Winnipeg Free Press - PRINT EDITION

Second-quarter financials alarming

  • Print

Based on Finance Minister Jennifer Howard's recent update on her government's financial situation, taxpayers should be alarmed. Despite the unexpected tax and fee hikes of the last two years, she not only expects a deficit of close to $500 million for the NDP government's summary 2013-14 accounts, but has also raised doubts balanced annual accounts can be achieved in the years ahead.

With considerable fanfare, Howard released the update, asserting her government "is beating its deficit-reduction target." Instead of the $518-million deficit of this year's provincial budget, she now expects one of $485 million. She blames a supposedly faulty census by Statistics Canada for part of this yawning shortfall. The agency denies this, with no complaints about the census coming from any of the other provinces and territories.

While Howard reiterates an intention to eventually achieve a balanced budget, true expense restraint and considerably more information would be required before any impartial observer could conclude the government is on track to 'slay' the demon deficit. Annual deficits have plagued the NDP since the government's 2008-09 fiscal year. From its return to power in 1999 till now, the government has increased its spending by 21/2 times the rate of inflation plus population growth.

What is missing in Howard's news is recognition that core government finances and her summary accounts would look much worse than the already-glum deficit outlook absent the inclusion of forecast net income for Crown corporations (and expected surpluses from other government-funded agencies), from which government is precluded from withdrawing funds. Core government operations, which exclude the 'commercial' Crowns, are reporting ongoing annual deficits, far away from any prospect of balance.

Making things look better upfront (but hampering the future), it appears $900 million of this year's claimed $1.5-billion "investment in infrastructure and capital asset renewal" will not be "expensed" in 2013-14, deferred instead for amortization in future years.

When the actual level of investments in infrastructure exceeds the amortization expense year after year, flexibility is lost for future years and governments. This is a path that leads toward credit-rating downgrades, harsh civil service layoffs, or more tax hikes and fee increases.

Leaving the focus on the reported deficit and the low prospect of achieving a balance any time soon, the latest financial report also reveals disconcerting information about the government's debt levels. Both gross and even so-called net debt levels have risen again and are expected to even go higher.

Gross debt is now expected to reach $30.2 billion by March 31, 2014, up from the $27.9 billion a year earlier. This would represent almost 50 per cent of gross domestic product, a particularly alarming ratio for a province, especially one where spending continues to balloon out of control amid chronic annual deficits. (That ratio is expected to grow more rapidly as Hydro pursues an extremely risky $34-billion spend-up for new transmission and dams in northern Manitoba). As for the government's focus on so-called net debt, I find no solace. When debt is to be repaid by a Crown agency, ratepayer bills provide the money -- whether taxes and fees to government or utility bills to ratepayers, it's still coming from the same pockets -- ours, the citizenry.

After following Howard's announcement and taking the time to read the supporting documents provided, my view is all Manitobans should be increasingly concerned. The NDP's spending problem is not acknowledged, anywhere. And, with Ottawa determined to balance its own books for 2015, an unlikely rescue will come in the form of higher federal transfers. Indeed, funding part of the NDP's spending boom was the doubling of federal transfers to Manitoba since 1999. There is no prospect of another doubling of easy "outside money" in the next decade, so Manitoba will increasingly have to live within its means.

If this government doesn't put on the brakes, and soon, I foresee credit-rating downgrades followed by even higher taxes and fee levels. Already owing $30 billion, with much more debt to come, the interest rate hikes that almost certainly lie in the future will prove costly to a cash-strapped Manitoba government and its taxpayers.

Premier Greg Selinger was cautious in providing tentative assurance that "major" tax hikes were not contemplated for 2014. I am not surprised with his caution.


Graham Lane is a retired chartered accountant and former chairman of the Public Utilities Board.

Republished from the Winnipeg Free Press print edition January 8, 2014 A9

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Total Body Tune-Up: Farmer's Carry

View more like this

Photo Store Gallery

  • Hay bales sit under a rainbow just west of Winnipeg Saturday, September 3, 2011.(John Woods/Winnipeg Free Press)
  • KEN GIGLIOTTI  WINNIPEG FREE PRESS / July 23 2009 - 090723 - Bart Kives story - Harry Lazarenko Annual River Bank Tour - receding water from summer rains and erosion  damage by flood  and ice  during spring flooding -  Red River , Lyndale Dr. damage to tree roots , river bank damage  , high water marks after 2009 Flood - POY

View More Gallery Photos

About Graham Lane

Graham Lane is a retired chartered accountant who worked in the public and private sectors for 50 years, concluding his career as chairman of the Manitoba Public Utilities Board.

He has also held key positions at Credit Union Central, Public Investments of Manitoba, the Manitoba Public Insurance Corp., the University of Winnipeg, and the Manitoba Worker's Compensation Board.

Before gaining his CA designation in Quebec, he was third in Canada in the then-national intermediate examination. He has a diploma in business administration from the University of Western Ontario and has served on numerous charitable and service boards.


Do you agree with the sale of the Canadian Wheat Board to foreign companies?

View Results

View Related Story

Ads by Google