On August 7, 2009, the Manitoba Chambers of Commerce received a letter from Manitoba’s Minister of Finance. Here is that letter in its entirety (headers have been added for ease of reference):
Thank you for your thoughtful pre-budget submission on behalf of the Manitoba Chambers of Commerce (MCC). I was pleased to have the opportunity to meet with you and your colleagues and as always, the discussions were informative and helpful as our Government prepared Budget 2009. I would also like to thank you for providing a copy of MCC’s Policies & Resolutions 2009-1010 of which I would like to specifically address two items: the Health and Education Levy, and Modernizing Government.
Manitoba Finance understands and is mindful of the challenges that your membership is facing as a result of the recent economic and financial situation. The 2009 Budget makes strategic stimulus investments in infrastructure, and provides tools to assist businesses and forward an innovation agenda, as well as place increasing focus on immediate skills and apprenticeship training to lay a stronger foundation for education of youth, who will be drivers of the province’s future prosperity. Budget investments and tools are intended to strengthen our economy now and into the future. It does so using a balanced and steady approach given the Province’s financial responsibilities and accountabilities.
As you may be aware, many jurisdictions have gone into a deficit position in 2009/10 in order to pay for economic stimulus measures and due to their drop in revenues. Manitoba’s Budget, Steady. Balanced. Building Manitoba’s Future, is in stark contrast to this, and focuses on budding momentum on existing work done, whether diversifying our economic base, infrastructure investment or our international markets. Manitoba will be deficit-free and invest $625 million in strategic stimulus investments, and has projected a summary budget surplus of $48 million.
Payroll Tax/Business Tax Reform:
With respect to payroll tax, I would emphasize that it is important to consider our Government’s record of reducing business taxes as a whole. Numerous measures taken since 1999 will save Manitoba businesses more than $400 million annually as of 2011.
Most notably, we are completely eliminating two of the key business taxes: both the small business income tax and the general corporation capital tax will be eliminated by the end of 2010. The capital tax has already been eliminated for manufacturing firms.
The general Corporation Income Tax rate dropped to 12% on July 1 – down from 17% in 1999 – and we have significantly enhanced tax credits for businesses. To mention only the largest changes, the Manufacturing Investment Tax Credit was made 70% refundable and the Research and Development Tax Credit rate was increased from 15% to 20%. We also increased the thresholds for the Health and Education Levy by 25%.
To see how significant these changes are, note that corporate profits in Manitoba increased by 86%, or approximately $2 billion, between 1999 and 2007 while net corporation income tax revenues only rose by $93 million over the same period – or less than 5% of the profit increase. Almost all of the $2 billion increase in profits was retained in the hands of Manitoba business, and this does not even include the savings on capital tax and Health and Education Levy.
When all business taxes are considered, it is clear that Manitoba has a competitive environment for business. A 2008 international tax comparison by KPMG, “Competitive Alternatives – Special Focus on Tax”, found that Winnipeg had the 20th lowest Total Effective Tax Rate out of 102 cities in ten countries, and the third lowest effective Corporate Income Tax Rate out of 81 North American cities. This helps to explain the strong record of private capital investment in recent years. Between 2003 and 2008, the real (inflation-adjusted) value of private investment in non-residential construction rose 65% while real investment in machinery and equipment was up 38%. In 2008, Manitoba’s 15.2% increase in private investment was the highest in Canada.
I would like to draw your attention to some other announcements in support of infrastructure and competitive improvements that will be of interest to your membership that include:
- A $212 million joint federal-provincial infrastructure project in support of the development of CentrePort Canada. It will develop CentrePort Canada Way, a four-lane divided expressway. The high-speed corridor will connect Inkster Boulevard, the James A. Richardson International Airport and the CP Weston rail intermodal facility to the Perimeter Highway near Saskatchewan Avenue.
- A $535 million investment for building and improving highways including:
- the Trans-Canada Highway from Brandon to Saskatchewan,
- Highway 75 to the U.S. border,
- PTH 59 north,
- PTH 8 north of Gimli,
- PTH 10 south of The Pas, and
- various roads projects in Brandon and Winnipeg.
These highway investments will strengthen exporter access to domestic and international markets. Manitoba has again committed that it will work with the International Gateway Council, the private sector and other government partners to promote Manitoba as a transportation and distribution gateway to the world. Our Government’s successful collaboration with private sector stakeholders to advance CentrePort Canada – also recognized by the federal government as a priority area for stimulus investment in Manitoba – will further develop Manitoba’s transportation and trade networks. These networks will be vital to our economic success when we enter into a period of global economic recovery.
We are not only taking action to support capital investment, but Budget 2009 is also making human capital investments. This year the family of Co-op Education and Apprenticeship Tax Credits was extended to include a new component: the Advanced-Level Apprentices Hiring Incentive. This family of programs encourages employers to provide work experience to young Manitobans which will empower and engage them in meaningful, well-paying employment.
Our provincial Sector Councils continue to be key partners in linking industry, labour, education and government in skill development, and attracting and retaining skilled workers in all regions of Manitoba. This collaboration has enabled us to provide a co-ordinated package of training supports to assist businesses to expand and meet business goals. It has also allowed us to implement new and innovative industry-relevant training programs, and provide workplace skills upgrading and training for over 12,000 individuals per year.
We are listening to what industry has to say. Continuing the need to build innovative partnerships with industry, The Advisory Council on Workforce Development Act was passed in June 2008. Consisting of representatives from Sector Councils, labour, education and government, the newly created Advisory Council will provide strategic information into the development of Manitoba’s Labour Market Development Strategy as well as advice on labour market policy, programs and trends.
Most recently you might be interested to know that legislation was introduced in order to improve labour mobility within Canada. We anticipate that this will help to address skill shortages by creating opportunities for freer movement of certified workers. The Manitoba Labour Mobility Act would allow certified workers from other Canadian jurisdictions to have their credentials recognized in Manitoba and allow them to practice their occupations in the province. This legislation takes action to ensure that Manitoba maintains a highly skilled experienced work force which we recognize as being crucial to the international success of our industries.
Modernizing Government (Government that is effective, efficient, accountable and transparent)
Sound management and use of public resources are keys to making government more effective, efficient, accountable and transparent. Our Government has made sure that public spending remains under control and that every tax dollar invested into government delivers results in an effective and efficient way. According to Statistics Canada, since 1999/2000, Manitoba’s total per capita expenditure growth has been the second lowest of all provincial governments. As well, Manitoba’s rank in total per capita spending has fallen from fifth highest to forth lowest among all provinces. Since 1999, the Government of Manitoba has undertaken a number of activities to create a culture in the public sector for finding efficiencies. Our Government plans to maintain its advantage by continuing to test new ways to reform government processes in order to improve services without increasing costs.
1. Values and Ethics in the Civil Service
Effectiveness, efficiency and accountability are all part of the Government of Manitoba’s Values and Ethics Guide for civil Servants (the Guide). The Guide reflects the predominant views of the civil service, and offers a guide for those who seek leadership or have questions about public servants role in providing effective and efficient programs and services to Manitobans.
The Guide requires that civil servants act in the public interest. In practice, this means that public servants must display the efficient, effective and accountable use of public money, property, goods or resources. Civil servants at all levels are required to use all resources, including human, financial and technological resources efficiently and effectively for the public benefit, and strive to ensure that the public receives maximum value for each tax dollar spent.
The Guide also requires that civil servants act with skill and dedication, meaning the provision of responsive, effective and efficient services to the community that are flexible and can adapt quickly to changing demands. It means that civil servants give their best to meet performance standards and other organizational requirements. In doing so, public servants should continually review ways to improve our programs and service in response to the public’s changing needs – whether through the use of new technology, forging new partnerships, or streamlining our processes.
For more information on the Values and Ethics Guide, please visit:
2. Training Public Servants to be Efficient, Effective and Accountable
Training and staff development further reflects our commitment of an efficient, effective and accountable public service. Workshops train and educate civil servants about Government of Manitoba Performance Reporting Guidelines, approaches to performance measurement, policy development and completing department plans. These guidelines and workshops provide public servants with a common language and approach for managing public resources in a consistent, efficient, effective and accountable manner.
3. Projects, Initiatives and Reorganizations
Since 1999, the Government of Manitoba has undertaken a number of projects, initiatives and reorganizations that further reinforce efficient, effective and accountable management of public sector programs and services. Examples include:
- In 2008, the Comptrollership Change Management Initiative (CCMI) was launched to continue implementation of modern comptrollership practices in the government. The CCMI will enhance the ability of departments to generate information that is accurate, relevant, understandable and timely about their financial situation, their results relative to costs incurred, and mitigation strategies relative to financial and operational risks.
- Launched in 2008, the Budgeting for Outcomes (BFO) Pilot Project is testing a comprehensive way of budgeting that defines desired outcomes for particular projects dealing with greenhouse gas reduction, and decides on the funding to be made available to achieve these outcomes. While BFO is not new, Manitoba’s approach has been tailored to our provincial context, and a competitive process where departments are able to apply for programming funds to Treasury Board based on the outcomes they offer, and the value and efficiencies they achieve.
- Since 1999, our Government has implemented reforms within existing government organizations to better mange public resources, capitalizing on synergies, regional capabilities, expertise and talent. The appointment of a Healthy Living Minister focuses on creating conditions and supporting behaviors that promote the best possible health choices for everyone. Manitoba Water Stewardship now has sole responsibility for protecting and managing Manitoba’s high-quality water resources. Manitoba Science, Technology, Energy and Mines was created to better align existing resources in support of the development of energy, research and innovation as key contributors to the provincial economy.
- Through a process known as “clustering”, some internal administration, finance and information technology services have been reorganized to consolidate services in fewer administrative groups.
A further list of the Government of Manitoba’s modernizing efforts can be found in the appendix section of the following budget paper:
The Manitoba Government is committed to improving the way government measures and reports to the public on both financial and non-financial performance outcomes. Outcomes-based reporting enhances efficiency, effectiveness, transparency and accountability by providing information on the actual impacts, benefit or changes experienced as a result of a program or government service.
The first overall Manitoba Government performance report to the public, Reporting to Manitobans on Performance: 2005 Discussion Document, was released in June 2005. This document asked Manitobans for their views on the best way for the provincial government to expand the information that it provides to citizens on the progress it has made toward meeting its commitments. The document provided information on key performance indicators, opening discussion on approaches to performance measurement and reporting in Manitoba.
In the fall of 2006, for the first time, a set of key performance measures was included in every government department’s Annual Report. Performance reporting information is also included in the regular Annual Reports, and various specialized reports, of many of the other organizations in the Government Reporting Entity. Performance indicators in Departmental Annual Reports are intended to compliment financial results and provide Manitobans with meaningful and useful information about government activities, and their impact on the province and its citizens. Please note that Departmental Annual Reports containing performance measures are available on-line at:
In 2007, the Province developed performance reporting principles and guidelines. These principles and guidelines provide a solid foundation for performance reporting as Manitoba works to improve the way government reports to the public.
Also introduced in 2007, the Financial Management Strategy (FMS) – as statement of our Government’s priorities or sound financial management – further demonstrates the commitment to enhancing transparency and accountability. The FMS sets out what our Government intends to achieve over the next year and into the future. The results achieved are reported at the end of each year; the first report on outcomes was released in 2008. This gives the public a real opportunity to assess the success of our Government’s performance.
It should also be noted that the number of specialize reports of indicators has increased since 1999. Examples include:
- Manitoba Health and Healthy Living has established Community Health Assessments as a foundational process to measure the health status of the populations served and to inform Strategic Planning by the Health Authorities. Two 5 year cycles of community health assessments have been completed over the last 10 years with the third set of reports planned for release in Fall 2009.
- In 2005, the first Provincial Sustainability Report of Manitoba was also published. It provided Manitobans with timely, accurate information on important sustainability issues and trends. It is a way of monitoring Manitoba’s sustainability by tracking and interpreting key indicators in the province’s many sectors.
- As well, Government departments are continually reviewing and revising their websites and the reports they compile in order to provide meaningful and easily accessible information to the public regarding issues such as health care, education and justice.
Further information on performance reporting in the Government of Manitoba can be found at the following link:
Consideration of departmental estimates and monitoring of program spending is done through the Legislature on an annual basis, as well as by the Opposition through public hearings. Departmental estimates are reviewed by the Committee of Supply (which has no fixed membership) through a line-by-line question and answer process in which spending is reviewed in detail, and calling the vote on each line and resolution in the order in which they appear. It is through this process that motions to remove or reduce line items can be made.
Thank you once again for your time and submissions. My colleagues and I look forward to continue working with the MCC to explore options and opportunities that will ensure an even brighter future for your membership and all Manitobans.
Minister of Finance