Manitoba·Analysis

After cutting the PST, Brian Pallister has nothing left to do but call an election

The provincial sales tax has been cut, the deficit is dropping and provincial spending has been reined in.​ The only thing left to do for Premier Brian Pallister is call an early election.

A jubilant premier has fulfilled his signature election pledge, but won't talk about 'the speculection'

Manitoba Premier Brian Pallister says he won't engage in any talk about a possible early election call. (John Woods/Canadian Press)

For all intents and purposes, Brian Pallister has done everything he set out to do during his first term as premier.

The provincial sales tax has been cut back by one percentage point. Manitoba's deficit is dropping. And provincial spending has been reined in to the point where it's only going to rise 0.3 per cent in the coming fiscal year.​

The only thing left to do, if you're the leader of a party flush with money and ahead in the opinion polls, is call an early election.

But that's a topic Pallister was unwilling to entertain on the most jubilant of his four budget days.

"The speculection?" the premier asked with a grin late on Thursday afternoon. After slaying the PST dragon, Pallister had wandered in to the legislative assembly committee room to kibbitz with reporters the way political leaders only do when they're in a very good mood.

The Progressive Conservatives steamrolled into the Manitoba Legislature three years ago on the heels of what had become an immensely unpopular NDP government. 

Part of the public dissatisfaction stemmed from the NDP's decision to raise the PST one percentage point after former premier Greg Selinger promised he would not do so. But there was also annoyance with rising deficits and the general malaise that occurs when any party remains in power for a long time — 17 years, as was the case with the NDP.

Pallister promised to reverse the PST hike more for what it symbolized — loosey-goosey fiscal management by long-in-the-tooth New Democrats — than for any sound economic reason. From a money-management perspective, you could argue it'd be wiser to balance Manitoba's budget before you eliminate a $325-million source of annual revenue.

Even people who applauded Thursday's PST cut agreed.

"A pure fiscal conservative would want to see the deficit come down faster overall and have this done already and then look at the PST," said Todd MacKay of the Canadian Taxpayers Federation, who was nonetheless overjoyed by the 2019-20 Manitoba budget.

Help from Ottawa

To be clear, the province is forgoing $325 million worth of annual revenue in the same fiscal year it plans to post a $360-million deficit. That is not a conservative move.

Without the PST cut, the Tories could have come close to balancing the provincial budget this coming year, rather than during their second term, as promised by the premier.

And he couldn't have cut the PST this year without help from Ottawa, which is transferring Manitoba $319 million more in the coming fiscal year.

A spending plan that features both a PST cut and a deficit could be seen as risky when you consider the provincial economy is expected to slow next year, generating less revenue for the province overall.

The province is painting a slightly rosier economic picture for itself than the Conference Board of Canada did two weeks ago, meaning Pallister is betting on Manitoba outperforming the expectations of independent experts.

Higher interest rates could also increase borrowing costs for Manitoba, whose debt is expected to rise to $26.1 billion by the end of the next fiscal year.

Spectre of flooding, trade tensions

And then there are other risks to the provincial economy. The Red River Valley is expected to flood this spring somewhere between the magnitude of the inconvenient 2011 event and the more damaging 2009 deluge. There are also growing trade tensions with Beijing, which isn't afraid to bruise Manitoba canola producers as it exchanges diplomatic blows with Ottawa.

In other words, Manitoba is by no means out of the fiscal woods as it tries to follow Quebec and British Columbia into the hallowed land of balanced budgets.

Quebec, which not too long ago displayed some of the worst fiscal restraint in Canada, uses its increasing economic  latitude to whittle away at its total debt. B.C., which now boasts one of the most enviable provincial economies in Canada, has used balanced budgets as an excuse to engage in a renewed round of social spending.

Manitoba is nowhere near either province. What's more, it's unclear whether Pallister would start spending again after his government does balance the provincial budget, assuming all goes well and that does happen during a second PC term.

An election in 2019 makes sense for the Tories, as the NDP and Liberals do not appear to be ready to mount a serious effort to unseat the better-funded, more popular PCs.

But even on what appeared to be one of the happiest days of his public life, Pallister declined to speculate about this prospect.

"You guys seem to be doing fine with that," he said.

The window for a 2019 election call is narrow: it would have to come after a spring flood and prior to the fall federal election. MLAs interested in another term may want to reconsider placing a deposit on a summer cottage rental.

About the Author

Bartley Kives

Reporter, CBC Manitoba

Reporter Bartley Kives joined CBC Manitoba in 2016. Prior to that, he spent three years at the Winnipeg Sun and 18 at the Winnipeg Free Press, writing about politics, music, food and outdoor recreation. He's the author of the Canadian bestseller A Daytripper's Guide to Manitoba: Exploring Canada's Undiscovered Province and co-author of both Stuck in the Middle: Dissenting Views of Winnipeg and Stuck In The Middle 2: Defining Views of Manitoba. His work has also appeared in publications such as the Guardian and Explore magazine.

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