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Pallister’s austerity measures will weaken Manitoba’s COVID-19 recovery

The province may soon become a case study in the disastrous effects of austerity policies on pandemic recovery efforts

Canadian PoliticsCOVID-19

Manitoba Premier Brian Pallister speaks during the province’s COVID-19 update at the Manitoba legislature in Winnipeg, March 30, 2020. Photo by John Woods.

Over the last few weeks, it has become increasingly difficult to watch Manitoba Premier Brian Pallister deliver updates during his COVID-19 livestreamed press conferences at the provincial legislature in Winnipeg.

From refusing to answer questions from journalists about his government’s refusal to accept payment from the University of Manitoba in lieu of budget cuts, to comments about fighting against the Canada Emergency Response Benefit (CERB)—the program doing the most to replace income for those laid off from the public sector—his government’s response to the crisis has become increasingly ideological, callous and opportunistic.

As Lucas Edmond already noted in a recent analysis for Canadian Dimension, it is increasingly apparent that Pallister is operating according to an age-old playbook called disaster capitalism. The term was popularized by Naomi Klein in her 2007 book The Shock Doctrine: The Rise of Disaster Capitalism, in which she describes the practice of using the cover provided by catastrophes such as Hurricane Katrina to rapidly implement austerity measures that would ordinarily be met with massive political backlash.

The situation in Manitoba is developing in such a way that the province may soon become a case study in the disastrous effects of austerity policies on societies recovering from the COVID-19 pandemic.

It has long been known that austerity does not work, particularly during times of significant economic downturn where massive stimulus spending is necessary to spur job creation and resuscitate business activity. The theories of former University of Chicago professor Milton Friedman, who served as the architect of a ‘shock therapy’ program in Chile after the overthrow of Salvador Allende in 1973, are still central to the theoretical architecture of neoliberal capitalism, an ideology that is embodied (consciously or not) by Manitoba’s response to the present crisis.

Why, however, would a political party put into practice a playbook that is known to produce increased inequality, poor social outcomes, and a slower recovery? Has Manitoba’s provincial government not considered the obvious contradictions of an approach to governance that hyper-focuses on balancing the books while cutting tax revenues? To borrow one of Pallister’s favourite metaphors: what family tries to stay afloat by both cutting costs and taking cuts to their income?

To understand Pallister’s playbook, one needs to understand the logic of neoliberalism, an ideology that places emphasis on the rationality of individuals in the free market, and that sees a dramatically reduced role for the public sector.

Around the world, neoliberal ideas have correlated with a minimized role for government in providing funds for institutions and programs that serve the public interest. This view of the state sees intervention as giving way to inflationary tendencies which could threaten the ability to compete in the global economy.

Neoliberalism has had a profound impact on Canadian politics, from the federal all the way down to the municipal level. It is a theory that underpins an institutional environment which not only guarantees private property, but also maintains a rate of profit that is acceptable enough for the system to continue to reproduce itself. If we accept that political parties are representatives of specific classes or a certain strata of society, the Manitoba government’s response to the crisis becomes even less surprising.

Pallister’s austerity agenda

In the midst of the COVID-19 pandemic, the Pallister government is setting itself up to have its cake and eat it too—imposing austerity while relying on the federal government’s Keynesian-style demand management measures to pick up the tab. The province has even contracted a company to offer over-the-phone assistance to businesses seeking to access federal relief programs. This strategy allows the premier to accept responsibility for a potential recovery while still working towards his ideological goals of cutting non-essential costs, balancing the books and creating room for the private sector to expand.

In terms of direct financial aid to consumers, the Manitoba government has offered a paltry $200 refundable tax credit to all seniors over the age of 65. Indirectly, it has also eased interest payments and penalties payable to crown corporations such as Manitoba Hydro and Manitoba Public Insurance.

Meanwhile, the province remains committed to eliminating PST on property insurance, representing a loss of $75 million in tax revenues. Pallister has also offered relief to businesses in the form of deferrals of payroll and sales tax.

Overall, Manitoba has fallen behind at the same time other jurisdictions of varying political stripes have stepped up to offer income supports or emergency funds to those affected by the pandemic. According to a press release published by the National Union of Public and General Employees (NUPGE):

Pallister has failed to offer meaningful support to workers, families, and small businesses. He has ignored calls for income supports, especially for those living on income assistance, for paid sick time for all workers, rental assistance, and for consistent and adequate funding for child care, to name just a few. He had ignored the small business community, too, before unveiling limited financial relief this week. The Manitoba government did, finally, announce job-protected leave for reasons related to COVID-19, but was slow to do so and the leave is unpaid.

Pallister has often repeated that he does not wish to duplicate programs already being offered by the federal government. The situation, then, is one in which there is a federal government engaging in demand management through initiatives like the CERB and the Canada Emergency Student Benefit (CESB), which are reaching people in Manitoba, while the provincial government pursues an austerity agenda that directly benefits businesses and property owners at the expense of ordinary working people.

Economically, the federal relief measures will to some extent ensure that the economy as a whole remains intact, while the province’s commitment to austerity pulls the public sector out of an intervening role in the economy and reduces the tax burden on businesses. This maintains an environment in which profits are still possible.

From a political standpoint, Pallister can continue to enjoy the economic benefits of the stimulus being footed by the federal government while also sticking to his ideological guns. By distancing himself from measures like the CERB, he is announcing to his base that he still believes there is no such thing as a free lunch. In other words, there is no need to worry about the province joining in on the spending, ultimately leading to tax hikes and a reduced rate of profit.

The justification for neoliberal austerity is often technocratic; ‘we are doing what has to be done’. What must be kept in mind at all times, however, is that economics is not a neutral science. Almost all economic policy “works”—the question is for whom? All economic policies are essentially political in character, and this fact cannot be left out of our analyses if we wish to propose viable alternatives.

While it is painful to witness in real time, Pallister’s response to the current crisis is far from surprising. With a majority Progressive Conservative government, and little to no meaningful opposition from either the labour movement, the NDP, or other extra-parliamentary groups, the left will need to get organized to prevent the steady creep of neoliberal deficit reduction policies from hobbling Manitoba’s recovery in the long term.

Cam Cannon is a freelance writer and a columnist for The Manitoban. They are currently enrolled in their third year of studies in global political economy at the University of Manitoba with specialized interests in the political economy of settler colonialism, gender, and ideology.


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