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Deciphering the budget from a business perspective

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Once again this provincial government made it clear to the business community in this week's budget that it's on its own.

Not that that's a bad thing.

The province has done well eliminating the small-business tax and experience has shown it's a mug's game trying to pick winners.

At the same time the Selinger government can be thankful there are no major fires to put out. There's no need for massive bailouts for a key sector -- such as the auto industry in Ontario -- because it could be argued there are no sectors more important than any others in Manitoba.

That's neatly pointed out in the budget documents that show there are 11 different sectors that each make up more than five per cent of the GDP.

Manufacturing is the largest at about 10 per cent of GDP and although employment there has declined -- as it has across North America -- Manitoba's manufacturing group has a reputation for strategic investments and strengthened efficiencies.

With its hands full trying to stave off further deficits and meet its health care and education spending, Premier Greg Selinger and Finance Minister Stan Struthers were happy to trot out the fact that between 2007 and 2012, Manitoba's average annual growth rate of 2.1 per cent was second-best in the country.

With little positive trends to point to, however, the forecasters expect slightly weaker growth this year -- 1.9 per cent -- which is nothing to write home about but still slightly ahead of the Canadian average.

For the past few years the mining industry has enjoyed strong commodity prices and significant capital investment led by HudBay's $700-million-plus investment to build the Lalor mine outside Snow Lake.

Ed Huebert, executive vice-president of the Mining Association of Manitoba, said the industry was pleased the budget calls for renewed efforts to reach out to the aboriginal and northern communities to develop resource-revenue sharing and other types of co-operation. But the industry was disheartened because the Manitoba Geological Survey budget has been cut by 10 per cent.

While spending for that traditional industry is getting pared back, assistance for digital media companies -- likely the fastest-growing global industry -- was enhanced.

The Manitoba Interactive Digital Media Tax Credit got a significant boost in the budget. Not only has the province budgeted $1.2 million this year compared with $200,000 last year for the tax credit, its application has been significantly broadened

"We're pretty thrilled," said Kevin Hnatiuk of New Media Manitoba.

He said it puts Manitoba on par with Ontario and Nova Scotia, which is trying to set itself up as a new media hub.

"We hear people tell us that there is excellent work done in Manitoba, but there are just a little better incentives elsewhere," he said. "Now we can be that much more competitive."

The Small Business Venture Capital Tax Credit program -- ostensibly the alternative to the retail venture capital tax credit that blew up so badly over the Crocus Fund -- has been extended. It's far from a sure thing.

As well the First Peoples Economic Growth Fund is to be renewed. It was formed about six years ago with a five-year budget of about $20 million as a way for First Nations people to leverage some of Manitoba's lottery profits. It received a one-year renewal last year and a long-term extension agreement is being negotiated between the Assembly of Manitoba Chiefs and the province. Last year it placed 17 loans totalling $5.8 million, which attracted an additional $18 million to those projects. It's not going to alter the economic dynamics for First Nations on its own, but it helped create close to 300 jobs last year, about half in northern Manitoba.

Republished from the Winnipeg Free Press print edition April 19, 2013 B4

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash


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