Brian Pallister’s new provincial government was dealt a terrible hand. The deficit likely exceeds a billion dollars there is an unneeded and financially disastrous Hydro expansion that threatens to take Manitoba into the poorhouse.
However, the new regime has been taking its sweet time to figure things out. It didn’t pause Bipole Keeyask construction, as was promised in the campaign. The government has been severely hampered by limited policy capacity and a micromanaging top-down culture. Higher taxes are likely on the way and will outrage the Progressive Conservative voter base.
It sounds harsh, but the last thing this government needs is fresh cash. Call it the Manitoba "paradox" — where its government spends the most resources only to achieve the least results. Witness how the highest spending levels per capita for health care and education go hand in hand with the worst outcomes — the longest emergency room wait times and Canada’s worst-performing schools in international comparisons, and so.
Public-sector staffing is way out of control, as confirmed by Statistics Canada data and detailed in the latest Frontier Centre paper, The Size and the Cost of the Public Sector in Western Canada.
The percentage of provincial public employees (excluding Crown corporations) as a proportion of the total workforce ranges from a low of 14.1 per cent in Alberta to a high of 25 per cent in Newfoundland and Labrador. Manitoba comes in second-highest at 21.6 per cent. In other words, Manitoba has 53 per cent more public-sector employees per capita than Alberta and 30 per cent more than the national average (16.6 per cent).
Using a slightly different measure — comparing the size of the public-sector workforce with the population in each province — we find Ontario with a low of 73 government employees per 1,000 residents to a high of 111 in Manitoba. Manitoba has the highest public-sector staffing per capita in Canada — 34 per cent larger than the national average, which is 83 public-sector employees per thousand.
A final statistic reveals how quickly the government staff count was increasing under the former Selinger government. Manitoba’s public sector, including municipal employees, grew by 2,500 over the last two years — up two employees per 1,000 residents. Going back five years, the public sector has grown by 15,000 — up 13 employees per 1,000 residents, equivalent to adding a city of employees the size of Steinbach to the public payroll in just half a decade.
Most of us are unaware of the scale of Manitoba’s budget challenges. Chasing above-inflation-rate increases from federal health-care transfers and conjuring up a carbon tax in the new, post-climate-change Donald Trump era are not answers for Manitoba’s long-term success. Neither will be rinky-dink made-in-Manitoba spending cuts such as "Filmon Fridays," consolidating departments, MLA pay freezes or inconsequential bureaucracy-directed reductions in management positions.
Which brings us to the concept of remaking Manitoba as an "average" province. Consider a well-thought-out plan embracing cutting-edge, customer-focused public service models that deliver better services at substantially lower costs. A goal would be to converge the number of government employees over several years down to the national average.
If Manitoba were at the national average, there would be 28 fewer employees per 1,000 residents (35,000 fewer public service workers). Given that in 2015 the average salary of public employees was about $62,000, Manitoba taxpayers would then save about $2.2 billion per year. To put this in perspective, this extra "dead weight" spending would easily cover a $1-billion budget deficit and substantial tax cuts.
Admittedly, it would be politically difficult for even a prudent government to eliminate 35,000 provincial and municipal public-service positions in the short term.
Government could start, however, by slowly reducing the number of positions through attrition — not replacing employees who resign or retire and not hiring new employees.
If, for example, the public sector in Manitoba was reduced by two per cent a year, and given about one per cent growth in population, it would take only about eight years to reach the national average (83 per 1,000).
With proper leadership, Manitoba could shed its position as a big-spending, sleepy, public-sector backwater and prosper with a more dynamic economy based on lower taxes and higher-performing public services.
Peter Holle is president of the Frontier Centre for Public Policy.