Hey there, time traveller!
This article was published 5/3/2014 (874 days ago), so information in it may no longer be current.
It came very late in the game. Could it also be too little?
The NDP government delivered a significant message re-boot to its infrastructure program on Wednesday, the eve of the 2014-15 provincial budget.
Gone was the stumbling and bumbling of former finance minister Stan Struthers, who failed spectacularly one year ago to explain how the NDP was going to increase the PST by one point to make a massive investment in infrastructure.
Struthers' misfire has dogged the NDP for much of the last year. Still, in a bid to turn the tide of opinion, the NDP this week delivered an update on its five-year spending plan and the economic benefits that will come from the extra infrastructure cash. It was informative and intelligent messaging.
It's exactly what the NDP should have done a year ago.
During that year, Premier Greg Selinger has been pummelled by supporters and critics alike for muddying his message. This week, we can see Selinger has made progress in marketing the idea of an infrastructure tax. The tax-hike revenue is now focused on core infrastructure: highways, flood protection and municipal grants. This has won back the support of construction, business and municipal leaders.
Is that enough to change the tide of public opinion? We won't know for sure until the next election, expected in early 2016. If opinion does not change, the NDP will only have itself to blame.
It was always hard to figure out what it was the NDP was trying to do last year. For example, Struthers spent virtually no time linking the tax hike with economic spinoffs. Even though, that is perhaps the easiest, safest way to explain an infrastructure tax.
This time around, the NDP came armed with a report from the Conference Board of Canada, which noted that for every $1 in infrastructure spending during the construction phase, the province can reap $1.16 in GDP growth. That means more jobs, more retail activity, more home purchases, higher incomes and more tax revenue, which helps defray some of the burden of increased spending.
The spinoff argument for increased infrastructure spending is sound and unassailable. Regardless of the type of project, it is simply the best way for governments to spur economic activity. Much better than, say, tax cuts.
The big question is: Why in the world didn't Struthers or Selinger make that point last year? It's a mystery that may never be solved.
The new and improved messaging does not mean, however, that the NDP is out of the woods. Selinger will likely continue to struggle to prove to taxpayers all of the PST hike is going to infrastructure.
This is not an accusation anyone is trying to fool anyone. Rather, this is a case where it's genuinely difficult within the constraints of accounting practices to follow a dollar from the PST hike through general revenues and out into an infrastructure project.
Where do things stand now?
The NDP budgeted $1.8 billion on infrastructure last spring. In its last quarterly update, the total amount spent will be closer to $1.5 billion. Now, before anyone runs for a pitchfork, there are some facts that explain what happened.
Most provinces spend less than budgeted on infrastructure due to weather, unanticipated design or engineering problems and tender troubles. That is the reality of the construction industry.
And despite the underfunding, Manitoba is still spending more. In 2012-13, the province spent $1.42 billion on infrastructure of all types. Right now, spending in 2013-14 is about $1.5 billion, and that number will likely go up a bit before the books are closed.
Lastly, it's important to realize infrastructure spending is a combination of cash (general revenue) and borrowing. So when the province reports it spent $300 million less than planned, some is due to lower spending, and some to lower borrowing.
On core infrastructure, which is what the PST hike revenue is supposed to fund, the province is reporting it is $71 million under budget. No one can say how much of that amount is actual savings, and how much is lower borrowing. But for this year, it means the province's deficit-reduction bid will be helped a bit from the PST hike.
The five-year infrastructure plan promises to spend that $71 million in future years, and figures for 2014-15, released this week, seem to show that will happen. On a go-forward basis, however, it will become tougher to show all of the revenue from the PST bump will go to infrastructure.
Finally, the NDP found out a way to hone its message on the PST hike. Only time will tell if it is too little, too late.