Easy Cost Savings in MB’s Next Budget

The NDP leadership race is where the action is in provincial politics right now. Unfortunately, the top issues – attracting employers, more private sector jobs, managing debt and fixing infrastructure – haven’t been front and centre. Instead, the candidates are promising new programs and new costs.

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Manitoba’s provincial debt is now over $25,380.00 per person (see www.debtclock.ca). Our next Premier should begin by floating plans to stop borrowing and spending more than we can afford. If the candidates are really that hard up for ideas, here’s an easy one: pick the ‘low-hanging fruit’ off of Manitoba’s budget tree. The easiest place to cut can be found in Manitoba’s long list of agencies, boards, advisory boards, commissions, special funds and corporations.

There’s a Trade and Investment Corporation, a Community Economic Development Fund and an Agricultural Services Corporation. There’s a Milk Prices Review Commission, a Combative Sports Commission and a Caregiver Advisory Council. Then, there is the Co-operative Promotion Board with its annual budget of almost $60,000 a year. Board members are paid a small fee to hand out grants to promote a better understanding of co-ops.

Of course, the full list of unnecessary bureaucracy would fill a few pages of this newspaper. Some of these agencies are paid for by taxes and fees charged to a particular industry. For example, the Deposit Guarantee Corporation insures credit union deposits, charges fees to credit unions. Still, it costs the government time and money to monitor each agency, review appointments and to step in if something goes wrong. The fees, along the inferred guarantees, still come out of the Manitoba economy.

If some agencies are really important, it’s still easy to save. Merging two similar boards can save on administration without reducing service. For example, the Manitoba Housing and Renewal Corporation could absorb the Co-Op Loans and Loan Guarantee Board. Civil servants and cabinet committees could and should serve as the legal board of directors for different agencies without extra pay.

Manitoba could even negotiate with other prairie provinces to merge similar agencies – like film ranking boards – to save. Small ones and even ‘big’ ones such as WCB and MPI). The province can cut board members’ fees, shrink the size of boards and use more videoconferencing to reduce travel expenses. Manitoba could save millions if these tactics were applied broadly. It’s so easy, other governments have done it.

A few years ago, Ontario conducted a small review, closing fourteen boards and agencies to save $5.2 million. Cuts included the Ontario Network of Excellence Advisory Committee (shut down), the Stadium Corporation of Ontario (merged) and the Biopharmaceutical Investment Program Marketing Advisory Committee (bureaucrats finally realized the committee was offering advice to a program that had already been shut down).

Late last year, Australia dug deeper into its own agency phone book. They’re in the process of cutting over 250 agencies, saving over half a billion Australian taxpayer dollars.

Agencies, boards, commissions and corporations are Manitoba’s bureaucracy outside the bureaucracy. While trimming them back or merging them won’t even come close to balancing our budget on its own,  it would be an easy place to start. Especially since saving money in these agencies doesn’t mean cutting a single nurse or teacher.

Let’s Truly Liberalize Liqour Sales in Manitoba

“Modern liquor rules come to Manitoba,” the happy headlines said just over one year ago. Give the provincial government a tiny bit of credit for Dave Chomiak’s recent liquor rule reforms – but don’t give them any more than that. Manitoba is still medieval when it comes to liquor regulation.

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Let’s get the biggest issue out of the way: to many Manitobans, the most obvious step is to open up liquor retailing altogether and allow for an open market.

That’s a tough debate to have. Any talk about liquor competition means a hailstorm of criticism from unions, who will claim the province will lose revenue. They don’t care that more open retail rules could mean more sales at a higher price point, generating more tax revenue in the process.  Some hoteliers might even grumble, as our reformed liquor rules still give hotels a quasi-monopoly on beer retail. Remember, hotels still dominate liquor sales in Manitoba because of a Prohibition-era legal doctrine. The idea is that you’ll need a hotel room to pass out in if you plan to buy a beer tonight.

If the MLCC debate scares you, pour yourself a glass of wine and relax. Even if you think it’d be the end of the world if someone bought a case of beer in a corner store, there’s still plenty of ways to reform liquor rules to help our economy.

Yes, this is about our economy. For instance, small liquor manufacturers are one of the fastest growing sources of new factory jobs in many Canadian and American cities. As Steve Lafleur explained in the Winnipeg Free Press last year, “the majority of Americans now live within 15km of a local brewer,” thanks to public interest in higher quality beers, wines, ciders and liquors.

In Toronto, Izumi Sake is brewed, sold and distributed by an Ontario-owned craft distillery, to rave reviews. In Minnesota, you can try Norseman Vodka or even Loonshine White Whiskey, since a state law to open markets to craft distilleries has spawned as many as fourteen new distillers. Many of the local vodkas, whiskeys and gins in production are made with organic grains grown by state farmers.

On the brewing side, our cousins in Minnesota also have rules to make it easy for local craft breweries to make and sell their product wherever there’s demand. The result is a state craft brewers’ association with sixty-three brewer-members. In fact, there are more brewers and distillers of any size in Duluth and the surrounding county – population 200,000 – than there are in all of Manitoba. Minnesota’s approach means more jobs, more local markets for local farm produce, more character for visiting tourists, and more local beer consumed at the expense of competing importers.

Look at temporary permits as a target for reform, too. Even after Chomiak’s reforms, Manitobans still have to walk a maze if they want to experiment with a pop-up restaurant, a fundraiser or a new festival. Look at Raw Almond, Winnipeg’s most innovative and high-profile restaurant. To serve cocktails, Raw Almond still has to sell you tickets which “can only be purchased on the day of your reservation,” as if it’s your cousin’s social in a neighborhood community club.

Then there’s the regulations on serving and selling. Other provinces (and cities) are flexible on opening hours to serve different clienteles. We aren’t. Other provinces allow for off-site retailing by local brewers. We don’t. In other provinces and cities, broader open liquor rules make it easier to enjoy exciting outdoor events and street festivals without the ghetto of a beer tent. Not here.

While the rest of the continent zooms past us, Manitoba isn’t seeing a boom in local brewery or distillery production. We’re not seeing a boom in flexible events and entertainment. It’s safe to blame excessively conservative bureaucratic regulation – and last year’s reforms didn’t go far enough to change that.

Don’t forget, none of this is about liquor safety. If it was, provincial officials would be willing to license Uber services, license more cabs, or do both to make it easier to ‘drive safe.’ That’s not going to happen as long as governments are more interested in pleasing taxicab lobbyists than they are in protecting potential cab consumers. Again, monopolistic thinking is holding Manitoba back.

Real liquor reform can make Manitoba a more attractive place to live. It can also help to create jobs and drive up tax revenues. We won’t exaggerate. We’re probably only talking about hundreds of new manufacturing, service and retail jobs. At most, we’re talking about hundreds of thousands or maybe millions of dollars in additional tax revenue.

Still, if we can really modernize our province in a few sectors like this one, one at a time, it’ll add up to a brighter future that can finally bring Manitoba Forward.

 

Manitoba Schools Should Empower Teachers and Students

In everything from economic growth to energy generation, Manitoba’s excessive bureaucracy and partisan, over-centralized government has choked off our potential. Sometimes, it’s the private sector surrendering power to the politicians by demanding public money before they’ll invest. Sometimes, it’s the public sector stomping out innovation to please their political masters.

One area where too much command and control has limited Manitoba’s potential is in K-12 education. Of course, we need provincial standards to make sure students are getting the basics right. But we can do so much more – if we tried. Instead, Manitoba’s government has taken standardization to a pathetic extreme. They’ve stomped out innovative teaching, learning and school organization in the process.

Perhaps this explains why our school results are so poor for the money we spend. Since the turn of the 21st century, the per-student cost of education has risen roughly three times faster than inflation. The ratio of teachers to students has grown steadily – as has the cost of administration.

With so much invested, we should be getting better results. We aren’t. Last fall, we learned that Manitoba’s educational outcomes rank dead last in Canada in math, science and reading. It doesn’t help that our teachers need permission from their political principals on Broadway before they go to the washroom.

Some observers feel that only radical changes to our system structure will help. There are calls to cut schools and even cut school boards, since frustrated parents hope to shift money administration back into to the classroom. Others argue for radical changes to education delivery, whether it’s on the left by allowing for more culturally-specific education, on the right by allowing for non-profit-run charter schools as they do in Alberta, or whether it’s tech entrepreneurs calling for more investments in educational technology.

Reform is needed. On the other hand, reform takes time. We can start getting better educational quality now if our educational bureaucracy was only willing to be more flexible. Our own teachers are looking for it, and it’s time to start listening to them. Other provinces are already ahead of us.

In British Columbia, provincial officials have led a four-year transformation of the curriculum that’s still underway. Built around five key goals, the new B.C. model insists on “personalized learning,” “quality teaching” and “flexibility and choice” as three of the most important values they want to see, alongside high standards and better use of technology.

Teachers complained that the curriculum was too scripted, with too many picky objectives – so the new model has “fewer, but higher level outcomes” to put measurable improvement on skills ahead of scripted, stunted instructional techniques. Note that British Columbia still has standardized testing for core curriculum goals to measure results, so parents will still know that different student and teacher paths to success are still all about success.

Alberta’s public system is learning to be more flexible through experimentation, thanks to a recently completed ninety-school pilot project for “High School Redesign” that put a familiar goal – “flexibility enhancement” – front and centre.

In Ontario, provincial teachers have had a chance to experiment in how they’d teach more flexibly from the ground up. Public schools there have completed one hundred school level learning pilots for a “21st Century Teaching and Learning” initiative that’s designed to enhance the next wave of teaching and curriculum reforms. Two thirds of the teaching pilots included the use of a technology that many of our kids already have access to: mobile devices.

Even in Saskatchewan, the system is proving more nimble – by adjusting with the calendar. Provincial officials noticed that tying school opening dates to Labour Day meant losing valuable instructional days in years where the holiday fell later in the month. In November, the government tabled legislation to change the rules, so school will begin on September 1st – even in Canada’s most farm-friendly province.

Meanwhile, here in Manitoba, nothing meaningful will be changing in the 2015 school year when it begins on September 8. – losing four instructional days in the process. The Ministry of Education will still be building its firewalls as always, hoping to snuff out even the faintest spark of change, innovation or reform.

Manitoba Forward is here to help teachers win this fight, and to help students win the chance to learn the way their neighbors will be learning in other provinces – where they’re already spending less and getting better results. Help us make education a place where we can move Manitoba Forward again – and share your ideas on how better public policy leadership can improve our education system.

Manitoba Forward Fact-Sheet

Manitoba Forward Fact-Sheet

  • Manitoba Forward is a non-partisan organization that does not endorse either opposition party or leader and includes members from all walks of life
  • Manitoba Forward’s core objective is promoting and mobilizing voters around smart policy solutions through the next provincial elect and on an indefinite basis afterwards
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Stop Politicizing WCB

The NDP government, whoever ends up running it, should not tamper with the Worker’s Compensation Board’s approach to setting employer premiums. If it does, it risks transforming a system of risk-adjusted insurance premiums to just another form of one-size-fits-all payroll tax.

It comes as no surprise that Selinger, down in the polls and in disarray, is headed to rewarding his close union friends with yet another labour-leaning change to the WCB.  But, will the change be in the interests of all workers? Unfortunately, bending yet again to the narrow interests of organized labour will end up costing jobs and economic growth.

Public sector union leadership and the NDP support each other even while rank-and-file union members become increasingly disenchanted by NDP policies. While globalization has weakened the power of private sector unions, with multi-plant employers having no need to cower over the diminished risk of strikes, public sector unions remain strong, operating in unreformed, old-style government monopolies. Teachers, nurses, the MGEU and CUPE can still evoke anxiety in the minds of their NDP brothers and sisters, particularly when an election is in the wind.

While the vast majority of the unionized civil service in Manitoba go into work everyday not to curry political favours but to do great work for great work’s sake, the same cannot be said about union bosses. There’s an understanding between the NDP and labour leadership to satisfy the union bosses and expect the favour to be returned (donations, media buys, campaign workers, candidates). The MGEU provided Doer, CUPE, Kostyra: a Premier and a Finance Minister. Does this symbiotic relationship involve a conflict of interest? You betcha!

It is no coincidence that the drift to ever-bigger government throughout the NDP’s 15-year reign has occurred during a time when Manitoba has yet to see a major private sector employer arrive. Rather, the province has seen a succession of major private sector job losses — closures, downsizing, transfers of work to other jurisdictions.

So, it is unwise to play with the WCB’s employer assessment system, a sound approach which a dying Selinger government is preparing to trash. The current system provides an incentive for employers to pay attention to safe working conditions, not to suppress claims.

Better, let’s have a comprehensive review of the current out-dated approach to compensating and rehabilitating injured workers, perhaps towards a model of jointly-funded employee-employer 24-hour accident and illness insurance. It would provide insurance whether disability was due to work or not.

And, while claim suppression (the union bosses’s argument for change) may, rarely, occur, the penalties are significant enough to promote good behaviour. Who promotes claim suppression?

The current approach provides lower premiums for employers when accidents decrease. Lower premiums help employers succeed while investing in safe workplaces. Pro-active positive measures that produce lower employer assessments are in the interest of both employers and employees. An incentive approach promoting safety has long been adopted by private insurers, and MPI.

The NDP consistently favours organized labour. But, it is in the best interest of all workers, employers and the economy if Selinger’s crew keeps their clumsy thumbs off a balanced, sustainable win-win WCB assessment model.

Again, what is needed is a truly independent review of a long-outdated and inefficient program, one where duplication, inefficiency and favours by government rules. With union-biased Greg Selinger “up the creek without a paddle,” let’s hope it ends his move to a more political and less sustainable system.

Manitoba’s Cooling Housing Market

The largest component of most family’s net worth is the value of their home. During the past decade values have increased faster than the rate of inflation. Better still, gains in the value of your principal residence are tax free. Upon retirement many downsize and count on the profit from sale of their home to help them enjoy retirement.

Gains have been spiked by ultra-low mortgage rates, a spin-off benefit of the global recession of 2008-09. Central banks have driven rates down well below normal levels in an attempt to promote spending and economic recovery.

With the recovery underway, spotty as it is for Europe and several Canadian provinces Including Manitoba, signs point towards rates beginning to climb in 2015. With current inflation in the range of 2-3%, the normal expectation for five-year mortgages is 5-6%. Today, you can get a rate below 3%. What happens to house prices when rates rise?

Lenders limit their mortgages based on ability to repay. With higher interest rates the ability to repay declines, along with the size of loan offered. As mortgages get smaller pressure is then put on house prices, which fall. The hope is that rates will rise slowly and any price declines will be modest.

That said, it is best to also consider “other factors,” Here I comment on only a few of them. First, the general picture. The prestigious Economist magazine estimates that Canadian house prices are generally over-valued by 32%. Only Belgium, Australia and Austria were noted as having houses more over-valued than Canada’s.

Then, consider information recently released by the Winnipeg Realtors Association. It reported that sales had fallen to 1,137 while listings topped 5,100 at the end of August. The WRA President said “buyers are taking “¦ more time” and that the situation was good for buyers. Nationally, listings fell and in the hot markets sales to listings increased. Here, listings grew and the ratio of sales to listings fell to just below 20%. Trouble!

More troubling signs come from Statistics Canada’s recent employment report. Manitoba has no more full-time jobs now than it had two years ago in August 2012. Immigration is slowing and more Manitobans are leaving the province than other Canadians are moving here. As well, Manitoba’s average wage is among the lowest in the country. About 30% of households are considered to be of lower-income according to Stats Canada, and 20% of Winnipeg residents have accessed the city’s food banks.

From all of this, it’s clear that Winnipeg house owners shouldn’t expect further price appreciation in the near term for their property. Worse, there is a real risk that current values will fall. We shouldn’t put up our homes for sale on spec unless we have to. Listings are very high and sales slow. Prices are not galloping upwards anymore. Manitoba is not “growth country.”

Manitoba’s Real Unemployment Rate

Manitoba’s NDP government has a bad habit of hiding its economic failures. One of the provincial government’s best tricks is to brag about our low unemployment rate. Is that the right measure of success?

Statistics Canada shows that Manitoba’s unemployment rate in December 2014 was low, at 5.2%. At first glance not bad at all compared to the national rate of 6.6%. But when we factor in those who have left Manitoba to look for work, our unemployment rate could be closer to 13.8%.  Manitoba exports its unemployment to other provinces. We’ve all seen it.

FACT:

If we’d just kept up with the national average for job creation since the beginning of the year 2000, there would be 29,000 more jobs in Manitoba today.

 

Are you angry that young people are leaving Manitoba because the NDP can’t create good jobs in Manitoba?

Let’s hold the NDP accountable, Become a Member of Manitoba Forward

 

Your neighbor’s daughter couldn’t find work in her field in Winnipeg, so she left for Calgary.  A cousin moved to Vancouver because it’s better place to start a technology business, and he dreams he’ll have accomplished that within five years. A thoughtful civil servant you knew got tired of working for a doing not much practical government, so he took a similar job in Regina. The university ‘A’ student who waited tables at your favorite restaurant is leaving for Toronto to pursue an academic post; she wants to specialize and knows Manitoba universities limit themselves by trying to be all things to all people. A manager friend took a promotion and moved to Mississauga, because that’s what you have to do to get a promotion if you’re from a province where the number of private corporate HQs is not only low but also on the decline.

For too long, Manitoba’s greatest export has been talented, ambitious and innovative people. We still have many bright minds and skilled workers left, at least for now, but we’ve lost too many.  Most left to find better opportunities.

It doesn’t have to be this way.

The first two reasons people leave is because Manitoba both fails to create enough work to keep them here and too much of the private sector work that is here is of lower income.  Other provinces, particularly our western neighbours, have been more successful. They outpacedus because their voters didn’t accept excuses and mediocrity as a substitute for policies promoting private sector job growth, investment and innovation.

“Steady growth, good jobs.” Really? It’s not just that most of the new jobs in Manitoba aren’t good jobs. Remember, Manitoba jobs pay less than average jobs anywhere else in Canada except Quebec and the southern Atlantic provinces. Yes, even an average job in Newfoundland and Labrador pays better than here.

Manitoba under the NDP is also a failure in the number of jobs created. Manitoba’s job growth hasn’t been steady. It’s hasn’t even been average (national average, 22.5%). In the 21st Century, we’ve grown Manitoba’s job pool by 17.2%. Most of that tied one way or another to government and deficit spending.

If we’d just kept up with the national average for job creation since the beginning of the year 2000, there would be 29,000 more jobs in Manitoba today. Our failure to create new jobs at even that average rate has had consequences. Think of all those opportunity refugees: the unemployed neighbour, that entrepreneurial cousin, the depressed government worker, that student waitress seeking a better opportunity,and that ambitious will-be entrepreneur.

If you look at our annual net out-migration, we’ve exported over a hundred thousand people in just a few decades. If you look at the raw totals, it’s even worse, as the trend is getting worse. During the five years 2009-2014, over 80,000 people out-migrated from Manitoba to other provinces. On average, 2/3rds of those people would be here and in our workforce if the opportunities were better..

If every working Manitoban in that group came home tomorrow, what would happen? Mathematically, without a magically arrival of new employers, our unemployment rate would soar to 13.8%. Instead, it’s much lower because we exported the demand for good jobs to other provinces.

Whenever they’re challenged with numbers like these, the government’s first response has been to attack the figures. That’s a mistake here. First, all of these numbers are based on StatsCan sources, including seasonally adjusted labour figures. But even if you found a way to make our ‘moral’ unemployment figure only 12%, or 10%, or even 8%, the point doesn’t change. Our job growth is still below average. We’ll still know that our friends and family have kept unemployment artificially low by moving away.

So when the provincial government tries to hide its job creation failure, tell them it’s time to stop hiding from our problems. Tell them it’s time to start moving Manitoba forward again, before we export another generation of underemployed and unemployed friends, relatives and neighbours to other provinces.

Hydro’s Mega Project Should Be Halted

Manitoba’s NDP government forced Manitoba Hydro to ditch a plan for an east-side routing for Bipole III. The routing direction, made on purely political and ideological grounds, led to an overall massive hydro development plan that is unsound, will cost Manitobans dearly and should be halted.

The much longer western route was set without regard for the engineering, economic, environmental and sociological implications for wildlife and people, Hydro ratepayers in particular. Especially affected are landowners who have the misfortune to farm and live in the right-of way, First Nations and Metis whose lifestyles and livelihoods will be interrupted by the transmission line, and lower-income households relying on electricity for heating. They all have had little to no influence on either the route or the mega project itself, despite Manitoba Hydro’s protestations to the contrary.

Forecasts for power requirements that might have been valid in 2007 are no longer applicable. Consumers are now using electricity more conservatively and the export market has changed significantly, that due in large part to inexpensive fracked natural gas and American incentives for wind and solar generation. As well, construction cost forecasts have exploded, basically doubling already, while spot export electricity prices have tanked.

With a damn-the-torpedoes approach, the government and Hydro have proceeded as though these market changes never occurred. Together, they called the shots in a regulatory process that was intentionally flawed and deliberately biased to achieve a predetermined and financially disastrous outcome — new expensive northern dams and north-south transmission that will produce and deliver more energy than Manitobans need, with a strategy to feed the excess into an export market that will buy it only at rates significantly lower than cost.

And, while the provincial government’s revenue from Manitoba Hydro operations will skyrocket, it will be all at the cost of ratepayers. Manitoba ratepayers are being expected to backstop this ill-conceived plan that will bring long-term advantage only to Americans.

I fully expect that, if this wrong-headed and risky plan proceeds to completion, Manitoba rates will triple, severely crippling the finances of lower-income households, indeed all households that rely on electricity for heating, and industry. As well, Manitoba will be at significant risk — drought (now overdue), interest rate increases (virtually inevitable) and further construction cost increases (predictable).

Taking into account that concurrent system refurbishment is forecast to require $12 billion in any case, should the $22-billion-plus gamble on the future American market for imported power proceed? No!

After 144 years as a province, Manitoba’s provincial government debt has risen to about $30 billion, having grown at an accelerated pace over the past 15 years. How will the long-term credit market view a potential doubling of debt over the next decade?

The Hydro mega project is unnecessary, risky and wildly expensive. If the residents of Cross Lake have trouble meeting $600 monthly electricity bills in winter, how will they make out when rates triple? Some of Manitoba’s largest industries have said they are here largely because of low electricity costs. Will they stay and others come if the so-called Manitoba advantage is gone?