The provincial government’s recent Throne Speech and economic update deserve both beefs and bouquets. Let’s start with the good news.
When faced with tough economic times, governments often get weak-kneed and delay or cancel planned tax relief. It’s called taking the easy way out. Ontario taxpayers saw that happen in 2002 when Conservative Premier Ernie Eves delayed previously announced personal and corporate income tax relief during their economic slowdown.
Fortunately Manitoba’s provincial government hasn't postponed previously announced tax relief. And for this, Finance Minister Greg Selinger and Premier Doer deserve praise. Although their reductions to personal and corporate income tax rates are relatively minor, it is encouraging that they acknowledge it will have a positive effect on the economy.
Now for the bad news. Conspicuously absent from the Throne Speech was a long term vision to address the many challenges facing our province.
A prime example is the government’s growing dependence on handouts from other provinces. According to the 2008 budget, 21% of the provincial government’s revenues will come from other provinces. Include handouts from the federal government and Manitoba’s total portion of revenue from other governments now sits at 36.7%. As it was just 28.2% in 1999, Manitoba's rate of dependency has increased more than any other province during that period. The Throne Speech contained no vision or plan for addressing this problem.
If this province is to stand on its own two feet, it will have to develop an aggressive debt retirement strategy. Currently, $262 million of taxpayer dollars are wasted each year on debt servicing costs. Although this figure is down since the government took office in 1999, at the current pace, our debt won’t be retired for another fifty years. A growing portion of the handouts from other provinces should be earmarked for debt repayment.
The province's unsustainable spending rate also needs to be tackled. Between the 2007 and 2008 budgets, spending increased by 6.2%. The government will be quick to point out that our aging population is a major driver of health care spending. However, if you take health care costs out of the equation, overall spending still increased by 6%. That’s more than double Manitoba’s inflation rate.
If the government is looking for a place to start, here's one frivolous example. The Throne Speech announced a “Financial Literacy Initiative” - a program designed to teach Manitobans how to open up bank accounts. Do any banks or credit unions exist that wouldn't do that for free?
Finally, the province has yet to layout a long term plan to bring our taxes in line with other provinces. It's no secret that Ontario, Alberta, B.C. and now Saskatchewan have all left Manitoba in the dust. In fact, a recent increase to Saskatchewan’s basic personal exemption by $4,000 has expanded our tax gap with that province. Saskatchewanians can now earn $12,495 tax-free, while Manitobans are taxed on any income over $8,134.
It may be true that Saskatchewan has more oil revenues. Even so, excuses won't make Manitoba the "have" provice it can be. If Manitoba is ever going to become a “have” province, our provincial government needs to layout a long term vision for our province that includes an aggressive debt repayment schedule, a plan to bring our tax rates in line with other provinces and a strategy for reducing spending.
A Throne Speech with a bold, common sense vision would have been welcome. Too bad it's not what we got.
Colin Craig
Manitoba Director
