CALGARY, AB – The Manitoba government’s choice to pursue steady fiscal management over dramatic spending cuts in its first budget signals a desire to spare citizens from unwelcome, and potentially harmful, shock therapy.
The new government of Brian Pallister has been in the office just six weeks – barely enough time for members to warm their seats. Yet it needed to respond quickly in Tuesday’s budget to a growing budget deficit.
It is sobering that the $23 billion accumulated debt means the province has net debt equal to 33 per cent of gross domestic product. Servicing debt alone will cost $667 per capita this year, money not available for investment in services.
Most interesting is the commitment to a “value-for-money review.”
Reviewing the services government provides with an eye to extracting greater value is not simply an exercise in cutting. It is a tool to ensure that taxpayers get what they need when they need it. Delivering services more efficiently allows for dual benefits: more effective use of resources and cost savings.
The government is aware that drastic budget cuts would not only have an impact on front-line services but also threaten to do harm to an economy that needs no shocks. That may in part explain its decision to go forward with $1.8 billion in planned infrastructure spending on a broad range of projects.
Manitoba’s eight-year path to budget balance is unquestionably a long road, but one with an end in sight. This year’s projected deficit of $889.9 million is smaller than last year’s forecast of just more than $1 billion. The government says it has found $120 million in program spending savings already. This nod to fiscal restraint may be enough to allay fears of further downgrades to the province’s credit rating.
Some may be disappointed that there are only modest targeted incentives to stimulate investment in small business and green energy investment but the government is clearly playing the long game. The indexing to inflation of the basic personal exemption and income tax brackets, for example, insulates taxpayers from bracket creep. Lower income Manitobans are also getting some tax relief.
Voters in Manitoba opted for change in the recent provincial election. The budget represents a modest but helpful course correction.
COLLEEN COLLINS, Vice-President and Interim CEO, is available for interviews.