Canada West Foundation Blog

By Tom Carson, Director of the Manitoba Office

While there remains one more hurdle—selling 13,000 season tickets within three weeks—Winnipeg appears destined to bolster western Canada's presence in the NHL by adding another team. Yes, western Canada, with almost 31% of the nation’s population will have four (or nearly 60%) of Canada's seven NHL teams.

In 1996 when Winnipeg lost its NHL franchise, several economic factors drove the end of the city's presence in the league. These issues have since been minimized throughout the years, which should secure Winnipeg’s position in the league going forward:

The Winnipeg Arena was considered to be the finest facility in western North America when it was built in 1955, when Winnipeg was Canada's third-largest city. The Arena was renovated in 1979 and expanded to accommodate 15,565 people. Owned by an agency of the City of Winnipeg, it did not provide the revenue potential that owners needed nor the modern amenities and entertainment potential expected in today's facilities. In contrast, the city's new arena (2004) is a full season multiplex owned by True North Sports and Entertainment Limited, the owners of the new hockey club. For hockey, it can accommodate 15,015 people, which is not large by NHL standards (the smallest of 30 NHL arenas ranging from 16,234 to 21,273 seats). However, size is not everything: five NHL clubs had lower than 15,000 average attendance in 2009/10, many of them were substantially lower.

The 1996 ownership of the Winnipeg Jets did not have the means to backstop the growing financial risks that came from the rising salaries and operating costs associated with NHL expansion into the US. By comparison, True North Sports and Entertainment has spent the past decade learning the market, done its due diligence and the ownership team of David Thompson and Mark Chipman has the means and knowledge to support a team in the current Western economy, provided that the fan base is as strong as Manitobans believe.

The Canadian dollar was very weak in 1996. NHL hockey salaries were paid in US dollars and in Canada, every player's salary dollar cost the club at least $1.36. Prior to the negotiations that ended the 2004/05 lockout the NHL had no luxury tax, revenue sharing, salary cap or salary floor.

Manitoba's population was 1,134,000 in 1996, and the capital region of Winnipeg was 684,100. Today, after posting its highest growth rate in 40 years, the estimated population is projected to stand at 1,250,900 with the CMA at 764,200. Although it has the smallest NHL population by at least 250,000, the region is a deeply knowledgeable and committed hockey population.

All in all, a stronger Canadian dollar, a well-designed new facility, a province more confident in its economic future, a growing population, a greater local sense of pride and a rabid fan base are all pieces of the package that make this potential NHL franchise far different from the one Manitobans lost in 1996.

By: Tom Carson, Director of the Manitoba Office

Manitobans head to the polls on Tuesday, October 4, 2011, and with only 169 days to go it is not surprising that the budget tabled on April 12 seemed designed both to benefit the largest number of interests and to create the least possible controversy.

On the revenue side, no increases are planned for major corporate or personal income taxes and expenditure increases will be sprinkled across many sectors, reaching a very broad public. These increases include the freezing of administrative costs for the regional health authorities and tying tuition increases to the consumer price index (CPI).

However, there was also some disappointment, especially for those who viewed the budget through a lens where the economy and our future spending ability is of preeminent importance. While the minister stated that overall expenditures were expected to rise by 2.3%, year over year, spending on core programs actually rose by 4.89%.

Going into the preparations for this budget, consultations generated a few hot points:

• The Business Council of Manitoba had what seemed to be an unprecedented recommendation; in recognition of the serious impact that Manitoba's infrastructure deficit has on the economy, the leaders of Manitoba's business community actually recommended a 1% increase in the provincial sales tax to be applied for a ten-year period and used only for infrastructure expenditures. This was seen as an opportunity for municipalities to deal with their infrastructure problems with a revenue source that actually grows with the economy.
• The government responded with a commitment to spend the equivalent of one point of the provincial sales tax on municipal infrastructure and public transit. This looks like a bigger commitment than it is. Rather than being incremental to current infrastructure spending, this commitment blends current grants for infrastructure and public transit. While blending both grants identifies a secure and growing source, for the City of Winnipeg it would represent an estimated 9% increase from funds they already receive. Winnipeg will benefit by having this increase funded from a growth stream, whereas previously approximately 50 to 60% was funded in this manner. Over time the value of that growth will become more obvious, however, it is not a substantial investment and will not contribute significantly to correcting the infrastructure deficit.
• Comparatively, Manitoba's universities have been both underfunded and, due to a decade-long tuition freeze which ended in 2009, prevented from using tuition increases as a means to help balance their books. The government has committed to increased grants of 5% over the next three years and has reinstituted a tuition freeze, although this time tying it to growth in the CPI. Although this commitment is not enough to bring them on par with the support received in most other provinces in Canada, it does at least begin to reflect the importance of universities to our provincial economies.
• For those hoping that the budget would reflect a major commitment to cut spending, the tone of the budget speech demonstrates that it was clearly not something the government wished to lead with. The publicly stated commitments to restraint are quite narrow—they are striving to negotiate a 0% increase for the general civil service, freeze discretionary salary and operating expenditures, maintain last year's reduction in ministerial salaries and carry on a freeze on salaries for members of the legislative assembly along with their staff. They will be attempting to freeze salaries for senior management in the regional health authorities and generally seeking ways to foster innovative, cost-effective services. (Government will likely also expect all public-sector employers to seek the same wage freeze—presenting an interesting dilemma for university administrators).
  
  

The question yet to be answered for Manitobans is whether the right policy choices are being made through the current budget. Were there alternatives which could have resulted in balancing the budget more quickly? If these choices were not made in this budget, will it be incumbent on the government formed after October's general election to initiate them?

It might be tempting to say that no government going into an election would choose to add 1% to the sales tax or to introduce themes of restraint and program redesign. However, Saskatchewan is also heading into an election in November of this year, and unlike Manitoba and most other provinces, has already posted a surplus. Both provinces saw greater revenues last year and both spent more than they had budgeted in 2010/11. Saskatchewan's revenues and expenditures have grown significantly more than Manitoba's, but their treatment of the budget challenge in 2011/12 is quite different despite the upcoming elections. While Saskatchewan plans to be spending 5.48% more than their printed estimates of last year, they will be spending 2.45% less than their actual previous year expenditures. And the untouchable—spending in the Department of Health will actually be reduced compared to the previous year.

Now, that would have raised eyebrows amongst those looking for more attention to the bottom line in Manitoba!

On Monday, May 31, Manitobans awoke to hear that they had lost the powerful presence of Dufferin “Duff” Roblin. At age 92, Manitoba‘s 14th premier stood as the oldest living former premier in Canada and he was loved and respected equally by those in politics and those who place politicians firmly in the category of “persons not to be trusted.” First elected in 1949 at the age of 32, he served as Premier between 1958 and 1967.

Manitobans love him because he had that rare combination of being a visionary, a realist, and a person with the courage to take on hard work and pursue unpopular ideas without resorting to that nasty partisan behaviour which tends to characterize modern day politicians. His advice has been sought by and offered to every Premier since his leaving office. He is remembered in the Encyclopedia of Manitoba as having restored the party system, making it desirable for parties to have visibly different views on policies and the role of government. Sadly, today, those differences are often harder to detect.

Manitobans awoke to a plethora of tributes which will serve to inform them of some of the reasons why his government is seen by many as the most influential since World War II. They will learn how he saw the value in using the power of the state to drive modernization.

It is safe to say that most Manitobans know that he drove the construction of the Red River floodway because it has saved the city of Winnipeg from major flooding on at least 10 occasions since. Fewer know that in 1963 a construction budget of $63 million was unheard of, and moving 60,000,000 ft.³ of earth was even greater than the excavation needed for the Suez Canal. Those in 1968 (when it was finished on time and under budget) who believed the idea to be sheer folly and a colossal waste of funds could not have known that the dream to save the city from nature’s powers was actually achievable and the accomplishment would prevent more than $10 billion in future flood damages. Dubbed in 2008 by International Association of Macro Engineering Societies as one of the 16 engineering achievements that shaped the world since biblical times, what Manitobans affectionately call “Duff’s Ditch” deserves to be recognized as one of his stellar accomplishments.

However, Duff did not see it as his greatest achievement. He placed far greater emphasis on other areas of government priority. Education was the highest and required no less than the reorganization of the primary school system and the establishment of three new community colleges (Assiniboine Community College, Red River College and Keewatin College) along with increased support to existing universities and the establishment of two new ones (the University of Winnipeg and Brandon University). A short summary of his government’s achievements can be found in the Encyclopedia of Manitoba.

Perhaps with his passing and with Manitobans being given the opportunity to re-learn his story some future leader will be inspired to perform with the kind of dignity and determination, clarity and principles which Premier “Duff” showed us is possible.

Post script
The space shuttle orbits 196 miles above the Earth. Outer space starts at approximately 200 miles above the Earth. This is how visible the Winnipeg floodway is from 282 miles:

Posted By: Tom Carson