Kinew’s plan dogged by NDP’s debt habit
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Hey there, time traveller!
This article was published 08/08/2019 (1149 days ago), so information in it may no longer be current.
In 2010, the former NDP government pledged to balance the books by 2014 under a five-year economic plan. Coming out of one of the worst recessions in decades, the province was running a deficit in excess of $500 million that year.
Three years later, despite modest economic growth and tax hikes in 2012 and 2013 – including a one-point increase in the PST – government was still nowhere near eliminating the deficit. What was supposed to be a balanced budget in 2014 turned into a projected shortfall of $365 million. The plan to balance the books was pushed back to 2016-17.
Government, under then-premier Greg Selinger, continued to spend beyond its means, despite relatively good economic times. The NDP was gradually creating a structural deficit.
By 2015, the plan to balance the books was pushed back yet again, this time to 2018-19. But the NDP came nowhere near meeting that deficit-reduction timeline. In its final year in office, the deficit ballooned to $932 million.
During those final six years in office, the provincial government’s net debt soared to $21.4 billion from $12.6 billion, due to chronic deficits and unprecedented levels of infrastructure spending, paid for with borrowed money. The provincial treasury was a wreck.
Balancing the books is tough. It requires a constant, nose-to-the-grindstone commitment to find less costly ways of delivering services and saying “no” to spending government can’t afford.
NDP Leader Wab Kinew laid out his party’s commitment Thursday to balancing the province’s books by 2023-24. It’s the same time frame the Pallister government has set to eliminate the deficit.
But unlike the current administration, which has made substantial progress in reducing the deficit since coming to office in 2016, the NDP will have a much tougher time convincing voters that, if elected, they would meet the goals they have set out.
Kinew should at least be given credit for recognizing the importance of returning to a balanced budget. That’s a good start.
Kinew should at least be given credit for recognizing the importance of returning to a balanced budget. That’s a good start. It’s encouraging to see any political party acknowledge that trying to fund government operations through chronic deficit-financing is not sustainable. It’s been tried – including by the former NDP government – and it failed, miserably.
Perhaps Kinew and the NDP had little choice but to submit to that reality, given the suspicions Manitobans still have about their ability to responsibly manage taxpayers’ money.
Still, Kinew and the party are hardly convincing in their new-found support for balanced budgets. The rookie leader rarely, if ever, makes impassioned pleas for government to spend within its means, or why it’s important to do so. He and his party seem more like reluctant converts.
It’s difficult to believe the party has made that conversion at all when you take a closer look at their spending blueprint.
While it projects a balanced budget within four years, it makes no allowance for a number of spending areas that would likely add hundreds of millions in new expenditures to the budget.
The NDP, for example, says it would cancel the Pallister government’s wage freeze plan for public service workers. Freezing wages for two years, followed by salary increases of no more than .75 per cent and 1 per cent in the third and fourth year of all new contracts, is a substantial part of the province’s deficit reduction plan. Cancelling it would add tens of millions in new spending that isn’t in the NDP plan.
A pledge to eliminate the deficit isn’t just about putting a few numbers on a sheet of paper. It’s about a daily, weekly and monthly commitment to reviewing spending decisions and responding to changing economic realities.
The party has also released a long list of health care promises, including hiring more nurses, opening more hospital beds, and converting at least two community hospitals back to acute care facilities. Yet their plan only includes $30-$44 million in extra health care spending per year. That’s small potatoes in a $6.6-billion health budget.
They’ve taken the Pallister government’s five-year deficit elimination plan, made some miniscule adjustments to it (between $72 million and $130 million in net changes out of a $17.5-billion budget) and called it their own. It’s tough to see how they could make as many changes as they announced Thursday – including in education, family services, affordable housing, mental health and more – without substantial increases in spending.
More importantly, the political conviction required to balance the books just doesn’t seem to be there. A pledge to eliminate the deficit isn’t just about putting a few numbers on a sheet of paper. It’s about a daily, weekly and monthly commitment to reviewing spending decisions and responding to changing economic realities.
The NDP failed to do that while in office. It will be tough for them to convince Manitobans they could do it now.
Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.
Updated on Thursday, August 8, 2019 5:09 PM CDT: Fixes typos.