Selinger wagers voters will want more, not less

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This article was published 16/11/2015 (3780 days ago), so information in it may no longer be current.

Politics, like poker, is a game that involves equal measures of skill and cunning.

You must be able to read your opponents, bluff when necessary and be prepared to bet on a future that is anything but certain.

In that context, Premier Greg Selinger Monday used a throne speech to go “all in” with a bet that he can spend his way to another election win.

Selinger’s government promised significant increases in spending on infrastructure support to municipalities, health care, child care and the arts. All this and a pledge to begin a long and arduous process to relocate the CPR rail yards from the core of Winnipeg.

These pledges strongly imply the Selinger government, mired in a string of budget deficits, is in no hurry to balance its budget. Instead, as Selinger made clear Monday, he will continue to put “investments” in key government services and initiatives ahead of austerity.

“This is the right time to invest. Borrowing costs are at a historic low… That allows for those assets to be built now when the global economy is fragile,” Selinger told reporters.

In many ways, the throne speech marked a remarkable posture for the premier, but one that will provide maximum contrast with the vision put forward by the Progressive Conservative Opposition in April’s election.

As outlined in his own alternative throne speech Friday, Tory Leader Brian Pallister has promised a focus on balancing the budget and lowering taxes while protecting “front-line” civil servants and the services they provide. He has promised to present the details of a fiscal plan that will allow him to eliminate the deficit, lower taxes and protect core services, a gargantuan task in these days of anemic economic growth.

Selinger’s contrasting vision was outlined in the throne speech in language that was more detailed and graphic than ever before. Selinger believes investment in key services and assets will ultimately lead to a stronger economy, something that will not happen without government intervention. That stronger economy will, eventually, overcome the annual budget shortfalls that dog his government.

Selinger is correct in one assertion: the current rate of economic growth forecast for Manitoba and for most provinces is insufficient on its own to cover the increasing costs of providing core services. The Parliamentary Budget Office and the Conference Board of Canada along with major banks are downgrading expectations for growth during the next two to three years. This makes it increasingly unlikely that, without some sort of booster shot, provincial economies will produce the revenue needed to maintain services.

The PBO in particular has warned that with current rates of economic growth, provincial treasuries will fall further behind in their struggle to maintain core services, landing them deeper and deeper in debt.

We already see evidence the scenario described by the PBO is coming to fruition. Only B.C. and (remarkably) Quebec forecast budget surpluses for this year. Even the traditionally gaudy treasuries in Alberta and Saskatchewan will see red ink on their balance sheets this year as resource prices continue to sag.

Ottawa will post a small surplus this year, but that is driven mostly by the sale of government-held assets (primarily shares in General Motors) and unannounced under-spending in an array of federal departments. The PBO is forecasting another federal deficit for next year, even before new program spending promised by Prime Minister Justin Trudeau is taken into account.

Selinger’s strategy is to continue spending money on the things most important to Manitobans in the hope it not only creates economic growth, but also leaves the province with more of the things people value. The latter part of the equation seems doable as the throne speech included a little something for everybody.

The speech outlines increased and longer-term commitments to basic infrastructure, including money for bus rapid transit and more money to municipalities. In terms of social infrastructure, Selinger outlined plans to fund new child-care spaces and recreational facilities.

There are pledges to support a host of niche projects, including a new Pan Am/Reh-Fit Centre health-care facility, a contribution to the Winnipeg Art Gallery’s Inuit Art Centre and new electric buses for Winnipeg Transit.

The former assertion — that these investments will grow the economy — is much less certain.

Certainly, infrastructure spending is government’s best economic stimulus weapon. Government gets back several dollars in economic activity from every dollar spent fixing roads and bridges. However, on some of the other niche projects, the connection between investment and economic growth is more tenuous.

Selinger argued that taken together, these investments help Manitoba work better and draw more people and private-sector investment. It’s true the condition of basic infrastructure, social services and cultural/recreational amenities contribute to a more vibrant economy. It is, however, much more of an indirect cause-and-effect.

What we know is we’re going to see stark contrasts in the platforms of the major political parties in the spring election.

As was the case in the recent federal election, we’ll have a party recommending greater fiscal restraint, lower taxes and smaller government. On the other side, we’ll have at least one, and possibly two, parties arguing for bigger government and enhanced services with little or no tax relief.

These days, the most any voter can ask for is a clear choice — that’s what we’ll have come April.

dan.lett@freepress.mb.ca