You have to give Saskatchewan’s NDP government credit. With a revived provincial economy cranking out small surpluses, the Romanow government is showing remarkable restraint as pressure mounts from public sector interest groups to start blowing the wad on more public spending. Perhaps the government senses that ordinary folks clearly favour continued fiscal prudence.
Towards the end of July, the administration announced a no-nonsense policy to help the City of Regina get back on its feet. The Saskatchewan capital is growing even more slowly than Winnipeg, and had the worst job growth of any prairie city during the last decade. Traditional critics of the NDP will be surprised at what’s in the plan. Rather than waste more money on make work programs, downtown beautification, tri-level development agreements, ever more consulting reports and other shuffle dances, they just got to the core of the problem. The NDP simply arranged to end Regina’s business taxes.
The Saskatchewan Government did it by agreeing to pay its fair share of property taxes on provincial properties situated throughout different municipalities. Regina, the site of 40% of the province’s holdings, will benefit directly to the tune of $30 million once the additional revenues are phased in. Regina Mayor Doug Archer, a prominent New Democrat, then announced the quid pro quo. Regina would eliminate its business tax over three years. An ecstatic Regina business community promised immediately to re-invest the money saved directly back into the city.
But there was more fallout from the NDP’s elegant policy move. Without a business tax, Eaton’s will save up to $700,000 per year on its downtown Regina store, so it has reconsidered its decision to close the facility. The NDP’s plan therefore kills two birds with one stone. It preserves an important anchor store in the capital’s troubled core, while providing a tangible, long-term boost to the economy in the form of permanent tax elimination. Eaton’s will stay, but no one can say it received special favours.
Compare the NDP approach with Manitoba’s.
Here, the province and the city rushed to provide a special three-year grant to Eaton’s downtown Winnipeg store. In the process it opened up an enormous can of worms. Other downtown stores and businesses will now stampede forward in search of similar payouts. Manitoba thereby gains the unfortunate notoriety of being the only place in Canada where politicians agreed to hand over ratepayer money to bail out Eaton’s.
Subsidies and grants will never make a thriving downtown. For that matter, neither will converting Portage Avenue downtown into a temporary pedestrian mall, expanding the library or simply shuffling other activities from the suburbs to the core.
A major clue to the solution was provided recently in the results of a survey conducted by Winnipeg 2000, the city’s business promotion agency. Managers of businesses in Winnipeg and Calgary were asked about the elements that discourage business in their communities. Looking at variables that are controllable-we can’t do much about the weather-produces some eye-opening conclusions. Over 60% of Winnipeg managers cited high taxes as a problem, compared to only 10% in Calgary. Poor civic government was cited by 13%, compared to a miniscule 3% in Calgary. Finally, over three times as many managers in Winnipeg point to over-regulation as a problem.
Winnipeg could outperform Calgary if there was some coherent policy, vision and leadership to address the three obvious challenges identified by the survey. These items have been identified repeatedly before to no avail. The ones who can do something have done nothing.
We can learn from the Romanow Government to stay out of the subsidy and handout game and cut taxes across the board. But that requires the province to bring in a new policy framework for Winnipeg government that improves performance while sharply reducing costs.
Until that happens other places will continue to grow faster.
