Dewar makes no apologies for budget that relies on borrowing

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This article was published 30/04/2015 (3910 days ago), so information in it may no longer be current.

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Manitoba Finance Minister Greg Dewar says his first budget will reward Manitobans with more jobs, higher wages and smoother roads.

It relies heavily on borrowing, with the Selinger New Democrats hoping their focus on jobs and education will help carry them to victory in next year’s general election.

“Our economy is creating jobs faster than any other province — more than 20,000 jobs since we delivered our last budget,” Dewar said, adding there will be one more budget next year before voting day April 19, 2016.

“Three out of every four new jobs are in the private sector. And these are good jobs: four out of five are full-time.”

The government’s 2015-16 fiscal plan is very much a continuation of past budget and policy announcements. The province will continue spending heavily under its 2013 five-year $5.5-billion infrastructure plan, such as on the previously announced new interchange on Highway 59 and the north Perimeter Highway and on the new permanent road network on the east side of Lake Winnipeg.

In health care, which is 40 per cent of the budget, spending climbs 4.3 per cent to $5.6 billion this year.

Overall spending in core government departments such as health, family services and education is forecast to be $420 million in the red in the new budget.

The government confirmed it overspent in core departments by $207 million in 2014-15.

“While other provinces are imposing cuts, we are proud to work in partnership with health-care providers to ensure our system is sustainable for future generations,” Dewar said in his speech.

Today’s budget also contains new measures to both help the poor find better housing and for air travellers flying away on holiday.

First, Dewar said the government will spend $22 million in the next year to fully implement its Rent Assist shelter benefit so that it’s at 75 per cent of the median market rent. The move overtakes what Opposition Leader Brian Pallister said he would do if he was elected premier in the next election.

And starting July 1, qualifying commercial passenger flights flying out of Winnipeg non-stop to somewhere outside North America can apply for a fuel tax rebate worth an estimated full-year $50,000 tax savings.

Almost like clockwork, cigarette taxes go up half a cent per cigarette after midnight, from 29 cents per smoke to 29.5 cents.

Banks, trust corporations and loan corporations will pay a one-point higher Corporation Capital Tax. The rate goes up midnight from five per cent to six pent. The hike is expected to bring in an estimated $25.5 million.

‘Our government has acted quickly and boldly to keep Manitobans working. It is no accident Manitoba leads the country in economic growth.’
— Finance Minister Greg Dewar

Dewar told reporters the hike amounts to a “small contribution” the banks can afford.

“We think the banks have the capacity to absorb it,” he said.

Other tax credits are almost being extended three years, including the small business venture capital tax credit and the data processing investment tax credit. Both are designed to stimulate business growth and job creation.

On the flip side, for the government to meet its promise to not cut core services, it needs money beyond what it will collect in taxes and higher fees. Revenue is to climb $179 million above an earlier projection, but spending is to jump $289 million, the budget papers say.

Overall, the summary budget deficit for the new budget year is forecast to be $422 million. The government also revised its 2014-15 budget deficit. It climbed to $424 million from the earlier estimate of $357 million.

The government has run deficit budgets since 2009 in response to the global recession. Dewar said last week the government will be back in surplus by 2018-19.

The province’s net debt also increased to $20.4 billion from $18.6 billion. The government says net debt is a barometer of the cost of future government services. Debt servicing costs are forecast to equal to 5.6 cents of every dollar of revenue in this budget year, down from 13.2 cents per dollar in 1999-2000.

Dewar said the government made no apologies for continuing to spend borrowed money.

He told reporters that while there are several optimistic economic outlooks for the province, the government has no choice but to continue spending for at least the next two years to keep growing the economy.

“Our government has acted quickly and boldly to keep Manitobans working,” he said. “It is no accident Manitoba leads the country in economic growth.”

Dewar said the province hopes to be back in surplus as the economy improves, driven by the construction industry, and as revenue growth accelerates.

‘If they just held the line on spending they’d be in surplus this year. But they didn’t. They chose to inflate their spending to a ridiculous degree.’
— Progressive Conservative leader Brian Pallister

“We are expecting the economy to grow,” he told reporters. “Things can change.”

Progressive Conservative Party Leader Brian Pallister said the province has the revenues to balance the books, but it has squandered the opportunity.

“If they just held the line on spending they’d be in surplus this year. But they didn’t. They chose to inflate their spending to a ridiculous degree,” he said.

Pallister said the Selinger government, by continually running deficits, has greatly added to the provincial debt. He said continued deficit financing threatens the viability of future health and social programs.

“This government has decided that it wants to lever its political fortunes ahead of the best interests of Manitoba families, and that is just horrible for the future security of the people of this province.”

Manitoba Liberal Party Leader Rana Bokhari said the government is untrustworthy when it comes to managing the province’s finances.

She said Finance Minister Greg Dewar’s budget has put the province deeper in debt, and the NDP must be defeated in next spring’s election.

“They’re not realizing that Manitobans have to pay for that debt. That will fall on generations to come.”

Green Party Leader James Beddome said today’s budget shows the Selinger government has turned its back on protecting the environment.

“It has a $1-million emissions reductions fund — while laudable, [it] is a mere pittance especially in the context of the fact that the provincial government has failed to meets its own legislated climate emissions reductions fund,” he said.

Beddome said most money available to conservation is going towards its top provincial parks at the expense of protecting waterways.

‘They’re not realizing that Manitobans have to pay for that debt. That will fall on generations to come.’
— Liberal leader Rana Bokhari

“A ‘green’ budget is more about having a green cover,” he said.

Manitoba Federation of Labour president Kevin Rebeck praised today’s budget as being a way for the NDP government to continue to build for the future of the province.

“We need to continue to have government be a driver of the economy to keep that growth going,” he said.

But he said the increase to the hourly minimum wage to $11 in October does not go far enough to help low-income workers.

“We still have poverty-level wages for minimum wage earners and that’s not right,” he said.

He said a $15-an-hour minimum wage should be the target.

Chuck Davidson, president of the Manitoba Chambers of Commerce, said that with solid economic growth forecast, the government could have provided tax cuts to individuals and corporations to increase the province’s competitiveness with other jurisdictions, but it failed to do so.

“I think this budget missed the mark on that, and that’s a concern for us,” he said.

Davidson also said he was disappointed the finance minister offered no plan for getting the province out of deficit. “The debt is continuing to increase. Eventually that is going to have to get paid for,” he said.

He said Dewar’s budget is reflective of a government that has been more preoccupied with its own internal divisions in recent months than it has been in planning for the province’s future.

Ron Thiessen, executive director of the Manitoba branch of the Canadian Parks and Wilderness Society, said he was disappointed the Conservation departmental budget is taking yet another hit.

However, he said the government’s focus on improving its most popular parks, such as Birds Hill and Grand Beach, is positive, as is its continuing work with First Nations on land-use planning. Both go towards protecting areas of the province Manitobans use for recreation.

Keystone Agricultural Producers Glenn Young said farmers want to see more infrastructure money spent on fixing rural highways other than the TransCanada Highway and Highway 75.

“There are many other highways in the province that farmers need to use to get their product to markets and many of those highways — some of the ones I’ve driven on — are in incredibly poor shape,” he said.

“There needs to be a consistent plan to rebuild our road system.”

 

bruce.owen@freepress.mb.ca

larry.kusch@freepress.mb.ca