Hey there, time traveller!
This article was published 28/8/2013 (1399 days ago), so information in it may no longer be current.
Two recent Statistics Canada reports show Manitobans are facing an uphill battle in their efforts to get ahead financially, according to a local economist.
Last Friday's monthly consumer price index report showed Manitoba had the highest annual inflation rate in the country between July of last year and July of this year, at 3.0 per cent. And Wednesday's payroll employment and earnings report showed it also had the smallest average weekly earnings growth in the country between June of last year and June of this year, at 0.4 per cent.
"Having the highest inflation rate in the country, by far, and the lowest average weekly earnings increase is an absolutely terrible cocktail for creating a strong economy," University of Manitoba economist John McCallum said in an interview.
"And it's grim for Manitobans trying to grow their standard of living. The cost of their standard of living is growing at seven times the rate of their earnings."
'Times are tight for a lot of Manitoba families and the Manitoba middle class is getting squeezed'-- the PCs' Brian Pallister
McCallum said the provincial government is at least partly to blame for the financial squeeze Manitobans find themselves in these days. Last year, it increased some provincial fees and expanded the provincial sales tax (PST) to include some previously exempt items. And that drove up the cost of those items and helped to fuel inflation.
And on July 1 of this year it increased the PST by one per centage point, McCallum added, which will add more fuel to the inflationary fire.
He said Manitobans who are feeling the pinch and don't want their standard of living to deteriorate are likely looking at either finding a way to bring in more money -- maybe taking on a extra part-time job -- or curbing their spending on discretionary items. And if enough of them curb their spending, that will slow economic growth.
Another option is to buy more things on credit. And a report released Wednesday by information and risk-management firm TransUnion shows the average consumer debt in Manitoba and the rest of Canada began climbing again in the second quarter of this year after taking a brief hiatus in Q1.
Tom Higgins, TransUnion's vice-president of analytics and decision services, said that shows Canadians haven't lost their appetite for buying on credit despite repeated warnings about the dangers of taking on more debt when interest rates are likely to rise.
'We think we have good, strong employment numbers. We think we have good strong numbers in terms of disposable income'-- NDP's Stan Struthers
TransUnion said Manitoba's average debt per person rose by 0.98 per cent from the first quarter to the second, climbing to $20,371 per person. That was also up 2.13 per cent from a year earlier, when it was $19,945.
The good news is that year-over-year gain was more than one percentage point lower than the national average increase of 3.47 per cent. And debt delinquency rates here were near or below the national average in three of four major categories. The exception was with car loans from automobile manufacturers, where Manitoba had the country's highest delinquency rate at 0.27 per cent.
Higgins said while debt loads are below the national average of $27,131, Manitobans still need to start reducing their debt before interest rates begin to climb.
Manitoba Progressive Conservative officials said what's disturbing is there was no need for the Selinger government to raise the PST in this year's budget.
PC Leader Brian Pallister said even without the PST hike, Manitoba will still enjoy a 13.6 per cent increase in revenues between 2012 and 2015. That's second only to Alberta, and above the national average of 11.3 per cent.
'Having the highest inflation rate in the country, by far, and the lowest average weekly earnings increase is an absolutely terrible cocktail for creating a strong economy'
And with the PST hike, tax revenues are projected to grow by 22.7 per cent, Pallister said. The next-highest growth is expected to be in Alberta, where provincial tax revenues are projected to rise by 17 per cent.
The Tories said their figures are based on provincial budget papers and do not include federal transfer payments.
"Times are tight for a lot of Manitoba families and the Manitoba middle class is getting squeezed," Pallister said, renewing his call for the government to abandon the PST increase.
"The government should live within its means, just as Manitoba families are being forced to do," added Reg Helwer, the party's deputy finance critic.
However, a government spokesman said the provincial Finance Department forecasts an 11.7 per cent increase in core government revenues, including PST revenues, between 2012 and 2015.
"I see no justification of those (Pallister's) numbers," Finance Minster Stan Struthers said.
The minister also defended the PST increase, saying it was necessary to protect Manitobans from flooding and to build the kind of critical infrastructure -- roads, bridges, schools and hospitals -- the province needs. He noted such investments help spur the economy.
As for the province's low earnings growth, Struthers said: "We think we have good, strong employment numbers. We think we have good strong numbers in terms of disposable income."