In this fairy tale, Tories likely won’t live happily ever after By: Dan Lett Posted: 4:34 PM CST Tuesday, Mar. 7, 2023

Opinion

Once upon a time, in a province named Manitoba, a Progressive Conservative premier introduced a bold plan to cut taxes and increase spending on core services in a bid to win an election.

It was 1999 and Gary Filmon went for broke with something he called his “50-50 plan.” Running neck-and-neck with the NDP, Filmon promised $500 million in tax cuts and $500 million in new spending on priority government services.

The 50-50 plan failed to capture the imagination of Manitoba voters, who in the 1999 election put an end to his 11 years in power and opened the door to a NDP dynasty that lasted nearly 17 years.

Why did the strategy fail?

Opinions vary. Some believe it was not bold enough to mitigate other PC liabilities, including deep cuts to program spending and the civil service, and the 1995 vote-splitting scandal. Others, however, believe the plan failed because the spending pledges — quite extravagant for their time — ran against the fiscally conservative brand Filmon had worked so hard to build in the 1990s.

Notwithstanding Filmon’s lack of success, the Tory 50-50 plan appears to be back. This time, authored by Premier Heather Stefanson and Finance Minister Cliff Cullen.

On Tuesday, in a bid to snatch a third consecutive majority mandate out of the jaws of what appears to be almost certain defeat, Stefanson tabled a budget that features $1.8 billion in “affordability measures” and $2 billion in new investment in government services.

Can Stefanson’s updated 50-50 plan succeed where Filmon’s failed? While the former strategy may have suffered by appearing out of character, Stefanson’s 50-50 plan is burdened by a basic lack of plausibility.

The foundation of the PC government’s 2023-24 budget is an extraordinary fiscal windfall driven by inflation, a general economic rebound from pandemic years and an extraordinary increase in earnings from Manitoba Hydro.

When you add federal transfer payments to the equation, Manitoba received $1.2 billion more revenue than it had forecast in last year’s budget.

In that windfall, Stefanson clearly sees an opportunity for political redemption.

Just as Filmon had envisioned, the PC government is spending robustly and perhaps recklessly to paper over the cracks in health care, education and social services caused by years of below-inflation funding increases. The result is an alarming 10 per cent, year-over-year increase in total program spending.

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At the same time, however, Stefanson is doubling down on her government’s obsession with cutting taxes.

Thanks to former premier Brian Pallister, the Tories have drained more than $1.3 billion from annual revenues through cuts to sales, income and property taxes.

Not satisfied with that achievement, Stefanson is unleashing another $800 million in tax cuts in this budget alone. These include another increase in the education property tax rebate, increases to the basic personal exemption and upward bumps in income tax brackets.

There are two ways to analyze Stefanson’s 50-50 strategy: fiscally and politically.

On the fiscal side of the equation, Stefanson’s plan is pure madness. She is essentially using a one-time fiscal windfall to significantly increase program spending and pay for tax cuts that could, in the event of an economic slowdown, cripple the provincial treasury.

On the fiscal side of the equation, Stefanson’s plan is pure madness. She is essentially using a one-time fiscal windfall to significantly increase program spending and pay for tax cuts that could, in the event of an economic slowdown, cripple the provincial treasury.

It should be noted that on the expenditure side, there is a fairly solid argument to spend more this year to shore up core government services. Tory austerity has left things like health and education, and support for municipalities, in a state of fiscal crisis.

However, it is hard to find any serious rationale to do both the spending increases and tax cuts. Particularly now.

At a time when the threat of recession still lingers, and interest rates are still rising — and in the process, adding significantly to government debt — Stefanson might have been better off restoring funding to core services and balancing the budget.

Of course, voting intentions are not always driven by fiscal concerns. Could there be enough political appeal in Stefanson’s 50-50 plan to win back support lost over the austerity years?

Unlikely.

At this stage, voters want to see real-world progress, not more promises. Unfortunately, even with all of the new spending pledges in the budget, Tories don’t have enough time to fix things before an election must be called in October.

Adding to Tory misery is the fact that a good number of voters have connected tax cuts with things like wait times for elective surgeries. A rebate on education property taxes is a whole lot less effective at cultivating political support if the recipients have to wait 18 months just to get a consult for hip, knee or cataract surgery.

There is little doubt Stefanson’s 50-50 plan is an attempt to balance the priorities of the broader public (which wants services restored) while still feeding the expectations of core supporters (who love a good tax cut). It is a deliberate effort to put the Pallister years into the rearview.

However, the history written in the 1990s by the Filmon Tories will show that bold gestures that are simultaneously out-of-character and fiscally reckless rarely win elections. They can, however, hasten the end of political eras.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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