Selinger’s Broken Tax Promise is the Least of it

Commentary, Taxation, Steve Lafleur

Premier Greg Selinger is wasting no time gutting the province's balanced-budget legislation, in order to push through an increase to the provincial sales tax without a referendum.

I'm not sure if I'm more annoyed by the brazenness or impressed by the ruthless efficiency with which they're gutting the balanced-budget law.


Then again, they've probably had a draft of the bill tucked away in a file for such an occasion since before they formed government.


The troubling part of this move is the need for a PST increase is entirely of the government's making. Two additional changes to the legislation — allowing the province to run deficits in the event of declining equalization revenue and sudden drops in revenue from Crown corporations — are written as though they understand the challenges their government faces, but would rather make excuses than decisions.


On the bright side, it seems they've finally stopped blaming the Filmon government for everything. Now they're using floods as an excuse for poor fiscal management and blaming future deficits on events they plainly foresee, but haven't the intestinal fortitude to plan for.

Balanced-budget legislation isn't sacred. It is something that can be undone by any government at any time. Gutting the legislation would be forgivable, had the government not pledged to keep the legislation intact. But they did.

Increasing the PST without a referendum is contrary to the spirit of the law and the government's own election-time promises.


The two additional changes to the legislation suggest the government sees the two icebergs that everyone else spotted long ago, but won't change course. The first is if Ontario continues its economic slide, Manitoba's equalization revenue will decline. At this point, there isn't any reason to believe Ontario will creep back into a "have" position any time soon.


Failing to prepare for the fallout is wantonly reckless. Instead of preparing, the solution is to ask for forgiveness in advance.


The second appears to be an acknowledgment of the risk posed by Manitoba Hydro's $20-billion dam explanation. After all, the shale gas boom in the United States has significantly reduced the market for hydroelectricity. It's not at all clear who will buy the additional generation. But if this entirely foreseeable disaster manifests, the government will now be exempt from balanced-budget requirements.


Manitoba does not require additional revenue. Manitoba has 23 per cent more public-sector employees per capita than the Canadian provincial average. If the province reduced its rate of public-sector employment to that of New Brunswick — which itself is above the national average — Manitobans would save $640 million annually.


Those savings would exceed this year's projected $515-million deficit. While it wouldn't make sense to slash employment levels, the province could actively encourage attrition over time so existing workers aren't affected. Given the impending retirement of baby boomers, significant public-sector employment reductions would be easily achievable without layoffs.


Instead of trying to scare voters by evoking Gary Filmon or blaming external circumstances, the Government of Manitoba needs to acknowledge the gravity of its current circumstances. The province's fiscal challenges are of its own making. It could choose to meet those challenges, but appears more interested in making excuses for the NDP's own bad decisions.