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Slow recovery a one-term policy

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19Aug

By: Graham Lane
Posted: Winnipeg Sun, August 19, 2016

Recently Standard & Poor’s cut Manitoba’s credit rating, citing the province’s high debt burden compared with
similar jurisdictions within Canada and internationally. Don’t attach blame for Manitoba’s stressed finances on
the recently-arrived Pallister Government, but by planning to balance the budget in 8 years risks his team
wearing it.

Some PC old-timers and insiders defend a go-slow attitude, blaming over-aggressive budget cutting for
Sterling Lyon government’s defeat way back 35 years ago. But the largest PC majority in history (a 20 seat
margin compared to Lyon’s 10 in 1977) signals public support for a more aggressive approach to an
undeniably complicated challenge. This is the opportunity for positive ‘root and branch’ public service reform,
not more painful and hopeless patching-up of an expensive and unsustainable big government model.

This case for real reform on Mr. Pallister’s wall should be flashing ever faster this week as it sinks in that a third
of provincial government spending is met by federal transfer payments. And they are going to decline. Falling
equalization payments, caused by Alberta’s and Ontario’s economic woes and the federal government’s choice
to expand its own deficits, makes serious reform or politically damaging cuts basically inevitable.

As one battle-tested statesman from another time observed, stretching out badly needed adjustments is a little
like amputating a gangrenous limb with a butter knife: you will likely die in the process. To whit, going ultra
slow on cleaning up the NDP mess might even be a recipe for a one-term Pallister Government.

Fortunately, Premier Pallister has positioned his government to pivot away from the traditional low-performing
public service model by referring broadly to the evident need to focus on improving results. Properly done, it is
a safe pathway to positive change since Manitoba delivers comparatively mediocre public service levels – most
notably in healthcare, education and municipal services – with about the country’s highest per capita costs.

But, how to get there is the billion dollar question.

Contrary to popular myth, most government employees work hard and yearn to do a good job. But they
operate in wildly dysfunctional and bureaucratic systems that reward paper-pushing, excess process and overspending.
Famously, managers get paid more if they can figure out how to have larger staffs. Services are
horrifically centralized so that front-line staff need layers of approvals, reaching up to Ministers’ offices, to do
anything. Flexibility is further compromised by archaic personnel systems. The last time I looked there were
about 1200 job classifications for provincial civil servants, about only 11 civil servants per position. A large
corporation might have 30 or 40 job classifications – far from one for every 11 employees.

This costly and massive dysfunction is congenitally replicated across all public sector operations – core
services plus hospitals, education, Crown corporations – producing expensive low-performing results. There
are too many layers of management and supervisors, too much emphasis on paper-pushing and following
over-prescribed rules and processes.

A serious plan to fundamentally reform this mess would include decentralizing control, pushing responsibility to
front-line staff, eliminating layers of overhead and downsizing through attrition. This is only part of the puzzle of
creating the smartest, fastest and most productive win-win way forward to balancing the budget while
improving services.

Graham Lane chairs Manitoba Forward (manitobaforward.ca).

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