Just how healthy is Manitoba’s economic horse?

Hey there, time traveller!
This article was published 23/12/2024 (646 days ago), so information in it may no longer be current.

Ensuring sustained prosperity is critical to a healthy society and province. Simply put, without economic prosperity, any government won’t have the tax revenues to support the social services we rely on every day. As our premier is fond of saying, “the economic horse pulls the social cart.”

These are fine words, but words have to be backed up by action. And action has to produce results.

Will Manitobans see results from our current government? Time will tell.

So how well is that economic horse doing in Manitoba?

That is just the question we look to measure and grade in the prosperity report prepared on behalf of the Manitoba Employers Council (MEC).

As the largest federation of employer associations in the province, MEC represents over 20,000 individual employers and hundreds of thousands of Manitoba jobs. Every two years, we conduct a study titled The Prosperity Report that measures Manitoba against its neighbouring provinces on a variety of economic indicators.

The 2024 Prosperity Report is the seventh edition and, since it mostly reflects data up to 2023, effectively represents the end point of progress achieved by the previous government and provides a good baseline to measure future progress which may be achieved by the current government.

Since the report was last done in 2022, I’m pleased to report that in many indicators Manitoba is now moving squarely into the middle. In 12 of 33 indicators Manitoba finished third or tied for third amongst provinces measured. (Provinces included in the report are Manitoba’s closest neighbours, including Ontario to the east, and Saskatchewan, Alberta and British Columbia to the west).

However, it is a major concern that Manitoba still finished amongst the bottom two provinces in 14 of 33 indicators, and at the bottom in nine of them. We recorded the lowest GDP per capita, the worst interprovincial migration rates, the highest family taxes and the lowest average weekly earnings.

Growing the economic pie is critical because, generally speaking, lower earnings translate to higher taxes. Taxing $100,000 of income at 10 per cent raises the same amount of revenue for government as $50,000 of income at 20 per cent. That tax revenue is crucial to support the health-care investments that increasingly are needed with an aging population, and provide the infrastructure we need to increase the productivity of a population that largely has been growing through immigration.

So where do we go from here?

In the report, we provide several ideas on how Manitoba can best chart a path forward.

First, we need to increase the per capita GDP, which is a good measure of productivity.

Next, reversing the drain of Manitobans going elsewhere will no doubt be a challenge, but it will pay immediate dividends.

It is not sustainable to pay for someone’s education, only to have the associated tax revenues flow to another province if they pack up and go elsewhere to start a career.

Increasing post-secondary graduation rates and increasing the number of entrepreneurs will lead to more high-paying jobs in our province. That will provide opportunities to reduce income tax rates without reducing tax revenue, and hopefully provide room eventually to eliminate the payroll tax.

We can all agree that we want more and better paying jobs, so taxing the organizations that create, and potentially add those jobs, makes little economic sense.

The path ahead will not be easy, and so it is helpful to look back and reflect on the progress we have made in Manitoba. While we are not near the top in many indicators, we have now moved at least into the middle in just over a third of them.

However, if we are to achieve the goal our premier has set of making Manitoba a “have” province, which previous governments have reached for and fallen short of, there is a lot of work to do.

William Gardner K.C. is chair of the Manitoba Employers Council and a partner at Pitblado LLP.