Hey there, time traveller!

This article was published 14/1/2016 (1708 days ago), so information in it may no longer be current.

Editorial

The finding by the Fraser Institute that Manitoba relies more heavily upon federal transfers than the rest of the provinces, outside the Maritimes, is hardly news. This province for years has milked revenues from its status as a "have-not" cousin of the federation.

The Selinger government cries Manitoba does not get its fair share from the federal government, that it is shortchanged due to the way Ottawa distributes the cash — its reliance on per capita formulas; the recent adjustment to population estimates by Statistics Canada; and the fact the Harper government decided to hold future hikes in health funding to rates of economic growth.

But Manitoba’s real problem is outlined in the comparisons the Fraser Institute’s report draws among provinces — their shares of transfer payments, the growth in their own revenues and their spending records.

The premise of Canada’s equalization program is that federal revenues ought to be distributed to help "have-not" provinces (those with less ability to raise revenue from their own tax base) keep core services relatively even with richer ("have") provinces. Provincial governments also get federal transfers for health and social programs. There have been various formulas over the decades for divvying up the pies, but now, basically, this is done on a per capita basis. The growth of the pie is held, roughly, to match the growth in the national economy.

Manitoba complains the decision by the former Conservative government to tie growth in federal transfers to the GDP is hobbling it financially. The previous Liberal governments had set, for example, the growth of health transfers to six per cent a year. That was largely done to make up for the cuts under Jean Chrétien in the mid-1990s, when Ottawa was battling a huge national debt.

Manitoba weathered another blow to its handouts, when in 2013 Statistics Canada said its earlier estimates of the province’s population was too high by 18,000 people. The adjustment affects Ottawa’s per capita calculation for Manitoba; transfers will fall by $100 million annually as a result.

The Fraser Institute found that, when adjusting for inflation, Manitoba has seen federal transfers fall by just more than three per cent since 2005-06.

That’s a gut-kick to a province tied, indefinitely it seems, to deficit funding.

But don’t blame Ottawa, the Fraser Institute says. Federal transfers have risen faster than inflation and population growth, and faster than provincial spending. The case the conservative think-tank makes, then, is the provinces have only themselves to blame for their financial straits.

In Manitoba, however, the picture is even starker. The hike to program spending here has outpaced that of other provinces since 2005-06. It has risen by 61 per cent, compared with the provincial average of 56 per cent. The growth in Manitoba’s own revenues was also was dramatically higher than the average growth among provinces.

Manitoba has a spending problem, not a revenue problem.

In fact, Manitoba’s spending record illustrates precisely why the federal government moved away from cost-sharing, a deal that would write that government into rapidly escalating transfers for budget decisions it had no control over.

Manitoba cries that getting out of cost-sharing and tying transfers to the GDP growth rewrote the fiscal deal for Canada. In fact, both Liberal and Conservative federal governments made hard decisions to curb their costs when the economy demanded it. If Manitoba had done the same years ago, the picture here now would be much rosier.