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Competitive and affordable? No!

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by Graham Lane

Published in the Winnipeg Sun, January 05, 2018

In his last financial news release of 2017, Finance Minister Friesen asserted that the Pallister government is focused on ensuring a Manitoba tax environment that is “competitive and affordable.” Approaching two years into Pallister’s reign, both goals are nowhere close to being achieved.

Taxpayers are regularly fleeced by inefficient governments. We pay top dollar for inefficient public services through excessive taxation and expensively produced commodities and services. Governments avoid benchmarking (which is a key to successful business operations) like the plague, they lack a performance measurement culture.

Consumer Price Index (CPI) readings have been close to the Bank of Canada’s preferred 2% rate for annual inflation. But, while the monthly CPI readings are important, they provide no indication of governments’ role in increasing inflation. This ongoing purposely lack of awareness assist successive governments in hiding low productivity while piling on debts and pushing up taxation and fees. Families have to live with inflation-level income increases, our governments don’t.

Examining the impacts of policies pursued by both the Manitoba and Winnipeg governments disclose an inflationary bias damaging to taxpayers. Some of those actions do affect the CPI – such as a change in gasoline taxes, others directly impact the disposable incomes of taxpayers. But, governments seem immune to concern over higher than inflation tax and tax-like utility increases.

Compare the published Manitoba CPI with recent revenue grabs of both the provincial government and the City of Winnipeg – grabs well in excess of the inflation rate. Let us also consider problematic actions of both the Selinger and Pallister provincial governments that affect ratepayers directly but do not show up in the CPI.

In the last staggering years of Selinger’s reign the NDP twice increased its revenue take from the PST – both increases more than reported CPI increases. First, by way of broadening the reach of the PST, the second by adding to the rate. Total annual take going forward – over $500 million and growing. Ostensibly a fiscal conservative, Pallister is poised to skewer the Manitoba PC Party by stumbling ahead with a politically toxic carbon dioxide tax – to bring $260 million a year going forward (an action representing many times the CPI).  Never mind, that orthodox climate theory posits that this tax be “neutral” with offsetting cuts to income and sales tax, etc..

While Selinger made mistake after mistake on the Hydro file, Pallister’s personal folly was to not press “stop” on Keeyask/Bipole. Now, we watch Hydro seek 8% annual rate hikes out six or more years – four times the CPI each year.  As for other government files, under Pallister MPI has already upped premiums twice (both increases two times CPI), WCB clings to excessive reserves rather than rebating to employers, and other public sector agencies have the green light to up fees rather than really economize.

And, as for the City of Winnipeg, under Bowman we have a new “impact’ fee (pushing development outside the perimeter) and CPI plus increases for water utility rates, meter parking and transit fares. Bowman’s reach for new revenue rather than improving the City’s efficiency is troublesome.

Without proper benchmarking, the inefficiencies of the Province and Winnipeg cannot be creditably assessed. But, just looking at the revenue grabs, neither government is “competitive” or “affordable”.

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