Honesty best policy as NDP’s balanced budget promise looks increasingly unlikely

When NDP Finance Minister Adrien Sala introduced the Manitoba budget earlier this year, he pinned much of the government’s fiscal plan on the hope that the economy would grow by 1.7 per cent in 2025.

That projection helped shape assumptions around rising revenues, a shrinking deficit, and the ultimate promise Premier Wab Kinew made in the 2023 election campaign — to balance the books by the end of the NDP’s first term.

With fresh economic projections out this month, it’s looking more and more like that promise will be difficult — if not impossible — to keep.

According to a new report released Tuesday by Deloitte, Manitoba’s GDP is expected to grow by just 0.6 per cent in 2025. That’s about a third of what government was counting on. TD Bank also released its own forecast last week. And while it was slightly more optimistic, predicting one per cent growth, that too falls well short of the province’s projection.

The implications are clear and serious. Slower economic growth means less money flowing into provincial coffers — less revenue from income taxes, less from sales taxes, and weaker growth in corporate tax contributions. And unless the NDP plans to tighten its belt and reduce spending — which so far it shows no signs of doing — that means the province’s $796-million projected deficit for 2025 could rise.

This is more than just a spreadsheet problem. It goes to the heart of the Kinew government’s political credibility. In the 2023 campaign, the NDP struck a careful balance: they promised to strengthen health care and public services without raising taxes, while also pledging to eliminate the deficit by 2027. They assured voters they could do all without making painful cuts.

Now the economic winds have shifted, and the path they laid out is narrowing. Sala has so far stuck to the script, saying the goal of balancing the books by the end of the term remains. But with each new independent forecast, that goal looks increasingly out of reach.

Here’s the problem: this government, like most, can’t control the broader economic forces that are driving down growth projections. New and shifting U.S. tariffs, inflationary aftershocks, supply chain disruptions, and weak investment trends are all weighing heavily on the economy. Business investment in Manitoba remains sluggish and exports are down. These are trends that no budget speech or campaign slogan can reverse.

So the question becomes: what now?

If the NDP is serious about sticking to its balanced budget goal, it has a few options — and none of them are politically easy. The first is to slash spending. But after campaigning on rebuilding public services, especially in health care and education, it’s hard to imagine Kinew suddenly pivoting to austerity. And he shouldn’t. It would do more harm than good.

The second option is to raise taxes, something the party has repeatedly ruled out. Kinew promised during the election not to increase taxes — although he ultimately did in the 2025 budget, by de-indexing income tax brackets and making changes to the education property tax rebate.

With affordability still a major concern for many Manitobans, there’s little public appetite for a major tax hike beyond those changes.

The third option is the most likely: miss the target and spin it.

That would mean acknowledging that economic conditions changed, that the projections were wrong, and that government still plans to balance the budget — but not on the original timeline. It would be a climb-down, no doubt. It would also be a recognition of fiscal reality.

This wouldn’t be the first time a government promised to balance the books and failed. The former Progressive Conservative government under Brian Pallister said in 2016 it would erase the deficit within eight years. It balanced the books briefly for one year, but returned to deficit after that.

COVID-19 certainly played a part. But the Pallister government left behind a massive deficit as it ramped up spending in the lead-up to the 2023 election, which the Tories lost.

Manitobans deserve honesty. They were sold a promise that the NDP government would be different, that it would be realistic, competent, and fiscally responsible. Now is the time to live up to that promise, even if it means admitting that some goals were too ambitious.

The deficit isn’t just a number. It’s a reflection of how well a government can manage money during uncertain times. Lower-than-expected growth may not be the NDP’s fault. But how they respond to it is entirely within their control.

If they double down on unrealistic projections, they risk undermining public confidence. If they take a clear-eyed look at the numbers and adjust course, including controlling spending in some areas, they may still win credit for being pragmatic.

Being honest with Manitobans about the province’s fiscal challenges is the best policy right now.

tom.brodbeck@freepress.mb.ca