Manitoba can’t get any respect

In an age of western co-operation, one province is left out in the cold

Lost in the westRecently in Vancouver, Canada’s three westernmost governments signed yet another co-operative declaration. The “Declaration on Open Skies” calls for the removal of “unnecessary barriers” to open up access to “the three western provinces,” offering “direct, unfettered” transportation links—part of a broader western strategy to create a more open, competitive and efficient regional market. In what almost seemed an afterthought, Manitoba, rather than being offered a seat at the table, was sent the paperwork for review. This came hard on the heels of another new agreement aiming, according to a Saskatchewan government news release, to create the “largest barrier-free trade and investment market in Canada.” Here again, Manitoba, the only left-leaning government in the West, did not sign on—highlighting Manitoba’s growing exclusion from the western club, a troubling trend.

It’s not the only headache facing Manitoba’s newly minted premier, Greg Selinger. He was sworn in just three days before being slammed by warnings of bankruptcy and blackouts at Manitoba Hydro, a Crown corporation owned by the province. This fall, a New York consultant-turned-whistle-blower also alleged that mismanagement has cost the public utility $1 billion. Selinger isn’t just the premier handed this mess; he was also, for years, the minister responsible for Hydro.

The province’s debt load, meanwhile, is higher than when the NDP took office a decade ago. The West’s once-in-a-lifetime boom seems to be over—before Manitoba ever had a chance to cash in. As billions churned through B.C., Alberta and Saskatchewan, it alone was unaffected—the province the boom forgot. And now, amid unprecedented regional co-operation, the province, scolded by economists for its competitive disadvantage and too-beefy regulatory burdens, is increasingly out of step with its western neighbours, who are aligning policies and political strategies, even hosting joint cabinet meetings to better act as a bloc. This creates “huge risks” for Manitoba, including being “completely isolated from major markets and population centres,” says Tory Leader Hugh McFadyen.

Even Saskatchewan, Canada’s “breadbasket basket case,” and for generations Manitoba’s pathetic sister province, has roared to life. The province has undertaken the country’s most substantive tax reform in two decades, making it competitive with B.C. and Alberta, and luring new business and investment to Regina and Saskatoon, says Niels Veldhuis, senior economist at the Vancouver-based Fraser Institute. Tax reform and belt-tightening came simultaneous to the first flow of natural resource revenue: Saskatchewan has since socked away well over $1 billion in oil and potash wealth.

Manitoba’s problem, critics say, is not a paucity of opportunity; it may not have uranium or natural gas, but it boasts a diverse economy with agriculture, manufacturing, hydroelectricity and mining. Boeing’s new fleet of 787 Dreamliner airplanes was built in the Peg, as were B.C.’s new fuel cell buses. A year ago, southeastern Manitoba boasted the country’s lowest unemployment rate. But, of late, its biggest business “by far,” says David MacKinnon, a senior fellow in the Atlantic Institute for Market Studies in Halifax, is “getting money out of other Canadians via the federal government.” Almost 40 cents of every dollar Manitoba spends is being mailed in from Ottawa—which, he adds, can lead to curious decision-making. Even as the economic crisis hit in 2008, Manitoba’s nurses were awarded a 10 per cent wage increase over the previous year, making them among the highest paid in the country. B.C., which does not receive equalization, announced a $3-billion deficit for 2009 and health care cuts totalling $360 million. Manitoba—economic “la-la land,” according to one Saskatchewan minister—was, meanwhile, one of two provinces to announce a surplus.

Whether Manitoba will continue to be showered with record levels of transfers is unclear: Ontario and Alberta, which contribute 60 per cent of this funding, have each announced record deficits for the year—$25 billion and $7 billion, respectively. Even before the recession, Ontario had begun campaigning for a new deal, arguing it makes no sense that “have-not” Manitoba can put more teachers, doctors and nurses per capita on the public payroll.

On the face of it, Winnipeg looks better than it has in years, with a new airport and the spectacular new Manitoba Hydro building downtown. The Canadian Museum for Human Rights has broken ground at the Forks, and University of Winnipeg chancellor Lloyd Axworthy is almost single-handedly remodelling west Portage Avenue with a string of campus expansions. But look closer—it’s a boom funded by the public purse. At a certain point, economists warn, growing government will crowd out private investment entirely.