Rock to Road

Sacrificing economic growth on the altar of deficit cutting

January 18, 2019  By Chris Lorenc

Chris Lorenc, MHCA president

What is this public obsession with spending?

If you’ve got a couple of bucks burning a hole in your pocket then, why not: go blow it.

But government stewardship of public funds demands more discipline and caution. Specifically, tax dollars allotted to capital programs should not, in fact, be spent. They should be invested.

The MHCA has repeatedly made this case to governments at all levels and to the public. Yet, there is reluctance to ‘lose’ the word spend. Exhibit A – a Winnipeg Sun report January 8: Why Pallister government has little choice but to cut infrastructure spending.


It may seem small to focus on a word, but words shape and reveal perspective. Viewing infrastructure programs as a ‘spending’ pressure is precisely why governments continue to miss the point. Strategic investment – picking the right projects and priorities for maximum benefit – in infrastructure is an economic-growth proposition. A 2015 Conference Board of Canada report found every $1 Manitoba invested in infrastructure in 2014 (largely in transportation infrastructure) boosted our GDP by $1.30. That report merely reinforced similar findings by a number of others that preceded it.

Investment in core infrastructure gives a near-guaranteed, high value return to the economy. It should be found at the centre of any economic development strategy. Yet, too many in government (and in the public) fail to make that logical connection.

The Sun article (only the most recent example in the public budget talk) did speak of the need for a balanced approach to deficit reduction, and to the fact that starving infrastructure priorities of sufficient funding can lead to higher costs in future years.

The MHCA agrees, four-square, on those points.

But in the head-long rush to eliminate Manitoba’s budgetary deficits and beat back the rising tab of debt-servicing charges, it is a critical error to lump all ‘infrastructure’ projects in a catch basin and label it a threat to fiscal sustainability.

Again, our industry has always encouraged governments to look at the return on investment of strategic infrastructure programs. Part of that strategy? Identify and dedicate revenue streams – and layout multi-year budgets — that can support borrowing at responsible levels. That way, debt-servicing costs of capital programs do not swamp the provincial budget in a sea of red ink.

This is a measured, thoughtful approach to public financing that protects the quality services Manitobans expect and deserve. Investing public funds to boost economic growth is smart management – this is how we generate the revenues for the social programs that underpin our globally envied standard of living.

Strategic investment in infrastructure is our ‘economic health care’ program. So, lose the word ‘spend.’ Think about infrastructure budgets strategically. Otherwise, strong economic growth stalls, unintentionally sacrificed at the altar of deficit cutting.

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