), “While the Women Only Wept: Loyalist Refugee Women in Eastern Ontario” (McGill Queens University Press) and “Minding the Public Purse: The Fiscal Crisis Political Trade-Offs and Canada’s Future” (McGill Queens University Press). In 2009, she was appointed to the National Task Force on Financial Literacy. In 2010, Federal Finance Minister Jim Flaherty appointed her chair of Canada’s Economic Advisory Council.
Paul Martin was the 21st prime minister of Canada from 2003 to 2006 and was Canada’s minister of finance from 1993 to 2002. He also served as the Member of Parliament for LaSalle-Émard in Montréal, Québec, from 1988 to 2008. During his tenure as minister of finance, he erased Canada’s deficit, which had been the worst of the G-7 nations, subsequently recording five consecutive budget surpluses while paying down the national debt and setting Canada’s debt-to-GDP ratio on a steady downward track. He also introduced the largest tax cuts in Canadian history and the largest increases in the federal government’s support for education, research and development. In conjunction with his provincial counterparts, he secured the Canada Pension Plan for future generations. He also strengthened the regulations governing Canada’s financial institutions, and Canada is now viewed as an international model for sound financial regulation. In September 1999, Martin was named the inaugural chair of the Finance Ministers’ G-20, an international group of finance ministers and central bank governors composed of the G-7 countries and emerging market nations. As prime minister, he pushed strongly for the group’s elevation to the Leaders’ level, which subsequently occurred in 2008. He is respected internationally in large part for his innovative leadership in helping forge a new global financial order. As prime minister, Martin set in place a 10-year, $41 billion plan to improve health care and reduce wait times, signed agreements with the provinces and territories to establish a national early learning and child care program and created a new financial deal for Canada’s on- and off-reserve Aboriginal peoples through the creation and growth of successful businesses. Before entering public life, he was chairman and CEO of The CSL Group Inc, which operates the world’s largest fleet of self-unloading vessels and offshore transshippers. The company’s acquisition by Martin in 1981 represented the most important leveraged buyout in Canada at that time.
Mary O'Grady is a member of the editorial board at The Wall Street Journal and writes editorial columns on Latin America, trade and international economics. She is also the editor of "The Americas," a weekly column that appears every Monday and deals with politics, economics and business in Latin America and Canada. O'Grady joined the paper in August 1995 and became a senior editorial page writer in December 1999. She was appointed an editorial board member in November 2005. In 2012, O’Grady won the Walter Judd Freedom Award from The Fund for American Studies. The award recognizes individuals who have advanced the cause of freedom in the U.S. and abroad. In 2009, she received the Thomas Jefferson Award from The Association of Private Enterprise Education. Recipients of this award are selected for representing the best that the free enterprise system produces. In 2005, O'Grady won the Bastiat Prize for Journalism, awarded by the International Policy Network for her articles on the World Bank, the underground economy in Brazil and the poor economic advice the U.S. often provides Latin American countries. In 1997, O'Grady won the Inter American Press Association's (IAPA) Daily Gleaner Award for editorial commentary, and in 1999, she received an honorable mention in IAPA's opinion award category.
Henry Olsen is vice president and director of the National Research Initiative (NRI) at AEI. He disseminates and publicizes AEI's work to the academic community; works with AEI's visiting, adjunct and NRI research fellows; commissions and supervises NRI projects and oversees the production of NRI publications. Olsen previously served as vice president for programs at the Manhattan Institute and as a judicial clerk to Danny J. Boggs, the chief judge of the U.S. Court of Appeals for the Sixth Circuit.