How well is the Manitoba economic horse pulling the social cart?

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Ensuring sustained prosperity is critical to a healthy society and province. Simply put, without economic prosperity, any government would not have the tax revenues to support the social services we rely on every day. As our Premier is fond of saying, “the economic horse pulls the social cart.”

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These are fine words, but words require action. Action must produce results. Will Manitobans see results from our current government? Time will tell.

How well is that economic horse doing in Manitoba? That is the question we look to measure and grade in the Prosperity Report prepared on behalf of the Manitoba Employers Council (MEC). As the largest federation of employer associations in the province, MEC represents over 20,000 individual employers and hundreds of thousands of Manitoba jobs.

Every two years we conduct a study titled The Prosperity Report that measures Manitoba against its neighbouring provinces on a variety of economic indicators. The 2024 Prosperity Report is the 7th Edition and, since it mostly reflects data up to 2023, effectively represents the end point of progress achieved by the previous government. It also provides a good baseline to measure future progress which may be achieved by the current government.

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Since the Report was last conducted in 2022, I’m pleased to report that in many indicators Manitoba is now moving into the middle. In 12 of 33 indicators Manitoba finished third or tied for third amongst provinces measured. Provinces included in the Report are Manitoba’s closest neighbours: Ontario and Saskatchewan to the East, and Alberta and British Columbia to the West.

However, it is a major concern that Manitoba finished amongst the bottom 2 provinces in 14 of 33 indicators, and at the bottom in 9 of them. We recorded the lowest GDP per-capita, the worst interprovincial migration rates, the highest family taxes, and the lowest average weekly earnings.

Growing the economic pie is critical because, generally speaking, lower earnings translates into higher taxes. Taxing $100,000 of income at 10% raises the same revenue for the government as $50,000 of income at 20%. That tax revenue is crucial to support health care investments that are increasingly needed with an aging population, and provide the infrastructure to increase the productivity of a population that largely has been growing through immigration.

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Where do we go from here? In the Report we provide several ideas on how Manitoba can best chart a path forward.

First, we need to increase the per capita GDP which is a good measure of productivity. Next, we must stop Manitobans from finding employment out of province. This may not be easy, but it will pay immediate dividends. It isn’t sustainable to fund someone’s education, only to have the associated tax revenues flow to another province if they leave to find employment.

Increasing post-secondary graduation rates and increasing the number of entrepreneurs will lead to more high paying jobs. That will provide opportunities to reduce income tax rates without reducing tax revenue, and hopefully provide ability to eliminate the payroll tax. We can all agree that we want more better paying jobs. Taxing the organizations that create, and potentially add these jobs, makes little economic sense.

The path ahead will not be easy, yet we should reflect on the progress we have made in Manitoba. While we are not near the top in many indicators, we have moved to the middle in just over a third of them. If we are to achieve the goal our Premier has made of making Manitoba a “have” province, there is still a lot of work to do.

— William Gardner K.C. is Chair of the Manitoba Employers Council and a Partner at Pitblado LLP

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