Yield signs ahead for provincial economy

Opinion

Hey there, time traveller!
This article was published 13/03/2018 (2766 days ago), so information in it may no longer be current.

On the business days that sandwiched the provincial budget, the province released a study by Deloitte on what it will take to put an economic development strategy together and a Conference Board of Canada report came out that says Manitoba’s economy is about to take a breather for the next three years.

The Deloitte report was underwhelming in its findings, and left an even less hopeful feeling because the only action the province was prepared to take was to begin a new round of consultations with business.

The Conference Board report was not surprising, because the issues affecting Manitoba — such as global trade uncertainties — are affecting the rest of the country as well.

In his Monday budget speech, Manitoba Finance Minister Cameron Friesen did not pretend the provincial economy is going gangbusters.

“Our economy is growing,” he said. “But lower growth will be the new normal for advanced economies throughout the world. Manitoba is not immune to this reality.”

The Conference Board and others are forecasting Manitoba will have among the lowest growth rates in the country for the next few years. But Friesen and Premier Brian Pallister have continued to focus on deficit reduction and lowering taxes, as opposed to business incentives, and they got a thumbs-up from the bond-rating agencies for that on Tuesday.

That may or may not be worth more than the ongoing uncertainty that prevails in the Manitoba economy from those who saw nothing in Monday’s budget to change the narrative that there’s not much on the horizon to look forward to.

On Friday, when asked about how he feels about the very low economic growth forecasts, and the reluctance of his government to target that, Pallister said: “The best tax incentives we can offer (business) is more money on the kitchen table so that there is more money to invest. We think we can build the kind of province they want to invest in.”

Justifiably, Pallister and Friesen point to the $800 million-plus Roquette and Simplot are investing in Portage la Prairie in the agri-food sector as examples that international investors — Roquette from France and Simplot from the U.S. — continue to be wiling to make in Manitoba.

They show that, irrespective of macro trends, there continue to be good reasons to invest in Manitoba. Yet, large companies that are already here are paring back their footprint, and many would argue it is prudent corporate management for Great-West Life, Manitoba Hydro, Shaw and others to reduce their Manitoba employment.

Meanwhile, mines are closing in northern Manitoba. And while there are some prospects in the pipeline, it will take a few years to balance off the losses.

In the last week, StandardAero announced expansions to three of its U.S. facilities, and New Flyer Industries has been growing its U.S. footprint with strategic developments in Kentucky and Alabama. Not to suggest the province could have done anything about those corporate decisions, but care and attention is needed on the home front.

Chuck Davidson, CEO of the Manitoba Chambers of Commerce, acknowledges the current government’s approach that makes it clear, especially to communities in the north, that all economic activity is not running through the provincial government any more.

Economically, it’s time to hunker down in Manitoba.

He said he believes, “the lack of an economic-development strategy does not lessen the business confidence in the province.”

But it does not improve it, either.

Lorne Remillard of the Winnipeg Chamber of Commerce, ever the optimist, is even less concerned about a detailed strategy. He pointed out there really has not been one for the last two decades at least, and the economy has not done too badly without it.

“Getting an economic-development strategy in place will unlock the real potential that resides here,” he said. “Look at the success we have been able to achieve without a co-ordinating vision and strategy. Imagine when we are are pulling in the same direction.”

And the fact is, historically, Manitoba’s relative economic performance shows up in a very narrow band.

But Don Leitch, CEO of the Manitoba Business Council, said his members, who run the largest companies in the province, all see the same reports that point to slow growth and have real concerns about NAFTA and trade issues.

“We have to really pay attention to the headwinds,” he said. “There are some very troubling signals.”

The business council advocated for some export tax credits to offset the carbon tax for Manitoba exporters whose competitors in the U.S. will not have the same costs, and was disappointed in lowered infrastructure spending in this budget.

“We have argued that a competitive economy is not just tax,” he said

“It is the regulatory environment, it is the trade environment… the way in which we try to incent good behaviour.”

martin.cash@freepress.mb.ca