The many consequences of austerity

Previously published in the Winnipeg Free Press April 5, 2024


In voting against the 2024-2027 municipal budget, Coun. Russ Wyatt stated that decades of low property taxes have resulted in “self-imposed austerity”, limiting the ability of the city to deliver services ( Mayor, councillors vote overwhelmingly for city’s multi-year operating, capital budgets, March 20).

As the City of Winnipeg implements a budget including cuts to recreation and library services, Coun. Wyatt is correct to note the “self-imposed austerity” created by the city’s property tax policy.

However, across Manitoba municipal budget constraints are compounded by years of provincial austerity measures that significantly impacted municipalities, including freezes on unconditional municipal funding and the elimination of transit cost sharing agreements. Municipalities have needed to fill the gaps left by stagnant provincial funding levels, shifts in departmental priorities and the contracting out of services.

Across Canada, municipalities have few tools to raise revenue while facing demands that go well beyond their traditional responsibilities, such as housing affordability crises, addressing climate change, immigrant settlement and on-going public health concerns.

While municipalities are responsible for a wide variety of social, community, sanitation, safety and transportation services, they have limited options to raise revenue.

The province plays a significant role in supporting municipalities, through direct financial support, providing municipal advisory services and aiding regional service delivery. These services for municipalities are key in ensuring the protection of the public interest and maintaining long-term social, environmental and fiscal sustainability.

Austerity measures at the provincial level impact municipal working conditions, job satisfaction, recruitment and worker safety. While austerity measures may potentially provide immediate savings, the chronic underfunding of municipalities and municipal services has significant longterm costs, including in deferred maintenance, loss of internal capacity and reduced service quality. The lack of sustainable funding means that critical issues remain unaddressed.

Since 2011, more than 75 per cent of the new population increase in Manitoba has occurred in the 10 largest cities. Despite this, funding to the Department of Municipal Relations has remained largely static over time, both to support provincial activities and in direct financial assistance to municipalities.

Support for municipalities in 2022 was only six per cent higher than in 2013, despite the double- digit population growth and pressing challenges municipalities are facing. When adjusting for inflation, total financial assistance to municipalities per Manitoban fell from $280 per person to $244 between 2015/16 and 2019/20. In 2021/22, funding was still 11 per cent below 2015/16 levels.

As part of the Working Under Austerity in Manitoba research project, over 2,000 public sector workers were surveyed. The majority

of respondents working in the area of municipal government felt that their work had been either greatly or moderately impacted by provincial austerity measures aimed at reducing expenditures and balancing the budget (91 per cent of provincial, 78 per cent of municipal and other employees).

Both provincial and municipal employees felt a negative impact on working conditions and staff recruitment, while almost 40 per cent of municipal employees felt worker safety had worsened. Despite stagnant funding, 76 per cent of provincial respondents felt that their work had not been scaled back. A major concern was the impact of unfilled positions (currently 74 positions and vacancy rate of 23 per cent), leading to increased workloads and concerns about service quality.

The use of private-sector contractors, particularly for professional work, raised concerns about oversight, the quality of outsourced projects and potential conflicts of interest. As one respondent noted: “Our function supports a public service that’s not profitable and isn’t meant to be profitable. It’s meant to provide the public with useful service. When these types of services are contracted out, they are plagued with budget cuts and cost-cutting measures that destroy the public’s satisfaction with the service provided.”

While outsourcing of government work has been motivated by perceived cost-savings and efficiency, participants’ direct experiences raise serious concerns about maintaining quality and protecting the public interest with this service model.

Despite the critical role that municipalities play in addressing the most pressing societal concerns, there is little evidence of provincial support to facilitate this.

With limited funding and numerous unfilled positions, employees are asked to “do more with less,” stretching the ability to maintain service quality and an efficient public service. While the contracting out of professional services promises increased “value for money,” this has not been demonstrated, as consultant costs can be higher than providing services in-house and quality may not meet standards requiring additional staff resources.

Participants confirmed the long-term implications of the “hollowing out” of the public sector, including limited staff capacity or expertise to evaluate the work of consultants and ongoing concerns about the protection of the public interest. While austerity measures have been widely adopted, any potential cost-savings must be evaluated in terms of the long-term impact on residents, communities, the environment and the broader public interest.

Orly Linovski is an associate professor in the Department of City Planning at the University of Manitoba and a research associate with the Canadian Centre for Policy Alternatives-Manitoba.