Clock has run out on blame game; government has to govern

Opinion

Hey there, time traveller!
This article was published 26/03/2024 (533 days ago), so information in it may no longer be current.

Manitoba’s former Progressive Conservative government may be mostly to blame for the province’s out-of-control deficit, but the NDP doesn’t seem to be doing anything to get a handle on it.

The current government sounds more like it’s still in opposition, blaming the Tories for everything that ails the public treasury, instead of taking some responsibility itself.

Finance Minister Adrien Sala released the province’s third-quarter financial report last week. It showed the provincial deficit has soared to nearly $2 billion for the 2023-24 fiscal year, up from $1.6 billion in September and more than five times the $363-million estimate in the 2023 budget.

So, what is the NDP government doing about it? Apparently nothing, at least according to its third-quarter report. Nowhere in the report does it state what steps government is taking to control spending to mitigate the size of the shortfall. Instead, it blames the former government for overspending in health care — mostly through the signing of new collective agreements with front-line workers — and in other departments.

The biggest driver behind the growing deficit is a projected Manitoba Hydro loss of $190 million in 2023-24, owing to low water levels. The Crown corporation had originally projected a $450-million surplus. But even without Hydro’s $640-million net income swing, the province would still be running a record deficit of nearly $1.4 billion.

The NDP says a large portion of that is the result of new contracts the Tories signed during the year with health-care workers that were not properly budgeted for. However, there was a $521-million expenditure contingency built into the budget that covers a good portion of those unanticipated costs.

A $293-million decline in income and corporate taxes is also being blamed for the shortfall. But that’s not because of a weaker economy. Projected economic growth (which drives income tax revenue) doubled to 1.4 per cent from 0.7 per cent in the budget. Either the Canada Revenue Agency’s taxation estimates are off, or the province grossly miscalculated the impact of its income tax cuts. The cuts were introduced by the Tories last year but have been sanctioned by the NDP, which implemented a portion of them Jan.1.

Either way, there was a $200-million revenue contingency built into the budget to offset some of those declining revenues.

The quarterly report shows revenue and expenditure changes in several government departments, including in Families, Agriculture and Advanced Education and Training. Some are up, some are down. These are normal fluctuations that occur every year in government.

It’s up to the government of the day to manage them.

Budgets are merely projections, they’re not written in stone. The assumptions and circumstances around estimated revenues and expenditures always change. Economic growth is usually higher or lower than projected and costs arise that were not budgeted for (such as a worse spring flood than expected). In some cases, spending is lower than anticipated for any number of reasons.

It’s up to government, through Treasury Board, to manage those changes throughout the year. Adjustments are always made to spending plans — it’s an ongoing responsibility. The factors that go into them are fluid.

Naturally, there are some decisions made by the previous Tory government that cannot be altered. However, it’s now up to the NDP to manage the province’s finances and to mitigate the impact on the deficit.

So far, that doesn’t seem to be happening. There doesn’t appear to be any plan in place to control spending.

The provincial government has a $23-billion budget. There are always opportunities to review discretionary spending and to delay or cancel certain expenditures outside of core spending on front-line services. It’s hard work. But that’s what Treasury Board, made up of government MLAs, is supposed to do; it’s their job to manage those changes and to protect the interests of taxpayers.

Right now, it seems no one is protecting the interests of taxpayers, at least not for the 2023-24 fiscal year. The NDP seems content to not only write off the year and blame the former government for all of it, it’s piling up spending of its own.

That is causing severe harm to the province’s bottom line. The province’s projected summary net debt has increased to $33.5 billion from an estimated $31.1 billion in the 2023 budget. That has driven up the provincial government’s net debt to GDP (debt measured as a percentage of the economy) to 37.5 per cent from 34.6 per cent in the budget. That’s not cause for alarm, but it’s a significant jump in one year. It will attract the attention of credit-rating agencies if it continues in that direction.

The NDP is in government now. It should start acting like it is.

tom.brodbeck@freepress.mb.ca