Moving Manitoba from a “Have Not” to a “Have” Province

Commentary, Role of Government, Jon Gerrard

Under my leadership, our provincial Liberal Party’s ambitious goal is to move Manitoba from a “have-not” to a “have” province. Today, equalization transfers provide 19% of Manitoba’s annual budget of $7.5 billion, making us one of the most “have-not” provinces in Canada. When Manitoba drives forward to become a “have” province, it will attract investment and people as those inside and outside it increasingly see it as a good place to live and work.

Simply setting this goal is important. Too often, Manitoba’s governments have set the bar too low. In fact, the ruling NDP would rather exploit the province’s “have-not” status and maximize equalization transfers from Ottawa, rather than work toward self-sustaining prosperity.

We have identified four drivers to achieve growth in Manitoba:

  • Growth must come primarily from private sector investment.
  • Increased immigration is vital to Manitoba’s economic prosperity.
  • We need to lower taxes and spend tax revenues more efficiently.
  • We need to reverse harmful environmental policies.
  • The key to vigorous growth in Manitoba is private sector investment. In 2003, Manitoba had the lowest per capita rate of capital investment in Western Canada and the third lowest in the country. Over the past 10 years, the accumulated new investment has amounted to only 40% of the Canadian average. This indicates a chronic lack of confidence in Manitoba’s investment climate and economic policies. It is also a predictor of lower relative living standards and a signal that policies need to be reformed to increase investment levels.

    At a minimum, we should strive to increase present levels of capital investment by 50% over the next four years by cutting corporate and business taxes from the highest rates in Western Canada to the Canadian average.

    Rather than take these progressive steps, however, Manitoba’s socialist government has focused on publicly funded projects that result primarily in short-term jobs. For example, Winnipeg’s present downtown mini-boom is public-sector driven, as are several large hydro dam projects now coming off the drawing boards.

    Manitoba’s payroll tax has arguably cost our province tens of thousands of jobs. Head offices like those of Meyers Norris Penny and Louis Dreyfus have left, and growing companies are penalized. To help reverse this trend, we will eliminate the payroll tax. Together with measures to make corporate and personal income taxes more competitive with other provinces, this will improve Manitoba’s investment climate and our economic and employment prospects.

    These efforts must be bolstered by policies to attract and retain more immigrants, who over time create many private sector jobs. Fewer than 6,500 immigrants came to Manitoba in 2003, and that’s not good enough. We need to settle at least 10,000 new Canadians in our province each year. By putting more effort into Manitoba’s successful Provincial Nominee Program, we will bring in more new residents. Expansion of our population and tax base will enable us to run a government that provides higher quality services at a lower relative cost.

    We must also change Manitoba’s taxing and spending priorities. We are not oil-rich Alberta, yet we have the most expensive services per capita in Canada. Today, budgeting in Manitoba remains focused on bean-counting around inputs spent by government agencies, and uses the SILI (Spend It or Lose It) approach. We will embrace a system that reorients departments from input-focused processes toward delivering cost-effective quality outputs. Using best practices models from around the world, we can deliver a high-performance government providing improved services at a lower unit cost.

    In addition, we will focus taxation and spending changes on five areas:

  • attracting and retaining young people;
  • driving the research and innovation needed to develop new and better products and services;
  • building skills and capacity so that people living in Manitoba can work at their highest potential;
  • reforming our delivery of health care and other social services; and
  • refocusing and expanding our investments in children, because early intervention results in large savings in later social and economic costs.
  • For too long, ineffective environmental policies have also curtailed Manitoba’s economic development. For example, the combined pickerel production of Manitoba’s three largest lakes (Winnipeg, Winnipegosis and Manitoba) was historically similar to Lake Erie — but weak environmental stewardship has left the province far behind. Meanwhile, toxic waste from the Sherridon mine is leaking into Kississing Lake and threatening an important sport fishery and tourist destination. In five years of NDP government, no action has been taken.

    Manitoba is blessed with wonderfully fertile soil, incredible lakes and Precambrian shield rocks with high quality ore bodies. It is home to people who are inventive, hard-working and keen to contribute to both traditional and knowledge-based industries. But that potential will not be realized as long as its government focuses excessively on public sector spending, sees more money as the only way to provide better health care, and pays insufficient attention to creating a good business environment.

    We know there is a better way. With the changes our party is proposing, Manitoba can achieve “have” status.