Will Doer's no-risk strategy triumph?
We're ready for economic storm: premier
Dan Lett | Winnipeg Free Press
Updated: November 21 at 02:50 AM CST
For some years now, Premier Gary Doer has stoically refused to stray from his steady-as-she-goes approach to governing.
It's not for lack of encouragement.
From newspaper hacks to lobby groups and hard-core loyalists within his own party, almost everyone has tried to get Doer to be more dynamic, more visionary, more aggressive in tackling Manitoba's economic challenges. Doer's reaction has been nothing if not consistently incremental.
Cut the sales tax? Take education taxes off property? Approve a new municipal infrastructure tax? Build a new football stadium in South Point Douglas? All these ideas were considered somewhat transformative, but all were deemed too politically and fiscally risky for the NDP premier.
At best, critics accused Doer of being unimaginative; at worst, they labelled him a risk-averse, visionless wonk, premier of small ideas.
Then again, most of that commentary came before subprime became a four-letter word, stock market tickers began looking like an electrocardiogram of a heart in full cardiac arrest, and mortgage lenders Freddie Mac and Fannie Mae threatened to throw themselves off the same cliff as the Lehman Brothers investment bank.
Now what was once considered boring is almost bold.
Doer unveiled a speech from the throne on Thursday that for all intents and purposes was -- dare we say it? -- a bold affirmation of the course the province charted in the spring budget. In the face of a very real possibility of a long, deep worldwide recession, Doer pledged that spending on priority programs such as health, education and justice would remain firm. Tens of millions in corporate and personal income tax cuts announced in previous budgets would go ahead. Investments in infrastructure projects, including the Red River Floodway expansion and northern hydro-generating stations, would proceed. And the best part is that all of this will happen without having to go into deficit.
Doer is boldly clinging to his course, arguing that the underlying strengths of the Manitoba economy are sound enough to withstand the global economic crisis.
The premier's theory is based partially on the fact Manitoba's economy is diversified, and thus not vulnerable to a collapse of any one sector, such as commodities or manufacturing.
He is also banking that large infrastructure projects, especially the construction of new generating stations in northern Manitoba, will provide a baseline of economic activity that will see us through the worst of the crisis. Finance Minister Greg Selinger said the commitment to continue spending on priority programs and infrastructure programs functions as an "inoculation" against the global fiscal flu.
Add to that the facts that federal transfers for health and education are expected to remain intact and the province's fiscal stabilization fund is hovering around $800 million, and there is reason to be cautiously optimistic.
Truth be told, it's not a bad theory. Manitoba's diversified economy has spared us in the past. Recessions in this province usually start much later, don't dip quite as deep and are shorter than recessions in provinces like Ontario. But being diversified hasn't spared us completely. With the throne speech, Doer and company are wagering that this time, we might actually dodge a recession altogether.
The peril for Doer is, of course, that almost no one can predict how long the economic crisis will last, and how deep it will go. The global economy right now resembles one of those elaborate obstacle courses used in martial arts movies. You know, the ones with the flying maces, giant swinging axes and whirling truncheons? Getting through it unscathed requires agility, expertise and luck. And quite frankly, almost no one gets through unscathed.
If Doer is right and a combination of risk-averse policies, a diversified economy and infrastructure investments can get us through to the other side of this mess, then he will have lots of opportunities to say, "I told you so."
If he is wrong, and a combination of sustained spending and an aversion to risky spending were not enough to spare us recessionary pain, then Doer will most definitely have some explaining to do.
And this throne speech will be remembered as a triumph of optimism over action.
dan.lett@freepress.mb.ca