Budget basically simple

Hey there, time traveller!
This article was published 20/03/2010 (5930 days ago), so information in it may no longer be current.

Premier Greg Selinger is the provincial government’s budget master, having delivered all 10 since the NDP took power in 1999. None of them needed the balancing act this one does. His finance minister, Rosann Wowchuk, will have her hands full as the government slips into deep deficit while storm clouds gather to the east.

All the complications about drafting a budget boil down to two simple things: raising money and spending it. Wowchuk’s problem is she can’t raise any more significant revenue without raising taxes. She can’t raise major tax rates unless she calls a province-wide referendum or changes the balanced budget law that requires a referendum to be held. This is risky business and no political party, at the moment, will go anywhere near it.

So Minister Wowchuk is left with controlling spending, something this government didn’t feel inclined to do during a period of healthy economic growth when ample tax revenues and generous transfers from Ottawa made spending easy. Tax revenues are flat; transfers from Ottawa are bound to go down. Therefore, every government program should be scrutinized for relevance and effectiveness.

Take health care, for example. Ten years ago it accounted for 35 per cent of the provincial budget; now it’s nearly 43 per cent, en route to half of all spending if the growth rate continues. This trend is not sustainable but political leaders won’t say so for fear that voters will accuse them of cutting precious health services.

It is possible to deliver quality health care without going broke if there is a willingness to look at successful models of system reform that have worked in many other places. In fact, there are several pilot projects underway here in Manitoba that are promising. The budget should recognize the pressures that health spending is putting on other departments, particularly education. It should mandate the minister of health to set targets that can be measured and it should set out a timetable for meeting them. The opposition parties could do the process a favour by participating in setting those targets. Let the parties fight about how well they are being met.

The economy will grow if we attract and keep the people who create the wealth. Manitoba has led Canada in attracting immigrants from all over the world. We took in fewer than 3,000 immigrants in 1998 and this year we will welcome more than 12,000. During the same period, our unemployment rate dropped significantly. The myth that immigrants take jobs from those already here is busted. Manitoba governments, both Conservative and New Democrat, can take satisfaction and credit for this enlightened policy that has strengthened our society and our economy. Now the challenge is to make sure that more doctors and engineers are practising their professions, not cleaning offices.

We have done less well in nurturing our own trainers, namely the colleges and universities. Tuition freezes have starved our post-secondary institutions. Now that the freeze has finally thawed, this budget should let universities raise the resources they need to compete with the best across the country and around the world. Governments and the private sector can make sure ample scholarships and bursaries are available to help students who lack the means to pay. As an example, the Business Council of Manitoba, along with its partners, the governments of Canada and Manitoba, has given out more than 1,000 bursaries totalling $3 million to deserving aboriginal students attending a post-secondary institution in Manitoba. No qualified student should be denied a university education because they can’t afford one.

Innovation will help drive our economic growth. Canada ranks 14th out of 17 peer countries, according to the Conference Board of Canada, earning a dismal grade of “D”. The Manitoba government has established the Manitoba Innovation Council, a place where researchers, entrepreneurs, labour and government leaders can work together towards a common objective: maximizing our potential to commercialize research, thereby enhancing the province’s productivity. The council deserves full support.

Eventually, a government in Manitoba may raise a tax. When that day comes, the tax raised should be the sales tax, one point of which is worth $225 million. Raising that tax has less impact on our ability to compete with other jurisdictions than raising income taxes. One day, but not yet, a government in Manitoba will harmonize the PST and the GST like most other provinces have already done. Meanwhile, we have to find ways of avoiding costly mistakes.

On Monday, we’ll offer some suggestions about how Manitoba can save hundreds of millions of dollars without sacrificing anything.

Jim Carr is the president and CEO of the Business Council of Manitoba, a group of 69 CEOs of Manitoba’s leading companies.