Wednesday 27 May 2009

Timing is everything

In politics, like in comedy, timing is critical. A new party can sweep into power on the heals of a major shit storm or unpopular war, for example. The ebbs and flows of the economy can also have a major impact on who gets elected and if they stay that way. If I convinced you that I could get you your job back then you would probably vote for me. (I can't by the way. Didn't mean to get your hopes up. Sorry...)

Here in Manitoba, Premier Doer's timing has been impeccable:

In the late 90s Federal Finance Minister Paul Martin chopped transfer payments to the provinces in order to slay the Massive Federal deficits, resulting in a "health care crisis" in every province of the confederation. But because health care is provincially managed, provincial governments generally took the hit. This was Doer's first big break, allowing him to roll into power on promises of health care reform. (remember "No More Hallway Medicine"? How did that go anyhow?)

The following years saw a world-wide economic boom, big revenue growth for the Canadian government and unprecedented increases in transfer payments to the provinces, but especially Manitoba, who's share of equalization payments (a.k.a. provincial welfare) consistently increased.* This allowed Mr Doer to avoid making difficult decisions, much like those that doomed his predecessor, choosing instead to throw money at problems. For example, without making any real health care reforms, Doer more than doubled health care spending.** Health care didn't really improve, but we got a couple of jazzy new buildings filled with health care administrators in downtown Winnipeg. In fact, most new jobs and construction are a result of government spending. The result is that the government is popular and everything seems to be fine. Life is good when you have money to spend, especially if it's somebody else's money.

Oh, but dark clouds loomed on the horizon: the economy began to stumble, portending the end of the massive transfer payment increases. This would have been bad news for Doer, but for one more timely new development: Keynesian deficit spending suddenly became in vogue. This produced a brand new revenue stream for Manitoba: Fiscal Stimulus! It also gave Doer an important 'out', allowing him to continue to increase spending under loosed balanced budget rules. And if he happens to run a deficit, then oh well ... we're in a recession you know!

Will his remarkable timing continue? Much depends on what happens federally. If the Conservatives stay in power as the economy recovers, or if the Liberals manage to get a majority, you can bet that they will again be looking for ways to chop spending and get the federal budget back on track, right about the time of our next Provincial election. This would put Doer in the same shoes as his predecessor, faced with declining revenues and tough decisions to make, should he get re-elected. You can bet that Doer will keep a watchful eye on that possibility, and quit while he's ahead if that's where things are heading. Whatever happens, you can bet he'll retire from politics smelling like a rose. He may be power hungry, but he's not dumb.

*2009: equalization: 2063m / fed transfers: 3782m
1999: equalization: 970m / fed transfers: 1723m

**2009: health spend: 4723m
1999: health spend: 2119m



Anonymous said...

Sad part is Bill Blakie will probaly take over from him. Double dipper himself . Good post

cherenkov said...

Probably, but then poor old Bill will have to deal with the plummeting equalization payments. If the NDP were smart they would concede the next election just so the conservatives can take the hit and get destroyed forever.

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