Smarter Broad-based Tax Reform

An innocent fog of ignorance about Manitoba’s bloated public finances underlies the dismally-performing NDP
governance model. This explains why no one has really directly challenged the dominant, but extremely
vulnerable, NDP narrative of brittle at-risk public services constantly threatened by ruthless tax cuts and
heartless privatization. The fairy tale provides a free pass for the well-organized public sector union
establishment pulling the strings behind the NDP’s Wizard of Oz façade.

At some point the chickens come home to roost. Over the NDP’s 17-year term, public sector spending grew
wildly faster than the normal economy – an unsustainable recipe for debilitating deficits, debts and constant
greed for ever-higher taxes. Fraser Institute reports that Manitoba’s net debt is rising at the fastest pace in
Canada – 93.4% over the past 8-years.

Brian Pallister observed that public sector spending increased two and a half times faster than the normal
economy during the NDP’s 4-term run. Shockingly that translates into $3.1 billion of higher spending, enough
to eliminate payroll tax ($350 million), the school portion of property tax ($493 million), the land transfer tax
($90 million), and corporate income tax ($590 million). This before either cutting PST by 70% (or 5 points) or
reducing income tax by 50%. Voters hear none of this except the gibberish that public services are perpetually
underfunded and vulnerable to tax cuts.

Prior to calling the election, Premier Selinger issued yet another blockbuster deficit forecast, again setting back
the year in which he, if re-elected, plans to balance the budget. Ever the class warrior, he also trotted out yet
another tax increase in his election platform – proposing a ludicrous surtax on the wealthier, the practical effect
of which would be lower revenue as high-earners reorganize their affairs to minimize taxation.

Taxes are necessary to fund important public services and infrastructure investments. But taxes are also a
drain on economic growth and innovation. Government should minimize, simplify and optimize taxes to attract
investment and jobs while encouraging entrepreneurs to flourish.

With that in mind, assume Selinger’s gang is defeated and reforms begin to improve services while extracting
substantial savings by converging spending to national benchmarks. This would free breathing room for an
aggressive, broad-based tax reform agenda that simplifies, lowers and eliminates taxes to boldly move
Manitoba forward:

  • Raise income tax exemptions and index – cutting taxes for low-income people while ending stealth tax
    increases as rising incomes push taxpayers into higher brackets. (Conservatives)
  • End payroll tax – this tax reduces wages for workers while discouraging job creation,; most provinces have
    no payroll tax. (Liberals)
  • Reform education funding – remove education property tax and pay for schools from general revenues like
    other provinces.
  • Reduce/reform sales tax – lower the PST; convert to a harmonized sales tax on a revenue neutral basis
    aligning Manitoba with most other provinces, eliminating unnecessary duplicate paperwork/bureaucracy.
    Allow businesses tax credits for investing in new equipment and factories. Allocate one percentage of the
    HST to municipalities on a per capita basis.
  • Freeze Hydro rates – – ahead of a comprehensive review of the expansion fiasco.
  • Restore the balanced budget law to include referendums on tax increases; phase in spending limits based
    on economic and population growth.

Graham Lane, retired chartered accountant, chairs Manitoba Forward (www.manitobaforward.ca), seeking
sensible growth-oriented public policies.

Bring in patient-centred health care

By: Graham Lane

Posted: 3/18/2016

Part of Canada’s successful global brand is our single-payer public health-care system, which guarantees access to free health care to all. While being free at point of use it is an expensive system, paid for by taxpayers. Experts agree it may not be sustainable over the longer term.

Compared to other developed industrialized countries, Canada’s health-care spending is among the highest, costs being 32% higher than the OECD average. Manitoba’s health-care spending, now around 40% of the budget, tops out close to being the highest in high-spending Canada. No surprise after 17 years of out-of-control NDP spending. As with the education system, somehow the Selinger government has, rather dismally, managed to combine high health-care expenditures with some of the worst health-care outcomes in Canada — including the country’s longest emergency room waiting times.

Politicians across Canada continue to play safe by shovelling new money into chronically bureaucratic low-performing monopoly systems of health-care delivery. But, the price of catering to our expensive provider and union-dominated health-care model, particularly in NDP Manitoba, is enormous. In 2014, according to the Canadian Institute for Health Information, Manitoba spent $5,000 per person on health-care, $739 per person higher than the national average. If Manitoba, with a political class that oddly seems to revel in the averageness of this province, just spent at the Canadian health-care average we would save about $940 million dollars a year, more than enough, for example, to end both payroll tax and the school portion of property taxes.

At some point, surely there should be limits to spending increases, taxing, and excess borrowing to support a system providing overall mediocre results to patients and citizens. Instead of having a system designed to meet the needs of the delivery apparatus, the system needs to be redesigned to put patients’ needs first.

The next provincial government should begin by studying European models of health-care provision. Some answers lie in a 2010 Frontier Centre study. Frontier co-partnered with Swedish researchers to benchmark Canadian patient outcomes and spending against 34 European countries. Canada scored 25th despite being the highest spender.

The study notes that high-performing health-care systems countries, which generally have single-payer, free at point of use systems, achieve much superior patient and taxpayer outcomes than ours, this due to two basic differences from the lower-performing Canadian system.

First, the top performing single-payer European models broke the delivery monopoly by separating the provider and funder functions of health-care services (known as the purchaser-provider split). Consumers choose to use either public or private clinics, which, in turn, bill a central purchasing authority for services rendered. Second, funding follows the patient, which means no global budgeting where hospitals simply get funded with a block grant irrespective of volumes of services provided — which still remains the Canadian way.

To give Rana Bokhari full credit, the Manitoba Liberals have proposed to dip the sclerotic Manitoba health-care system’s toes into test funding knee surgeries employing the European activity-based funding model. Done properly, it would eliminate waiting lists in this area.

It would be just a start. Trying new proven methods requires leadership. Both patients and taxpayers would benefit immensely upon Manitoba adopting European best practices in health-care reform.

A Reform Agenda for Provincial Governance

By: Graham Lane
Posted 03/10/2016

Manitoba government doesn’t leave room for the rest of society to breathe. It uses its power to reward friends and deter dissent. There should be room for people to act and speak freely. Now we have a provincial government that seeks to control and politicize far too much.

Within the provincial government itself, power should be divided. There should be checks and balances. Public sector officials and employees should be encouraged to exercise and voice their own best professional judgment.

The next government has vast opportunities to improve the transparency and performance of provincial governance, including taking these steps:

– The merit principle should be written into the law for appointments to public sector boards, agencies and commissions. We need transparency in identifying qualifications to serve and about the background of those selected.

– The provincial government should no longer pressure Crown agencies behind the scenes. If the government wants to order crown corporations to override their own best judgment of the public interest, this should be done by a public directive, with reasons given and a period for public comment before it comes into force.

– The Crown Corporations Public Review and Accountability Act and its Council (ever heard of either?) should be replaced by a new system to ensure that crowns live up to the highest possible standards of performance, accountability and independence.

– The role of independent officers of the Legislative Assembly should be expanded and strengthened. Members of Parliament and the public benefit from the thorough and objective reports that the Library of Parliament regularly delivers. Manitoba needs an equivalent research resource.

– Manitoba also needs the equivalent of the Parliament of Canada Budget Officer, to provide non-partisan analysis of legislative proposals and general economic challenges.

– Much public policy is actually made by regulation, not legislation. The regulation-making process, unlike the legislative one, has no provision for public input. Proposed regulations should be released in draft form accompanied by an impact analysis. The public should have the chance to comment.

– Watchdog offices should be strengthened so that the public can count on their independence. Appointment to offices such as provincial auditor, chief electoral officer, ombudsman and PUB chair should require the agreement of the opposition. These officials’ pay should be tied to an objective benchmark. (i.e. a % of a judge’s salary). If the government and opposition do not agree, an interim officer should be appointed by an independent commission.

– There needs to be a broadening of the authority of other watchdogs, such as the Children’s Advocate and the Conflict of Interest Commissioner.

– The auditor general should have the authority to publicly recommend the holding of a public inquiry. The NDP government came to power because Premier Filmon, to his credit, ordered one into a vote-splitting scandal. No public inquiry has since been held into equally troubling issues.

– Public sector advertising should be vetted by the auditor general. It must be strictly informational, not partisan propaganda paid for by taxpayers.

Reform of governance should be among the highest priorities of the next provincial government. It should be transparent, open, and make decisions on rational grounds, rather than patronage, pork-barrelling and the pursuit of partisan advantage.


Graham Lane chairs Manitoba Forward (www.manitobaforward.ca), focused on sound public policy. Bryan Schwartz co-wrote this column and is a law professor and author of “Revitalizing Manitoba.” 
Republished from the Winnipeg Sun online edition March 10, 2016.

NDP’s immigration booby trap

By: Graham Lane
Posted 03/03/2016

 

Recent news that Gord Mackintosh, Daryl Reid and Ron Lemieux will not run brings the number of NDP incumbents not running for election to 12. This large number is tantamount to the NDP throwing in the towel. Recognizing defeat is inevitable and they now spend their last months in power doing everything they can to sabotage matters for the next government.

We have seen what they are doing with Manitoba Hydro, setting the next government up to triple power rates with a plan to borrow $26 billion for building unneeded dams that will subsidize American power consumers. The latest public sector contract has a no-cut clause, hamstringing a new government from rationalizing departments and culling incompetent NDP partisans riddled throughout the government. New laws mandating ever-shrinking class sizes also forces unnecessary costs onto the next government, a recipe for even higher school taxes. And, let’s not forget the now chronic deficits which have followed the NDP’s systematic defanging of Manitoba’s balanced budget law, opening the door to ever-larger additions to the province’s mammoth debt.

Now yet another trap has been set by the NDP, this time in immigration. Last year, under pressure to better manage the flow of immigrants, the NDP implemented an expression of interest process. This allowed them to select applicants with the highest number of points and process them more quickly. This was first prudently managed, with about 70 invitations going to overseas applicants per week continuing up until October last year. Since that time, the number of overseas invitations has doubled to about 150 per week.

At the same time, there remains a backlog of 3,700 old and unprocessed applications from two years ago. At current rates of processing, these older applications would take five years to deal with.

But wait, there is a catch, Manitoba has a yearly quota of only 5,000. Based on the current number of applications invited every week, the quota will be used up in May. And, if they also process a few hundred of the old files from two years ago, then the quota would be fully allocated by the end of April — conveniently in time to mess up the next government.

The large number of invitations still going out seem purposely designed to create problems for the new government. In any given year, there are only about 2,000 approvals of those on Manitoba work permits. These are generally skilled workers, who work here for six to 24 months in order to qualify. If Manitoba runs out of spots by the end of April there will be no way these people can stay. Many will see their work permits run out, forcing them to leave Canada. Some of them have been here as students and workers for up to six years — while highly trained they still will have to leave.

The Provincial Nominee Program has been in operation for 19 years, but never before has it seen this kind of abuse. This is a new low in the government’s behaviour, and will affect thousands of families now living here who will have to go back home. The NDP will either blame the new government or the federal government (for not allocating more spots), but clearly it will be their fault.


Graham Lane chairs Manitoba Forward (www.manitobaforward.ca), focused on sound public policy. 
Republished from the Winnipeg Sun online edition March 3, 2016.

A real world solution for education woes

By: Graham Lane
Posted 02/25/2016

When it comes to our public education, taxpayers and parents should ask: “Will more money result in better student performance?”

The answer is “no.”

The Selinger government runs the most expensive and lowest-performing public school system in Canada. Yet, it shamelessly promises to again up spending above inflation if re-elected. Perhaps a clever political move; 80% of education expenditures goes to pay 14,000 teachers.

The evidence shows that kowtowing to the teachers’ union hasn’t resulted in better educated students. For example, between 2002-03 and 2012-13 enrolment in Manitoba public schools decreased by 3.5% while teacher numbers jumped by 5.8%. In addition, the average cost per student increased by 54% while the Consumer Price Index increased by only 21%. Educational costs, now the highest per capita in Canada, have increased by 2.5 times inflation, Put another way, if Manitoba’s education spending was merely at the national average, the province could easily eliminate the school portion of everybody’s property tax.

The latest NDP wheeze boasts about legislating smaller class sizes. Despite these union-centric policies, average achievement of Manitoba students on international tests has fallen to among the lowest in the country.

Not coincidentally, Manitoba’s worsening student outcomes can be traced to the dismantling of the Provincial Assessment Branch immediately after the NDP was elected. Manitoba is the only province without standardized testing to measure student performance. To start pulling students out of the outcomes basement, Manitoba needs an independent agency that can assess and ensure students have mastered the skills and knowledge required to move ahead.

Imagine an education policy that would have school divisions pay tutors (private teachers, Kumon, Sylvan) to bring them up to grade when the agency assesses students as being two grades below grade-level on core requirement levels. Initially, parents would pay for the assessment of their children, but if they are below grade-level the school division would reimburse the parents for 50% of the cost — with school boards to pay for second and subsequent assessments. When students are up to grade-level, tutoring support stops

How would this help students?

First, it would empower parents in their struggles with educational bureaucracies that are often impervious to their concerns. When parents talk to teachers, they often hear: “Just wait, your child will soon catch up.” Parents know that many children do not catch up — they keep falling further and further behind.

Second, this policy would force principals to keep better track of student performance.

Third, principals would ensure that failing students begin remedial programs immediately, before they fall too far behind and parents begin getting their children assessed. Principals would change the way they organize teaching in their schools. They would increase the time and attention that teachers give to students who are falling behind, and they would reassign teachers so that the very best teach the core subjects to the weakest students.

If principals fail to improve students’ learning, they would be demoted or fired by school boards. The boards would act to avoid having to admit that taxpayer dollars were being wasted on paying for assessing and tutoring for increasingly more students falling below grade-level.

That’s how it works in the real world. Why do we expect less from public schools?


Graham Lane chairs Manitoba Forward (www.manitobaforward.ca), focused on sound public policy. 
Republished from the Winnipeg Sun online edition February 25, 2016.