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Politicians need guts and smarts

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25Nov

By: Graham Lane

Published: Winnipeg Sun, November 25, 2016

Let’s hope Manitoba’s maxi-weight public sector is on its way to diet. Pallister’s throne speech acknowledges that Manitoba’s perennial government gravy-train needs to be reined in.

But don’t hold your breath, the task is immense.

Of Manitoba’s 515,000 full-time jobs, about 200,000 are in core government, health, education, social and municipal services, and Crown corporations. New Frontier Centre research finds Manitoba’s public sector, as a proportion of the workforce, 31% larger than the Canadian average. That’s roughly an extra 33,000 folks. If Manitoba had an average-sized public sector, taxpayers could save $2 billion annually.

How to explain Manitoba’s rampant public sector feather-bedding?

A deadly confluence of things; government monopolies have little incentive to control costs, managers are paid more if they expand staffs, and, the sector is heavily unionized, flourishing in Kafkaesque work environments both comically bureaucratic and expensive.

Politician paymasters can be overwhelmed by the system’s extraordinary complexity. They pretend to run the place, but, lacking independent public policy capacity, bureaucracies typically run circles around them. Paranoid of bad publicity: much easier to go with the flow, “Yes Minister”-style following the system’s ‘talking points’ while throwing money at the public sector blob (instead of making transformational reforms to provide better services at lower cost).

Much different in the private sector: bad service means lost customers if not bankruptcy. No bottomless budgets to paper over poor service while paying big salaries. Over 50% of private sector employees live paycheque to paycheque, with few reserves and constant worry about security and retirement.

Canada’s federal budget watchdog recently rang an alarm bell over growing government debt; steady growth in public payrolls being the major problem. Few politicians have the courage to refuse to give in to union demands. The result: unionized public sector employees are paid more, fear less about their security, have shorter hours, and enjoy gold-plated benefits and pensions compared to the average private sector worker.

Public sector workers are fortunate being in government monopolies that negotiate with powerful unions, prospering unduly in the continuing absence of smart structural reforms. Unions succeed in ratcheting up pay and benefits through comparisons with other similarly unionized jurisdictions, regardless of differing states of economies. Finally, governments have become addicted to borrowing and delaying accounting tricks before boosting rates and taxes to fund ever-rising public sector compensation.

Manitoba’s Tories have the misfortune of being stuck with cleaning up the immense fiscal wreckage left by the NDP. And, the historical experience in Canada with public sector reform is not good.

Politicians are either afraid or just not clever enough to effectively tame the public spending blob. They need to implement smart structural reforms lowering costs and improving services. The task is not helpless: such policy innovations have been applied very successfully around the world.

Yet, new governments can get flummoxed into saving nickels instead of moving on real reform. The risk is they slip into a maximum pain, minimum gain type theatre of so-called austerity – vacancy management of non-existent positions, token bans on out-of-province travel, reducing the number of government departments, holidays without pay, etc etc..

Hopefully, Pallister will understand the risk; if not it will be knives to the gunfight – as usual.

Graham Lane leads Manitoba Forward (manitobaforward.ca).

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