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Professors show the way to restore the province’s financial health

Author: Todd MacKay 2016/11/29

Professors work with their brains and some recent brain work is providing a prescription for Manitoba-wide policy to improve the province’s financial health.

 

The University of Manitoba Faculty Association recently reached an agreement with university management to end a 21-day strike. After tough negotiations, the two sides worked through issues such as “workload protections, enhancement to collegial governance and fair assessment practices.” But what’s most remarkable about the deal is what wasn’t included: salary increases.

 

“UMFA accepted a zero-percent salary increase in exchange for these substantial improvements to governance issues,” stated the union’s press release announcing the agreement.

 

There are numerous factors at play in any negotiation and governance issues were obviously a high priority for the union. But when it comes to salaries, the professors clearly took another key point into account: the government can’t afford to pay higher wages.

 

What the professors demonstrated in practice became a central policy in the Manitoba government’s latest Throne Speech.

 

“Legislation will be introduced, following consultation and dialogue, to ensure that the province’s public sector costs do not exceed Manitobans’ ability to sustain the services they receive in return,” promised the government in the speech.

 

Let’s start with the second part of that equation: the provincial government’s ability to pay.

 

Manitoba is running a $911-million operational deficit. This year, it will pay $874 million to cover the interest on a debt that’s already more than $22 billion. Bond rating agencies have downgraded Manitoba’s credit rating. It’s a simple mathematical fact that Manitoba cannot sustain the current spending on government services, let alone let those costs grow.

 

Now for the other part of the equation: the cost of Manitoba’s bureaucracy.

 

For it’s size, Manitoba has the second largest bureaucracy in Canada, according to a study produced by the Frontier Centre for Public Policy. (That total includes both provincial and municipal bureaucracies). It goes on to estimate that Manitoba’s super-sized bureaucracy costs taxpayers in the province more than $2 billion more than it would if it were in line with the national average.

 

This leads to an inevitable conclusion: the cost of the province’s bureaucracy is greater than taxpayers’ ability to pay.

 

Professors at the University of Manitoba clearly recognized this point in their own specific circumstances.

 

The university’s bill for salaries has gone up from $304 million (adjusted for inflation) in 2011 to $343 million in 2015. The amount paid per student has gone up 7.1 per cent. By forgoing raises, the professors are helping to ensure post-secondary education remains affordable for both students and taxpayers. But the professors are also protecting their own job security by ensuring the bills they submit for their services aren’t unsustainable.

 

Restoring the province’s financial health will not be easy. Manitoba’s dire financial situation means some job losses are inevitable and the provincial government has already made it clear that middle management must be reduced. But if compensation costs can be contained; frontline services can be maintained.

 

It’s important to consider the consequences of the alternative. The threat facing nurses and teachers and others who work for government isn’t the political philosophy of one party or another. The threat facing frontline government employees is the $874 million in interest paid to the province’s lenders every year. It’s a number that goes up each year the government is running a deficit.

 

For the sake of taxpayers and the people they pay, government salaries have to be contained to restore the province’s financial health.


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