Just Say ‘No’ to Spending

Frontier Centre, Media Appearances, Public Sector, Uncategorized

As taxpayers mull Dan Lett's recent column It's time to consider tax hikes, here are some facts to consider.

For those not familiar with the column, Lett argues tax hikes should be considered to address the province's deficit.

If one scrutinizes the Manitoba government's spending track record in greater detail, however, Lett's proposition becomes much harder to stomach.

First, Lett notes that "even if government did not hire a single additional person, or do anything more than it had the year before, spending would still go up thanks to inflation."

That's not entirely true. Governments often fund one-time projects, so savings could be achieved merely by saying "no" to new, non-essential funding requests.

For example, last year the Selinger government announced $100,000 in funding to build a new statue in honour of Ukrainian women. Nothing against Ukrainian women, but for a province deep in debt, spending money on things like new statues is hardly a priority.

Second, governments also lose hundreds of employees each year due to retirements.

For example, according to the provincial government's 2010-11 Civil Service Commission Annual Report, 24 per cent of its 14,440-person workforce will be eligible to retire within five years. That's 3,466 employees that will soon be ready for retirement for those scorekeeping at home.

As the Frontier Centre for Public Policy has noted, the Manitoba government has a high number of employees per capita compared to other provinces.

Merely by relocating employees to priority areas, instead of rehiring, the government could save hundreds of millions of dollars in staffing costs. Again, we're not talking "drastic cuts," just expecting the province to become as efficient as the average Canadian provincial government.

Lett's column also did not explore just how much spending has increased under the NDP.

In 1999, the last year Gary Filmon's Progressive Conservative party was in power, spending came in at $7.3 billion. Yet for 2011-12, once you exclude flood costs, the NDP has increased spending to $14.1 billion. That's more than double the rate of inflation over the past decade, even when you account for population growth.

So now let's put the deficit in context. First, many of the flood costs are one-year expenditures such as temporary assistance. Thus, if you look at the province's deficit and strip out flood costs, the $1.1-billion deficit becomes a $629-million problem.

That sounds like a lot of money, and it is, but it's only 4.5 per cent of the province's $14.1-billion budget.

After a decade of increasing spending at double the inflation rate, couldn't the government find 4.5 per cent in savings for just one year? Or maybe over a two-year period? After that, spending could resume at the rate of inflation.

For a typical family, that's the equivalent of seeing large pay raises for a decade and then having to spend a year with a bit of a tighter belt. Perhaps that might mean fewer dinners in restaurants, Junior wearing some of his older brothers' clothes and Dad getting another year out of that six-year-old car. Clearly, those are decisions families make every day, so why couldn't the government follow suit?

The reality is, spending has been on a torrid pace under the NDP and that's why Manitobans already pay the highest income taxes in Canada at the $40,000 income level.

It's also why Ernst and Young's online income tax calculator shows we pay some of the highest taxes at many other income levels as well.

High spending is also why Manitobans, unlike most Canadians, pay a land transfer tax when they buy homes ($3,650 on a $300,000 home), businesses here have to pay a payroll tax (a "bonus" tax once a company pays out $1.25 million in salaries each year) and both businesses and individuals pay large school tax bills.

To suggest the average taxpayer, who is already paying high taxes, and has no workplace pension plan, should pay more to feed a government that can't meet its spending targets, well, that's more than a tough pill to swallow.