The testimony of garry steski

Oh boy, if you thought the slogging through Groen’s testimony on budgets was bad, now we get to hear all about the Provincial Bond Market and Debt. undecided

As we are waiting for Mr. Steski to take the stand, Kevin Rebeck has snacks and he’s feeding his lawyers! I want to be on his team. Of course, he’s also sharing with everyone anywhere near him, so I’m sure that if I had wandered into his vicinity, he would have included me.

Direct Examination – by heather leonoff

Garry Steski is currently the Assistant Deputy Minister – Finance (Treasury Division), which for some reason is in the Finance Division of the Ministry of Finance, and not the Treasury Board Secretariat. (Why? Steski explained it, but I didn’t listen because I don’t care.)

I did hear, however, that the Treasury Division of Finance manages and administers the cash resources, borrowing programs, and all investment and debt management activities of the government, and that Garry Steski has managed this all since 2009.

I’m not about to pretend that I even want to have any clue about how bond markets work, but even with that admittedly bad attitude, I keep thinking – man does this guy ever know his stuff. Those numbers and ratios and percentages just fly out of his mouth with exceptional authority, and I assume with great accuracy, since no one corrects him.

Again, a lot if Steski’s testimony will be dealt with by the financial experts, but I gather that Heather Leonoff wanted him here to explain a little bit about why government debt is a bad thing. (It’s definitely a boring thing, but I guess it’s bad too.)

With apologies to Garry Steski, and all other financial experts, this is what I understood about how government bonds work.

If the Government of Manitoba wants to borrow money, it does so by issuing bonds. Banks buy these bonds and sell them to customers as investments. 85% of Manitoba’s bonds are sold in Canada, but some are sold to international investors because you can get cheaper rates. Maturity dates are staggered so that every year you have some bonds coming due and perhaps some more borrowing. For the most part, if you are in deficit for a year, you will have to borrow more.

Like the rest of us, Manitoba’s borrowing ability is tied to its credit rating, which is monitored by three agencies – Moody’s, Standard & Poor’s, and DBRS. As a general rule, you need good credit ratings in order to get good rates when you issue your bonds. And if your credit rating starts going down, you end up having to pay more to borrow.

One of the things that can tank your credit rating is when your debt load gets too big. Steski recounts that for a few months “last fall” (2018), they were unable to borrow money at a price the Province could live with because their credit ratings were down, and the price was too high.

CROSS-EXAMINATION – BY garth smorang

When Smorang-the-Smasher gets up, he goes straight to the question of the Treasury Division’s input on the content of the Province’s budgets:

No. says Steski, we have nothing to do with deciding what goes into the budget, and we do not have anything to do with reducing the deficit nor deciding about the level of tax revenue.

And, no, Steski doesn’t pay any attention to what the Government says in its budgets, nor does he worry about what reducing the PST would do, because he can’t do anything about it. He looks only at our credit ratings.

And, yes, about those credit ratings, it seems that the Province has been getting downgraded recently. And why? Because every year, Manitoba’s projected deficit is substantially higher than it turns out to actually be. Although in real terms this is good for us financially, apparently the credit ratings agencies think it is an indication of poor financial planning (or perhaps a lack of competence or understanding).

Then it gets a little amusing, at least for me, because Garth takes Garry through a series of downgrades in the credit ratings for the Province. There are a couple of extraneous reasons – like how to count or not count $31 billion of debt from Manitoba Hydro, but one repeating theme is – why are you, Manitoba, lowering taxes when you have deficit budgets and with this level of debt?

Hey, that’s exactly what I said – why would you cut taxes when you need money to cover your expenses and pay off a debt that you say is way too high?

Garry Steski has no answer to these questions. His job is to try to borrow money for the Province when it needs it, and at the best rates. It is not up to him to decide or comment on the wisdom of the policies or decisions that cause the Province’s credit ratings to rise or sink.

more questions in conclusion

As with Richard Groen, this seemed to be a little light on specifics – yes debt is bad, yes you can have trouble borrowing, but I didn’t hear details about serious troubles that were happening in 2016, or how our financial position was so-o-o dangerous that they just had to do something to reign in expenditures. I’m getting the impression that this is because those specifics aren’t there.

Steski did mention the problems in the fall of 2018, and also something about having to borrowing at higher basis points  “just last week” (which would have been mid-November of 2019). I assume these are bad things, they certainly don’t sound that good. But these are problems of very recent history.

Where’s the beef that would prove that the financial disaster the government says it inherited in April of 2016 was causing us so much grief?

Come on, Manitoba, is this a bison or is it just bull?

The Trial Begins

Setting the scene in Courtroom #210 as the trial of MFL v. Manitoba begins. We get some background and meet the players.

Opening Statements

The proceedings begin with opening statements. Here, the lawyers for each side give us an outline of the course they are going to take (and why it is going to take 13 days to get there).

The Testimony of Kevin Rebeck

The President of the Manitoba Federation of Labour testifies about consultations between the government and some Labour leaders prior to the PSSA being passed. They weren’t very fruitful, and there seems to have been some question as to whether the government was being truthful.

Passed but Not Proclaimed?

Why is the government waiting to proclaim the PSSA? I thought there was a financial emergency, and dire warnings of our precarious fiscal position. But it has been 2 1/2 years. Don’t they need it yet?

The Testimony of Elizabeth Carlyle

Elizabeth Carlyle gets cross-examined about what happened in a negotiation between CUPE and the Winnipeg School Division. It wasn’t a lot, and it doesn’t sound as though it was very good.

The Testimony of Dr. Mark Hudson

Remember when the faculty at the University of Manitoba when on strike in November of 2016? Dr. Mark Hudson is here to tell us why it happened. And he fills us in on what was happening between the University and the Province behind the scenes.

The Testimony of Tom Paci

Tom Paci appears on behalf of the Manitoba Teachers Society. His story? A quest for justice for Manitoba’s 15,000 teachers and an appeal to the gods of justice – how can we be bound by the PSSA when it is not law?

Indirect Taxing & Discriminatory Taxation

If a tax by any other name would be as taxing, could wage freezes be indirect taxation? And if members of public sector unions are paying more in taxes to support public services, would this qualify as discriminatory taxation?

The Testimony of Michelle Gawronsky

The leader of the Manitoba Government and General Employees Union recounts her experiences since the advent of the PSSA. Everything she says about her automatic approach to understanding concerns and finding ways to solve problems makes me think ” leader, leader, this is a great leader.”

The Super Six Speak

Six experienced union negotiators come to tell us about what has been happening in their collective bargaining worlds. We learn more about what the PSSA means for public sector unions and their collective agreements.

Labour’s Collective Bargaining Expert

Dr. Robert Hebdon testifies about the impact of the PSSA on collective bargaining in Manitoba’s public sector. It isn’t good.

The Testimony of Sheila Gordon

We end the union tales of collective bargaining under the PSSA in passed-but-not-proclaimed limbo with MGEU’s GEMA. Sheila Gordon, MGEU’s senior negotiator was there. And she is here to tell us how those negotiations did not go anywhere.

Labour’s Read-ins and One Last Reveal

You never know what read-ins from discovery might reveal.

The Testimony of Richard Groen

Richard Groen, an Assistant Deputy Minister from the Ministry of Finance, testifies about the Province’s budgets and such.

I was expecting him to demonstrate what all the financial fuss in 2017 was about, you know, why our financial ship was sinking so much that we needed all hands on deck. But …

A No-Compete Treat for the Labour Market?

I don’t understand why the government doesn’t think it should have to compete in its own labour market. It does everywhere else.

The Testimony of Garry Steski

Is it wrong to admit that before this I didn’t really know what a bond market was? Well, I do now, and we learn a little about how Manitoba’s bonds were affected by the fiscal challenges in 2016. Or not.

Bean Counters, Businessmen & Business of Government

If businessmen go into government to bring the principles of good business to government, then shouldn’t they act like good businessmen when they get there?

The Government’s Collective Bargaining Expert

It is best to talk about what happened here as little as possible. So we’ll talk a bit about the importance of turkey instead.

The Testimony of Aurel Tess

How a short day of seemingly tedious technical testimony on Manitoba’s Summary Financial Statements turned into a most unpleasant surprise.

Politicizing the Provincial Comptroller

Ok, Manitoba. Politicizing the Office of the Provincial Comptroller?

That takes the poop-cake.

The Government’s Economics Expert

The government’s economics expert, Dr. Livio Di Matteo, has a motto he lives by: Agimus Meliora – Let us do better.

It makes me wonder, Manitoba, can’t we do better than the PSSA?

Labour’s Economics Expert

Dr. Eugene “the Earnest” Beaulieu testifies that the PSSA is not only not necessary, it is a harsh measure that puts an unfair burden on public employees.

Bye Bye, Dumbo

Let’s take one last look at the Elephant in the Room, and then say goodbye.

The Mandamus Application

A day of argument about whether a statute that says “the Minister SHALL FORTHWITH” means that the Minister can decide not to do something and make up his own reasons for why he shouldn’t.

Decision on the Mandamus Application

Justice Keyser, the judge on the Mandamus Application, has spoken. Here’s a hint – MGEU wins.

Bill 9: We’re Gaming Again …

Before we begin all the good stuff, Garth Smorang has some objections to yet another litigation game the Government of Manitoba is playing.

Labour’s Final Argument

Labour’s last stand. Shannon-the-Hammer and Smorang-the-Smasher pull it all together and wrap it all up.

There is an awful lot of it, so Labour’s final arguments have been separated into four separate posts, which start here …

Butt-First Buffoonery

How did the Government of Manitoba get to such an embarrassing PSSA place? They backed into it.

The Government’s Final Argument

Forget the Elephant-in-the-Room.The Government of Manitoba has got many other ways to try to move the goalposts, as they try to change the game.

Kind of seems like they know they are losing.

Labour Replies

The Finale of the Finale. Labour replies.

(This means we are finally done. At least with the evidence and arguments.)

The Onion of Outrage

Why am I here? Why spend so much watching lawyers and judges and reading endless cases? It’s a pretty simple answer.

I was mad.

The Decision is In!!!

The Honourable Justice Joan McKelvey has ruled. Labour won. The PSSA is unconstitutional.

This is what she decided and why.

What Have We Learned?

There’s lots to discover from considering Justice McKelvey’s decision, and not just for labour lawyers. Let’s take a look at what we have learned.