Returning to Manitoba’s Past Glory

“Manitoba has always been blessed with an abundance of natural resources and strong people with an entrepreneurial spirit. Manitoba’s citizens, whether born here or arriving from other places around the globe, share a common desire to enrich their lives and the wellbeing of their families. Manitobans believetheir fellow citizens should be able to benefit from the opportunities and abundance the province has to offer.” The pre-amble to Manitoba Forward’sprinciples for good public policy represents the core belief of concerned citizens across Manitoba and a call-to action to return to our past glory.

 

Manitoba was built on the steel shoulders of those who envisioned Manitoba to be the heartland of Canadian achievement.  And for a period of time, we were. Be it bush pilots who established a hub of commerce in the north, the giants of agriculture who created Canada’s food economy, or the commodity traders who first drove its economic engine, ours is a province founded by entrepreneurial spirit.

 

While conditions seem very bleak for our province right now, the good news is we have strong bedrock to rebuild from. Manitoba Forward has developed a list of principles for us to get back to being a vibrant and prosperous province. I identify but an important few in this space.

 

Manitoba depends on the free flow of goods, services, and people. We will work to keep our borders open with all of our neighbours, particularly those closest to us; British Columbia, Alberta and Saskatchewan. We will also actively encourage free trade on the international level.” For sixteen years, the NDP provincial government has promoted highlyprotectionist public sector dominated economic policies that have held Manitoba back. It is Manitoba Forward’s view that joining Canada’s New West Partnership Trade Agreement would allow Manitoba to work with ourneighbouring western provinces to grow our economy.

 

“Structural deficits are destructive to the long term health of the Manitoba economy. Deficits should only occur in times of real economic crisis and should be eliminated as quickly as possible if they do occur.” The NDP lives by borrowing. Manitoba currently pays approximately $800 million annually to service our debt. That’s approximately $200 million more than we spend on non-Hydro  infrastructure in Manitoba. With even a one or two percentage point increase in interest rates, coupled with our growing debt and recently downgraded credit rating, that figure would sky-rocket.

 

“Crown corporations should operate transparently and in the best interests of the public. Their goals should be defined clearly in legislation, their performance should be regularly assessed, and there should be no behind-the-scenes political interference with them.”

Manitobans should be aware of how political interference in Crown corporations is hurting this province.  For but one example, the NDP’s continuinginsistence that Manitoba Hydro build Bi-Pole III, Keeyask and Conawapa dams, while updating editing infrastructure, could double overall public debt, triple electricity rates, and potentially bankrupt Manitoba.

 

The reason Manitoba once prospered was because of hard work, good ideas and entrepreneurship. Unfortunately, this provincial government has taken every step possible to undermine those values. The good news is Manitobans have seen enough and will soon have the chance to bring about a change.

Manitoba’s Deficit Crisis

Facts are facts. The facts on Manitoba’s debt should worry you. They should worry the government, too, but they’re not paying attention.

Fact: our total provincial debt is long-past record levels, and growing. The Moody’s credit agency is worried, they changed the outlook on our credit rating to “negative” making it more expensive to borrow. Whether debt costs are reflected in taxes or higher Hydro bills, it is still us who pay.

Fact: none of the three New Democrats running for premier expects to rein in their borrowing. They haven’t even got a plan to balance the government’s annual accounts, ever.

The line you hear lately about government debt is that it’s cheaper than ever to borrow. But at the rate Manitoba is borrowing that’s like saying it’s cheaper than ever to get addicted to heroin. Economists say it’s smart to borrow in hard times and have surpluses in good times, but this Manitoba government racks up debt in good times too — putting hard times around the corner.

For three decades, interest rates have been dropping. That’s the only reason why the carrying costs for Manitoba’s debt, including Hydro, has yet to explode.

But interest rates are sure to go up eventually, they have been kept artificially low only by the concerted efforts of national central banks worried about the global economy. And, interest isn’t the only problem with government debt. Over time, as every year passes, the full debt principal on another year’s borrowing comes due. Not being able to repay that principal, we have to refinance.

Interest rates are now so low that even a small tick up will mean a big increase in debt servicing costs upon refinancing current debts. Suppose a future government has to refinance at a 6.5% rate in 10 years’ time. Taxpayers and ratepayers would suddenly be paying twice today’s interest rates for another 10 or 20 years, just to cover the damage from 2014-15 deficit and borrowing.

Whether interest rates stay low for the next few years or begin their inevitable rise, every new dollar the government borrows is costing us now, and will cost the future more.

It doesn’t have to be this way. If Premier Selinger, Premier Ashton, Premier Oswald or their successors would simply promise to use early retirements and normal attrition to cut the size of Manitoba’s over-blown bureaucracy down to the national average, the provincial budget could be balanced quickly without forcing a single civil servant out before their time.

The NDP isn’t listening — yet. The way they’re piling on more debt is like the cliché of the frog who starts out in a cold pot of water on the stove. The frog’s temperature adjusts enough as you turn up the heat that it doesn’t know it’s boiling until it’s too late.

Science has proven that delaying escape doesn’t work with frogs. But it’s still trying to work that way with the Manitoba government. It’s now government policy to sit and wait until the pot boils before doing anything to jump out of it. Worse: the candidates for NDP leader are already saying they want to let that water boil for longer than we once thought possible.

Reforming Severance Pay – Putting an End to Back Door Bonuses

Severance Reform – Putting an End to Back Door Bonuses

Last week, Manitobans learned that when Greg Selinger’s former chief of staff left his job last November, he departed with $146,000 in severance and leftover vacation pay. He’d only been on the job for two and a half years.

Is this an outrage? Yes, but the problem isn’t with Martin personally. News reports made it clear this is really a problem of broader government policy. Apparently, under the NDP, insiders can now expect a year of severance on their way out the door as a matter of routine.

Public confidence in government has been undermined by the public’s growing belief that many politicians, political staffers and senior civil servants are in it for themselves. Headlines about rich severance, expenses and carefree travel have fed this sense that government leadership is about entitlement, not public service for fair pay. In the process, the hardworking majority of public servants suffer, thanks to guilt-by-association.

More than a year ago, concerned Manitobans created a new organization — Manitoba Forward ­— to call for real action on our biggest challenges. Guiding Manitoba Hydro and balancing the provincial budget are big challenges. Improving education and health care are big challenges. The search for higher-wage private sector jobs and more investment are big challenges.

Those issues matter — but we won’t be able to fix our problems if we don’t also change how Manitoba’s powerful political class does business.

Once severance is so high that payouts push public servants into the very top tier of Manitoba incomes, we are at a point where severance isn’t a transition payment at all. Once political figures can count on rich payouts whether they quit, were pushed out or got fired, then it isn’t a transition payment any more. It’s a back-door bonus, different from salary only in that you get to collect it after you’re no longer accountable for it.

In a province with so many challenges — and so much untapped potential — issues that undermine public confidence in government deserve attention. That’s why we should ask our local MLAs and candidates to formally promise to reform public sector severance. Whether it’s a pledge, a policy or draft legislation, change is needed. Note that Winnipeg Mayor Brian Bowman recently tried to reform city council severance and pay, with mixed results.

New rules should end big severance payouts in the public sector, with none for voluntary retirements and resignations. This has been a costly and unfair privilege that distances Manitoba’s overpowered political class from the general public. We must limit how generous public sector severance can be to match economic realities. Three weeks or a month per year of service is considered generous in the private sector.

If those changes had been in place, Martin’s severance payout, assuming he was fired, would have been something closer to $30,000 plus unused vacation, not $146,000. If he’d been fired for cause or voluntarily resigned, his payout would have been just for unused vacation, as it is for thousands of taxpaying Manitobans leaving private sector jobs.

Levelling out and reforming severance policy for the public sector is not the biggest problem with government practices in Manitoba today, but it is one worth dealing with.

Selling Innovation in a Forward-Thinking Manitoba

We’ll be discussing our potential as an innovator June 13 at “Manitoba Could Be…” a policy summit discussing how we can thrive again. Register now. 

Selling Innovation in a Forward-Thinking Manitoba

There’s a reason why Manitoba is last in Canada when it comes to creating small businesses

This week, Manitobans who are hoping to build their businesses gathered at the Winnipeg Convention Centre. They attended an event called Driving Innovation. It’s all about helping small businesses develop new products, new services and new business models – the key to a growth in a modern, job-creating economy. While Manitoba has produced no shortage of hardworking, brilliant entrepreneurs and innovators – there’s a reason they’re leaving this province in drovers for greener pastures.

Manitoba’s Minister of PR – Kevin Chief – will be stopping by for the customary greetings – but don’t expect his speech to be candid about the truth.

The truth is: Manitoba is a difficult place to start an innovative new business.

In fact, Manitoba is LAST in Canada when you measure how many small business employers we have per capita.* We’re talking about small businesses that have created jobs, not just self-employment businesses that Manitobans created out of desperation in Manitoba’s low-wage, low-opportunity economy.

Province Employer Small Business / Population Ratio (December, 2012)*
Alberta 1 small business for every 25.6 residents
Prince Edward Island 1 small business for every 26.2 residents
British Columbia 1 small business for every 26.9 residents
Saskatchewan 1 small business for every 28.4 residents
Newfoundland and Labrador 1 small business for every 30.8 residents
New Brunswick 1 small business for every 30.8 residents
Nova Scotia 1 small business for every 32.4 residents
Quebec 1 small business for every 34.8 residents
Ontario 1 small business for every 35.2 residents
Manitoba 1 small business for every 35.4 residents

It gets worse. It might seem like we’re in good company if Quebec and Ontario have fewer small businesses per person. But they also have more medium and large businesses per capita to make up the slack. In fact, we’re in last place overall. Manitoba has fewer employer-businesses of any size per capita than any other province either – a shocking sign of the NDP’s reckless indifference to the business climate in this province.

What’s gone wrong? We’ve got too much red tape. Our liquor laws make it difficult to start a microbrewery. Our labour laws make it difficult to run a small manufacturer. Our tax laws penalize R & D. Plus, there’s the long list of higher taxes and fees: low small business corporate tax rates don’t make up for higher payroll taxes, higher income taxes and higher sales taxes. Plus: Manitoba’s innovation policies don’t live up to their hype.

For example, Manitoba’s research and development tax credit is at 20%, making it more generous than in other provinces – on paper. That doesn’t matter, since the paperwork needed to take advantage of those credits is more complicated, rendering them less useful than advertised. Manitoba created a much-hyped Innovation Council in 2009 – but government policy doesn’t look much different than it did before it, aside from a slow-footed campaign to consolidate and reorganized various incubators, funding agencies and research councils.

Manitoba has a capital tax on banks and loan companies, pushing funding sources and investment out of the province. The result of this and other anti-growth policies: less capital available for investment. Last year, our businesses made fewer venture capital deals than Saskatchewan, Nova Scotia, and even fewer than tiny New Brunswick. In terms of overall private investment, we’re attracting less than half of what Saskatchewan is bringing in each year, despite their smaller population.

Now, it’s true that a number of politicians did manage to put up a sign a few weeks ago, renaming a street in the Exchange District as “Innovation Alley.” But that’s not much different from the signs you see in provincial political ads talking about “Steady Growth, Good Jobs.” The facts don’t support the hype. Most of the innovation happening on Innovation Alley or elsewhere is in spite of government policy, not because of it.

For too long, innovative businesses, new job creators and new business models have been treated like enemies in Manitoba. You may remember the Taxi Board stomping out any discussion of ridesharing. You may have heard about the province’s neglect of basic road infrastructure in front of productive rural factories, while it had plenty to spend on new headquarters for crown corporations. You may have read about how provincial food bureaucracies have stomped on local businesses for daring to offer local, organic, natural or innovative food products. If anyone’s putting up a sign at the border, it should read “innovators, beware.”

For the sake of those gathering to talk innovation at the Convention Centre today, and for the sake of our kids who’ll be looking for the jobs of the future, it’s time to start being more forward. It’s time to start making room for Manitoba innovation.

 

Manitoba Forward calculation using Statistics Canada’s December 2012 study of employer-businesses. (latest data available)