For anyone looking for evidence of the woeful state of relations between Manitoba and Ottawa, it could be found in Finance Minister Bill Morneau's lean and lifeless federal budget tabled Wednesday.

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Opinion

For anyone looking for evidence of the woeful state of relations between Manitoba and Ottawa, it could be found in Finance Minister Bill Morneau's lean and lifeless federal budget tabled Wednesday.

It wasn't that Premier Brian Pallister or his Progressive Conservative government were expecting much in the way of favours. Still, there were a number of "wants" that Pallister had been demanding that could have found life in this budget. When the document was finally unveiled in the House of Commons, Pallister and his government quickly learned that Morneau had ignored just about everything on Manitoba's list.

The asks weren't exactly earth-shattering. In exchange for his signature on the new federal health-care transfer payment accord — Manitoba is the only province or territory not to have signed on — the premier requested $60 million to combat kidney disease and settlement of a $34-million dispute over medevac flights for First Nations patients. He also asked — several times — for more money to provide services to asylum-seekers illegally crossing the border into Manitoba.

Concerned that neither of those priorities would find support, the premier retreated, asking only for a federal commitment to follow through on a previous pledge to invest $60 million in the so-called Factory of the Future, a National Research Council incubator that would develop new methods of digitalizing industrial processes. Ottawa deliberately raised the possibility that the funding — authorized in the 2016-17 budget that expires at the end of this month but unspent, requiring a commitment going forward — could be withdrawn if Manitoba continued to hold out on the health-care accord and a carbon-tax framework agreement, which Manitoba has also refused to sign.

The budget offers no new money for kidney disease or medevac flights from First Nations. On asylum-seekers, Ottawa could only muster some money to cover legal aid costs. And there was no specific mention of money for the Factory of the Future.

Officials in Morneau's office told the Free Press later that Ottawa's commitment to the Factory of the Future was intact. Even so, without a specific line item in this budget, it leaves a project first announced by Stephen Harper's government in 2015, and repeatedly delayed, still very much in doubt.

Overall, there seems to be a clear message for the Pallister government: we know what you wanted, and you aren't getting any of it.

Federal budgets are comprised of both fiscal and political priorities. The provinces know that many of the spending initiatives in the budget are governed by national funding formulas based largely on the number of residents in each jurisdiction. There is very little room in the programs for any federal government to punish or reward a province based on the state of relations.

Such is the case with transfer payments. Notwithstanding Pallister's disappointment about the new health-care transfer accord, Manitoba is actually in line for a small but important windfall in other transfer programs thanks to national formulas.

In particular, for the 2017-18 fiscal year Manitoba will collect $84 million more in equalization created by the economic recovery in some of Canada's larger provinces. When the health and social transfers are taken into account, Manitoba will see a net increase in all transfers of about $140 million.

How important is that? The former NDP government saw virtually no increase in transfer payments over the past five years. This year, as it attempts to force a downward trajectory on the provincial budget deficit, Manitoba's PC government will benefit from the biggest year-over-year increase in transfer payments in a decade.

Many other federal expenditures and programs, however, are dependant on the lobbying efforts of individual premiers and senior government MPs from each province. Many of the biggest bi-level and tri-level government investments in Manitoba — iconic projects that include The Forks National Historic Site, the Forks North Portage Partnership, the Canadian Museum for Human Rights, the Red River Floodway Expansion and Centreport — were the result of intense, hand-to-hand negotiations between premiers and key federal political representatives.

There is no evidence that Pallister and Manitoba's senior government MP, Jim Carr, are enjoying that relationship. Certainly, blame for the tattered state of relations can be spread around to both levels of government. Ottawa, in particular, has been a petulant bully when it comes to finding support for its national initiatives. That is hardly an approach that is going to build trust and co-operation.

That said, Pallister has also been petulant at times, and it has eroded the province's brand in the nation's capital.

Pallister's calculated risk to hold out on the health-care and carbon-tax agreements has now fully been revealed as an error judgment. The rookie premier believed strongly that if he and other first ministers could hold firm in demands for a better deal on health care funding, Ottawa would have to relent.

Pallister learned quickly that while premiers love to adopt a united posture in the moments following first ministers conferences, when the going gets tough they will quickly do whatever is best for their own provinces. Had Pallister recognized the long-standing tradition of premiers looking out for No. 1, he might have done things differently.

Behind the scenes, Pallister has simply not attempted to build much of a relationship with Justin Trudeau's government. Liberals complain that he and his ministers time talking to the federal Conservative caucus while ignoring Manitoba's Liberal MPs. Government sources confirm that while Carr and Pallister have spoken once at length, the Tory government here has not made any gesture to host the Manitoba Liberal caucus at the legislature. That is a short-sighted approach to building bridges with another level of government

Those gestures may seem insignificant, but they are best practices for politicians who have the pragmatism to successfully navigate the world of federal-provincial relations. No level of government gets everything it wants. But provinces can get some of the things on their wish lists if they ignore partisan affiliation and accept the obligation to build positive relationships.

dan.lett@freepress.mb.ca

Dan Lett

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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