Moving Manitoba Beyond That 70s Show

Commentary, Role of Government, Frontier Centre

Lost in the noisy federal election was the quiet coronation of Stuart Murray as leader of Manitoba’s Tories on the weekend. By all accounts decent and intelligent, Murray has never held office and begins with an empty policy slate.

Murray runs the risk of filling some very worn shoes. After eleven years in office, the Conservative government had stalled in a shapeless holding pattern, without a clear vision. Confirming the theory that political regimes die of old age, it had coasted along at the end, trying to fine-tune policy models that rooted during the era of the popular TV sitcom, That 70s Show. Today’s wide-open economy requires something bold.

In the late 60s, governments consumed roughly 30% of the economies of both the U.S. and Canada. Living standards were similar. Informed by the ideology of the times, the Trudeau and Schreyer administrations set in train policies that brought state spending, at its peak, up to 50% of GDP while the Americans held at 30%. The planners’ great expectations failed to materialize. We were left instead with debt and taxes, an enfeebled currency and lagging living standards. The Conservatives, both federally and provincially, tried to make big government work better. It’s an impossible task.

In Manitoba, the biggest chunks of the provincial budget underwrite failing industries. The healthcare system, awash with cash after years of annual 10% increases, hobbles along under the burden of lengthening waiting lists and hallway medicine. A billion dollars a year flows into public schools, more money than educators dared dream about a generation ago, yet grade-point averages have fallen by 25%. A slow-growth economic policy, reinforced by uncompetitive taxes and service delivery models, has Manitoba falling further behind.

The reality of tax competition is turning the technocratic dream into a nightmare. Albertans now pay a flat income tax rate of 11%. In the spring corporate tax rates in Alberta will halve, from 15.5% to 8%, while the rate for small businesses plunges to 3%. Last weekend, his own party asked Ralph Klein to end income taxes by 2005. Our local leaders don’t even seem to be dimly aware of the challenge to Manitoba’s tax base. Our major advantage — subsidized electric rates from a constrained Manitoba Hydro — pales in comparison. Businesses, especially new ones, are more likely to turn on their lights in the foothills.

Only far-reaching policy modernization and tax cuts will meet the challenge. Let’s consider Manitoba’s four most pressing policy opportunities.

Provincial politicians are forbidden to innovate in healthcare by federal constraints, but more centralization and “better management” will accomplish nothing. How, then, can we create an efficient system while maintaining Medicare’s vision of equal access for all? The Swedes did it by creating internal markets, breaking up the provider monopoly and allowing competition from independent contractors. Their health care is still paid for out of public funds and access is still universal, but allowing diversity in the delivery of services has enhanced the quality of care, lowered costs and — big surprise — increased the wages of healthcare workers. Waiting lists in Stockholm have declined by 73% since internal markets started in 1992. With our own system lurching towards chaos, the Swedish approach offers Murray, and our other leaders, a way to save Medicare.

Shaping up the public school system is a no-brainer, and the province has all the authority needed to accomplish it. The solution lies in school choice, a policy that would force the public system to upgrade its product or lose its customers. Policy makers need to do four things. First, abolish school divisions and the weak governance model of school boards. Second, fund public education completely from the provincial purse, with no reliance on property taxes, and redirect the funds to parents. Third, promote diversity in curricula by letting parent-teacher councils with real power take over existing schools. Fourth, test every child every year, and post each school’s results in the media. Within a year or two, children would come home knowing how to read, count and maybe even think.

Similarly, there is no shortage of strategies for reforming social services. Workfare has cut welfare rolls in half where it has been tried. If that seems heartless, let’s adopt the Swedish practice of requiring able-bodied recipients of transfer payments to attend school, perform community service or report for afternoon classes on living skills. In tandem, reverse the policy of centralizing assistance with the province by letting benefits be delivered and applicants assessed by neighbourhood-based agencies. Stop family disintegration by liberalizing the rules for extra income and linking the payment stream on total taxable income, with high personal deductions. Free up the social work industry by making professionals bid for contracts that contain performance standards, as they do in Kansas. Help those who need it — but do it intelligently.

Manitoba is unique: its economic strength is concentrated substantially in the capital region. But Winnipeg continues to languish within its low-performance Unicity framework. A new City of Winnipeg Act could quickly end the community’s reputation for unworkable local government. Using practical precedents from other jurisdictions, we could easily incorporate the principles of transparency (measuring costs to compare alternatives), neutrality (focussing on results, not process) and separation (removing politicians from administrative activities) into our urban governance.

These four fundamental reforms are by no means exhaustive, but they cover the most important policy dysfunctions that suppress our potential as a province. It’s another three years until a provincial election, ample time for Stuart Murray to build clear distinctions between his party and the New Democrats, who appear, as yet, firmly wedded to That 70s Show policies.

Unless he plans a second term in opposition, Murray should dump the reruns and offer us something new to cheer about.