Diagnosis complete; can Pallister treat what ails us?

Opinion

Hey there, time traveller!
This article was published 08/12/2016 (3225 days ago), so information in it may no longer be current.

There are two sure things you can count on every December.

First, that the premier of the day will deliver a state of the province address at a luncheon hosted by the Winnipeg Chamber of Commerce.

And second, even though very little news is generated by the speech, just about every news organization in the city sends someone to cover it. Largely, that reflects a secondary fact: even when the premier doesn’t say much newsworthy, the state of the province signals an important change of season in the political calendar.

The address typically marks the transition from the legislative season to a period in which the budget is the primary focus. Following a brief fall session of the legislature, when nothing important was accomplished, the Tory government has turned its attention to number-crunching and other budget-related tasks that should enable Premier Brian Pallister to start making some of the hard decisions he has been talking about, literally, for years.

It’s not that Pallister and his government have not accomplished anything to date. The premier shared a list of accomplishments from his first eight months with the more than 1,200 gathered at the RBC Winnipeg Convention Centre Thursday to hear what he had to say. Some were impactful, but many were appropriately modest for a government at this stage of its development. All will pale in comparison to Pallister’s second budget.

When that plan is tabled, many of Pallister’s ideas for improving the operation of government and reducing costs will go from the purely theoretical to the practical. In other words, it will be time for the premier to take action, not just talk about taking action.

What should be on the premier’s “to-do” list?

First and foremost, Pallister must show progress on reducing the deficit. His government’s first eight months have certainly carried the blush of austerity. Spending requests, particularly for new programs or initiatives, have been turned aside. Some programs have been cancelled, others have been delayed indefinitely. The number of departments has been reduced, and more than 100 senior management positions have been eliminated.

None of these decisions — either on its own or cumulatively — delivers much in the way of savings. Pallister is generating solutions measured in the millions of dollars in an attempt to tackle a fiscal challenge measured in hundreds of millions of dollars. They are, however, important symbolic gestures that serve as an action memo to the bureaucracy to start finding ways of doing the same — or more — with less.

The principal challenge that Pallister has faced — and the reason why so many have viewed his fiscal agenda with such skepticism — is the fact that he is now governing through one of the longest periods of anemic economic growth in modern history. In the past, political leaders carrying the burden of an underperforming economy had the comfort of knowing that if they could hang on long enough, what went down would come back up again. That is no longer a certainty.

Pallister talks quite often about “fixing Manitoba’s economy” as one of his main goals. What he does not acknowledge is that Manitoba’s economy is outperforming most of the country right now. Even so, is not producing the revenues necessary to protect services and balance the budget.

The skepticism that Pallister has faced is not the result of partisan analysis, it’s pure and simple mathematics. He continues to argue that he will succeed in curbing expenses and eliminating the deficit through sheer force of will. In reality, having decided that he will not raise taxes in any way, only austerity can help him get where he wants to go. He used Thursday’s speech to once again deny that assertion, but it is becoming increasingly difficult to avoid the term “austerity” after announcing in the recent throne speech that he wants to roll back civil servants’ wages.

At the heart of Pallister’s strategy is the assertion that Manitoba’s fiscal woes are the result of the previous government’s inability to control spending, not a drop in revenue. Unfortunately, math is not on his side.

Over the past 10 years, the province has spent about the same amount of money relative to GDP. In 2005-06, expenses as a share of GDP were 24 per cent; in the 2015-16 year, it was 24.1 per cent.

However, on the revenue side it’s a different story. Revenues as a percentage of GDP have fallen significantly, from 24.5 per cent in 2005-06 to 22.8 in the 2015-16 fiscal year. Pallister can argue that Manitoba has a spending problem, but the metrics show that revenues are dropping in relation to the output of the economy. That is a macro trend he will have to conquer if he is to balance the budget.

With his state of the province address in the rear-view mirror, Pallister now enters the first truly critical stage of his mandate. His speech was very heavy on doom and gloom at the outset, supplying the audience with the province’s lengthy list of problems, including rampant violent crime, poor educational outcomes and shaky government services.

It is common practice for a politician campaigning to win an election to paint the glass as half-empty to stoke a desire for change among voters.

But the campaign ended a long time ago, and he will have nearly a year on the job when his second budget is tabled. That will be the moment he will have to stop talking about the failures of the past and start delivering the solutions he has for the future.

dan.lett@freepress.mb.ca