Not out of the question for Kinew to make good on pricey promises

Opinion

Hey there, time traveller!
This article was published 16/10/2023 (725 days ago), so information in it may no longer be current.

When the incoming NDP government unveils its first throne speech in the coming weeks, it will be chock-full of expensive promises from the recent provincial election campaign.

The NDP’s first legislative blueprint will likely include broad commitments to hire more doctors and nurses, open scores of hospital beds and provide more funding for public schools, municipalities and infrastructure projects.

But where will the money come from to pay for it all?

Premier-designate Wab Kinew has also pledged to implement the Tories’ 2023 tax cuts, some of which don’t kick in until 2024, and has promised to temporarily eliminate the province’s gas tax and freeze Manitoba Hydro rates for one year.

There are also several pricey public-sector labour agreements the outgoing Tory government signed this year, the costs of which were not included in the 2023 budget.

Meanwhile, the NDP has promised to balance the books within four years.

Together, it seems like a tall order. But if you take a closer look at the books, it’s not that unrealistic.

The main reason: the NDP did not include in its costed campaign platform hundreds of millions of dollars in additional health-care transfers expected from Ottawa over the next four years. That will likely give it the fiscal cushion it needs to meet its spending commitments.

The starting point for both parties when they costed out their campaign platforms is the four-year fiscal outlook found in the 2023 provincial budget. It includes spending and revenue projections until 2027-28.

From there, each party estimated how much more it plans to spend on new programs and tax cuts and where it believes it might find savings or other revenue sources.

According to the Tories, Manitoba is expecting an additional $255 million in the Canada Health Transfer from Ottawa in 2024-25 (on top of what was projected over four years in the 2023 budget). The CHT increases are expected to rise each year to an estimated $475 million by 2027-28. It’s a lot of money. The federal government announced the additional funding earlier this year.

The Tories planned to spend most of that on tax cuts. According to the Progressive Conservative party platform, it projected $442 million in new spending over four years and $2.3 billion in income, corporate and other tax reductions. That’s $1 in new spending for every $5 in tax cuts.

By contrast, the NDP promised $2.27 billion in new spending over four years and $478 million to freeze Hydro rates, cut the gas tax, bring in a new renters tax credit and remove the PST on rental builds.

It was the opposite of the Tories’ fiscal plan: almost $5 in new spending for every $1 in tax cuts, tax credits and the one-year Hydro rate freeze.

But how will the NDP pay for all of this? There are two main explanations.

The party said it would use unallocated spending in the 2023 provincial budget to cover most of the costs.

Without getting into too much detail, the party was referring to a line in the expenditure estimates called “contingencies and unanticipated events.” It’s a $521-million contingency fund in the provincial budget that’s used for unanticipated costs, such as labour agreements or court settlements that may arise throughout the year.

The Tories argue that money is already accounted for to cover recently settled labour agreements, such as the Liquor and Lotteries workers contract. It’s a fair point, although it’s unlikely all of the $521 million has been spoken for. We won’t know until the audited statements for 2023-24 are released next fall.

Even if the NDP’s $2.27 billion in new spending can’t be financed entirely from the annual contingency fund (worth more than $500 million a year), there’s still the additional revenue from federal health transfers the NDP did not include in its projections that can be tapped. Those revenue amounts were not included in its costed plan because the NDP didn’t have the same access to Manitoba Finance’s internal figures as the Tories did.

According to the PC platform, Manitoba can expect almost $1.5 billion in additional CHT revenue over four years. Between that and at least part of the unallocated contingency fund in the 2023 budget, the NDP’s spending projections are within the realm or reality.

None of these numbers are written in stone. They are simply projections that will change over time. One bad recession or a couple of years of drought could turn all these numbers on their head.

On the flip side, even a single year of higher-than-anticipated tax revenues can turn a projected deficit into a surplus overnight, as it did for the Tories in 2022-23, the results of which were released during the election.

Budgeting is an ongoing process. It’s something governments manage throughout the year. Revenues and spending projections change monthly and are reported in quarterly updates. The key is for Treasury Board (made up of appointed cabinet ministers) to respond to and plan for changing circumstances as they arise.

Some governments do it well, others don’t. If Kinew and the NDP want to remain in office for more than one term, it will have to prove to Manitobans that it can be a good steward of the public treasury.

tom.brodbeck@freepress.mb.ca