Fortunately for Pallister, his party and Manitoba, if he retires soon to open the door for a new Progressive Conservative leader, he could be remembered for making Crown corporations and the overall civil service much leaner than it was under the NDP. From 2016 to 2020, the Manitoba civil service went from 14,876 employees to 12,371, a drop of 2,505 employees (a decrease of 16.8 per cent).
Give Pallister credit for resisting public sector pay hikes that the province can’t afford.
Pallister didn’t bring COVID-19 on us and he zealously worked to bring it under control (with Western Canada’s most over-the-top lockdowns). Pallister didn’t start Manitoba Hydro’s boondoggle expansion (though he failed to stop it when he could); that ‘credit’ goes to the NDP.
But he failed in not implementing long-overdue, deep reform of other parts of the public sector heartland – education, health care, Crown corporations, municipal relations, etc.
Ending the education levy will remain Pallister’s most significant achievement on the tax front, though Manitoba still badly lags most provinces on having a competitive income tax.
His tenure has been complicated by the COVID crisis and his government’s economically debilitating lockdowns.
Manitoba is headed for financial disaster.
While many private-sector workers struggle to return to full-time employment – thousands were laid off in the still-challenging COVID-19 saga – public sector workers mostly maintained their jobs. And now, led by their unions, we should expect public sector workers to seek significant wage hikes after years of futile bargaining with the Pallister government.
The government is mired in deficits and forecasts more of the same. If the current situation doesn’t magically improve significantly soon, taxpayers are looking at continuing provincial deficits that will prevent any more substantial tax reductions. And, without tax reductions to attract companies, Manitoba will remain in a downward spiral of deficits, borrowings and growing social discontent.
Without a miracle, if Pallister – who is almost universally reviled for his economy-crushing lockdown policies – continues as is, he and his crew will go down in flames in the next election. With all of Western Canada now lockdown free (including ending mask mandates, and Saskatchewan and Alberta both rejecting the idea of vaccine passports), Pallister seems at a loss.
The lockdowns will have killed innumerable businesses, postponed critical surgeries and harshly disrupted the education paths of our school children. This would return the NDP to power in the next election, with large wage hikes for the public sector driving even higher provincial government deficits.
Manitoba’s vast public sector has largely kept its jobs, with thousands of workers in health care garnering large overtime wages. The situation for many in the private sector is significantly different. With thousands of private-sector full- and part-time workers praying to get their jobs back, the wage hikes to come for the unionized public sector under a new NDP government won’t come easy.
Canada’s Parliamentary Budget Officer’s 2021 Fiscal Sustainability Report assesses the sustainability of federal and provincial government finances. Surprisingly, it concluded that the federal government can recover from the half a trillion cost of COVID-19, but it forecasts that Manitoba’s future finances are not sustainable.
If Pallister retired this year, his party would have a chance to find a new leader, one with the skill and vision to expand Manitoba’s beleaguered private sector by combining real public sector reform with reduced taxation.
Graham Lane is a retired CPA/CA and a member of the Frontier Centre for Public Policy’s expert advisory panel.
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