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Credibility deficit balloons

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Premier Greg Selinger is fond of telling Manitobans his government is a careful steward of their finances and their critical services as it navigates through economic "uncertainty" -- which he stressed has become the buzz word of the extended recession that dogs global governments. Indeed, Mr. Selinger no longer talks about balancing the budget, but speaks only of a "balanced approach." Manitobans can expect that provincial spending will proceed apace, with expenditures outstripping revenues.

And what that means is that the NDP administration will take credit for running, and justifying, unnecessarily high deficits. On Monday, Mr. Selinger revealed his government will be in the red until 2017, matching the forecasted year of a balanced budget targeted last month by federal Finance Minister Jim Flaherty.

Some of Manitoba's deficit is due to extraordinary expenses arising from an extraordinary flood in 2011. But past budgets and financial statements have shown that is only a portion of the problem. The bigger problem for Manitobans is this government's penchant for blowing not just past revenue projections but past budget expenditure projections.

On Tuesday, at his State of the Province address before the Winnipeg Chamber of Commerce, Mr. Selinger said the adjustment to the deficit projections was necessary to reflect the threats to global economies that have caused various authorities to reduce forecasts for economic growth, for Canada and for Manitoba. Asked how this affects specific provincial revenues -- personal income tax revenues? corporate tax revenues? -- he made it clear that revenues will be steady.

So if revenues are steady, as they pretty much have been over the course of a momentary recession in this province, the issue is the spending problem that has characterized the NDP's fiscal regime since it gained government in 1999. The so-called "wiggle room" Mr. Selinger said last month was required in getting back to a surplus is actually room to keep overspending.

That would explain, then, why Mr. Selinger was not offering to spread the pain of deficit management to the publicly paid workers. Earlier this year, Finance Minister Stan Struthers offered some expression that there might be another request for a two-year "wage pause" from public servants in collective bargaining this year, as the province did in 2010. The province is facing negotiations now with 9,600 publicly paid workers.

Mr. Selinger would only commit to looking "for moderation while maintaining employment." That's code for wage improvements with, in the very least, no layoffs. In fact, last year, according to the Civil Service Commission, not only did the government replace 2,270 employees who quit or retired, but it hired another 422 people. This makes a mockery of the NDP's "no layoff" concession to public servants in exchange for wage freezes two years ago.

The throne speech in November talked of cutting 600 civil-service positions in the next three years through attrition, but the record indicates the NDP lacks the courage to undermine support from its natural constituency.

This explains why it was that in the last budget Mr. Struthers tapped ordinary Manitobans with tax and fee hikes to increase revenues. Manitoba no longer can depend on dramatically rising federal transfers to fuel spending plans, or balance its budget. Now, Mr. Selinger speaks only of moving in future years to "shrink the gap" between revenues and expenditures. Having conceded that revenues aren't the problem, Mr. Selinger reveals he, too, recognizes the issue is his spending habit.

Mr. Struthers next week will lay out the hard numbers in the province's second quarterly financial statement of the year, where deficit projections for 2012/13 are stated. It will show how far the NDP has drifted from its budgeted $460-million deficit. It is not the global recession putting pressure on the provincial budget, nor the 2011 flood. It is the government's inability to control spending while currying favour with unions. No financial wizardry will disguise that, nor Mr. Selinger's ballooning credibility deficit.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition December 12, 2012 A10

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