Tale of Two Towers

Commentary, Taxation, Peter Holle

Two office towers in two western cities offer a poignant metaphor for the major challenge that faces Winnipeg, one that no candidate in this civic election has bothered to address.

In Calgary, energy giant Encana recently announced it will build western Canada’s tallest office building to address a critical shortage of space there. Flip the slide to Winnipeg, and the Canadian Wheat Board’s headquarters, housed in an unremarkable edifice just off Portage and Main, wedged in among the high vacancy buildings that formerly contained major corporate headquarters.

Despite easy excuses that it thrives because of oil, Calgary sits in a province with a relatively hands-off model of public policy that emphasizes low taxes and private-sector activity. The overall impact of government is low, about 28% of the economy.

The economic motor of Manitoba, on the other hand, the City of Winnipeg, operates within a much different model, one based on huge federal transfers and comparatively high taxes, which together fund a rickety, highly politicized set of government organizations, including crown corporations and sprawling bureaucracies in the health and education sectors. If you add up federal, provincial and municipal government spending, you find that about 50% of the economy is under the control of politicians.

Calgary’s population has just surged past one million. Winnipeg, once the third–largest city in Canada and the largest in western Canada, is now 8th in Canada and 4th in the West.

Winnipeg’s future is like the Wheat Board debate. Do we look to the future or hang on to the past? Do we preserve a model and government organization designed to serve a declining raw grain economy – and fight for a few hundred local board jobs – or do we ease the monopoly and create a dynamic, value-added food sector with headquarter jobs spread among several lithe but growing food companies?

More broadly, is our city’s future based in the past of 70s-style public policy, with politicians and central planners pretending to run the commanding heights of the economy on a pillowy sofa bed of equalization, subsidies, crown corporations, slick political talk and otherwise unfriendly investment policies? Or do we do the unthinkable and move on to other more successful and dynamic policy models? More succinctly, do we want to be winners, or nostalgic losers?

The present election contest is missing a champion for the winners. Midst a lot of talk about trees – the eclectica of city governance like bike paths, downtown housing subsidies, infrastructure deficits, and so on – where is the talk about the big picture, the forest?

Winnipeg was built on the back of a thriving, dynamic business spirit, the boomtown ethic that now energizes Calgary. But now we smother that spirit with an oppressive mindset of regulation and taxation. Mayor Sam Katz and his ally, Councillor Franco Magnifico, regularly boast about the Red Tape Commission, probably the best idea they ever had. But of the dozens of recommendations the Commission made, how many have been implemented? Perhaps one.

Winnipeg can grow again. But first we have to understand why we don’t now.