TALK about losing control of your message. Last week, Manitoba’s NDP government struggled mightily to explain its budget plan for 2013-14. A plan that includes a one-percentage- point hike to the provincial sales tax (PST) to fund infrastructure.
Any time a government raises a tax, it risks provoking the electorate and motivating opposition parties. Fiscally, it’s risky because Premier Greg Selinger has pledged to spend all of the new PST money on infrastructure, rather than reducing the deficit, which remains stuck at $500 million.
There is a case to be made for Selinger’s plan. Lamentably for the NDP, they did a horrific job of making that case.
The problems start with Finance Minister Stan Struthers, who consistently muddled his message. Consider that at no time during his news conference, or in his budget speech, did he use the word stimulus. The additional infrastructure spending is a good way of aiding economic growth. But Struthers couldn’t utter the word, even though NDP spin doctors were using the term repeatedly after the budget was tabled.
The trouble continued for the NDP when it failed to accurately describe the effect of the PST bump. Finance officials said four-person households would pay an added $25 a month, or $300 a year; the next day, that was revised to $115 per year. In real dollar terms, that’s not a lot of money; it just sounds a whole lot worse.
Ineffective messaging even led to allegations the province was not committing all of the new PST revenue to infrastructure, as was promised.
Critics claimed total spending on infrastructure had only increased by $80 million, which is less than the estimated $198.5 million the tax hike is expected to generate in 2013-14. A deeper analysis shows total infrastructure spending is increasing by $367 million this year (budget over actual), but that wasn’t readily available in budget documents.
These missteps pale in comparison to the biggest mistake of all: the mishandling of the referendum question.
Under the balanced-budget law, the province is required to hold a referendum before increasing any tax. Selinger has opted instead to introduce legislation that negates the referendum requirement. It’s a risky move and requires precise messaging to ensure supporters of the PST hike would remain onside. Although we’ve only started this debate, it appears the NDP has authored another colossal failure.
First, Struthers’ budget speech never dealt with the issue of the referendum. The word was not even mentioned in his speech. He desperately needed to deal head on with the issue, and the fact Selinger expressly pledged in the 2011 election not to raise the PST.
Selinger and Struthers also misjudged the stakeholders in the infrastructure debate, whose support is desperately needed if this is to succeed.
There should have been a commitment to bring together the major players in the infrastructure debate — municipalities, special-interest groups and the chambers of commerce — to figure out how best to spend the new money. The reality is that even among those groups that support an increased PST, there are competing priorities.
The Winnipeg Chamber of Commerce, for example, wants the additional point of PST dedicated to "strategic" infrastructure, which is code for large, often unplanned, mega projects. The City of Winnipeg, which did not call for a PST hike but is prepared to accept the money anyway, wants all new revenue given to municipalities and not spent on provincial roads, bridges and highways. CAA Manitoba, on the other hand, wants all new revenue spent on roads and highways, not community centres or mega projects. The Manitoba Heavy Construction Association wants the money spent on new capital projects — not maintenance or repairs.
It’s unlikely all these groups can be satisfied, but a process in which they have input into the final plan could ease them into a context where the referendum is not absolutely necessary. It’s a long shot, but it’s a better shot than the one they have now.
Overarching all these missteps was a desperate need for Selinger to acknowledge directly that his budget plan for this year breaks two specific pledges. The NDP had been resolute it would never abandon the budget-balanced law. Although critics will argue Selinger has been nibbling away at the law for years, this marks the biggest single change. Selinger also promised in the 2011 election not to raise the PST to fund infrastructure.
Away from partisan rants and knee-jerk special-interest analysis, there are arguments in support of the NDP plan.
Infrastructure is a worthy recipient of the additional funds, it will grow the economy, and the effect of the PST hike on individuals and families is pretty manageable. As for balanced-budget laws, no government should be forced to live with a law that is, arguably, past its best-before date.
The NDP put a lot of work into this, the most dynamic Manitoba budget in some time.
However, the premier needs to put just as much work into galvanizing his message. Right now, that message appears to be beyond his control.