Deficit will have to wait: Tories

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This article was published 31/05/2016 (3449 days ago), so information in it may no longer be current.

Manitoba’s first Progressive Conservative budget in 17 years freezes taxes, provides modest tax cuts and maintains healthy levels of government program spending.

Finance Minister Cameron Friesen delivered what he termed a “principled,” “practical” and “positive” financial blueprint, one he claimed will place the province on a path to fiscal sustainability.

Manitoba’s budget deficit will continue to be huge — $889.9 million for core government services, $911 million when the performance of Crown corporations and other reporting entities are included. Both figures are estimated to have topped $1 billion for the fiscal year that ended March 31.

“We acknowledge that our challenges are great. For too long, Manitoba’s government has spent beyond its means, resulting in accumulated debt and ever-increasing taxes,” Friesen told the legislature.

Slaying the deficit won’t happen overnight, he warned. He said the PCs intend to balance the books “within eight years.”

Premier Brian Pallister said during the election campaign that while a Tory government was intent on getting the books back in the black, it would not do so at the expense of front-line services. He promised a gradual approach to balancing the books.

No one could accuse the Tories Tuesday of making drastic cuts to services. Core government spending is projected to rise 5.2 per cent compared with what the NDP budgeted a year ago and 2.7 per cent over what was spent in 2015-16.

“Some people are going to say you are taking too long to go to balance, and some are going to say you’re doing it too quickly — I know that. I think the key point to remember is we a charting a new course and we are turning this canoe… carefully, because to turn it too rapidly is to risk our cargo,” Pallister said.

A key change from past NDP policy is the Tories will make the annual school tax rebate for seniors subject to an income test. Seniors with a net family income of $63,500 and over will no longer receive the rebate. Only families with a net income below $40,000 will receive the full $470. Those whose incomes are from $40,000 to $63,500 will qualify for a lesser amount. The savings to government from the changes will be $44.5 million in 2016-17.

Friesen accused the former NDP government of desperately trying to buy seniors’ votes with their own money when, “in its last gasp,” it offered the rebate to everyone, regardless of income.

He said that was not a principled approach. “Tax policy must be principled,” he told reporters.

The Tories have promised to lower the PST back to seven per cent from eight per cent within their first mandate.

Tax cuts announced Tuesday were comparatively modest.

The basic personal exemption on income taxes will be indexed to inflation beginning Jan. 1, 2017, at a cost to the treasury of $11.6 million per year. It’s expected the measure will mean 2,700 fewer low-income Manitobans will have to pay income tax.

Personal income tax brackets will be indexed to inflation at a cost to the government of $12.6 million a year. Someone with a taxable income of $31,536 to $68,158 would save $10 in the first year, while those earning more than $68,158 would save $67 a year from this measure.

In a briefing with reporters before he delivered his budget address in the legislature, Friesen claimed his department had identified $122 million in program savings, the full details of which the government will roll out in the coming weeks.

The government said one saving — some $900,000 annually — will come from having future property tax credits and rebates to seniors administered through the Canada Revenue Agency.

Friesen forecasts health spending will rise 3.8 per cent from current levels, and education funding will go up 1.4 per cent. All government departments with the exception of agriculture will receive spending increases.

‘I would not consider this an open and transparent budget. I am quite afraid of what this budget will do to ordinary, hardworking Manitobans’– Interim NDP Leader Flor Marcelino

Speaking to reporters, Friesen wouldn’t commit to raising the minimum wage this year, as the NDP had done repeatedly during its 16 years in office.

He wouldn’t say whether a planned new Manitoba Liquor & Lotteries Corp. downtown headquarters would proceed. “That’s a little further down the road than we are at this time,” he said.

Friesen said the fiscal challenges facing Manitoba cannot be overstated. In order to allow the time necessary to place the province back on course, the balanced budget legislation will be suspended, he said.

Next year, the government plans to introduce new legislation that will provide taxpayers with “enforceable protection,” including the restoration of taxpayers’ ability to vote on major tax increases.

Interim NDP Leader Flor Marcelino couldn’t identify any of the program cuts the New Democrats have been warning would come, but that didn’t stop her from accusing the Tories of planning to slash services.

“I’m alarmed — we can expect cuts,” Marcelino told reporters. “I would not consider this an open and transparent budget. I am quite afraid of what this budget will do to ordinary, hardworking Manitobans. We know Mr. Pallister, his Conservative ideas are akin to the Harper Conservatives.”

Many observers called Friesen’s maiden fiscal blueprint a stand-pat budget. Both business and labour had bones to pick with it.

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Chuck Davidson, president of the Manitoba Chambers of Commerce, said business hoped the government would have set a shorter timetable for slaying the operating deficit.

“I’m a little concerned (that it’s going to take) eight years to get to a balanced budget. We’d obviously like to see that done in a bit more of an aggressive fashion,” he said.

Kevin Rebeck, president of the Manitoba Federation of Labour, said he had hoped the Tories would commit to increasing the minimum wage in the coming year. He said a 50-cent hike would put $700 a year into the pockets of low-income workers.

Indexing the basic personal exemption and tax brackets will bring low-wage workers much less, Rebeck said.

larry.kusch@freepress.mb.canick.martin@freepress.mb.cakristin.annable@freepress.mb.ca

Nick Martin

Former Free Press reporter Nick Martin, who wrote the monthly suspense column in the books section and was prolific in his standalone reviews of mystery/thriller novels, died Oct. 15 at age 77 while on holiday in Edinburgh, Scotland.