Fiscal stars aligning for Kinew if NDP wins fall election By: Tom Brodbeck Posted: 7:00 PM CST Thursday, Mar. 9, 2023

Opinion

If the NDP win the next provincial election, and they almost certainly will, the party will inherit a far healthier set of books than it left behind in 2016.

It’s not because the Tories have been particularly good stewards of the provincial treasury, at least not in recent years. Far from it. Their famine-to-feast budgeting, interrupted briefly by heavy spending during the COVID-19 pandemic, has destabilized many front-line services. Successive years of funding cuts and freezes have caused long-lasting harm to hospitals, schools, child-care centres and municipalities. It will take years of restoring funding to core services to undo the damage. But it can be done.

In fact, it’s already in the works, beginning with this year’s Tory budget. The 2023 budget makes significant investments in key areas. It’s not enough to fix all the damage overnight, but it’s a start. It would allow the NDP to hit the ground running, should they win the next election, scheduled for Oct. 3.

The party and its leader, Wab Kinew, would have a few decisions to make on how to implement budget 2023, including whether to follow through on all the Tories’ promised tax cuts. They could implement some of them — those that benefit the widest range of Manitobans, including low-income people — and cancel others.

The proposed 2024 cut to the health and post-secondary education tax levy (the so-called payroll tax) should be the first to go. It’s not even a confirmed tax cut. It’s contingent on government showing a “better than expected revenue performance.” If revenues do not exceed projections, the tax cut — worth $34 million — would not proceed, according to the budget. The NDP could gut that with little, if any, public backlash.

They could also cancel the $453-million education property tax rebate, which disproportionately benefits higher-income Manitobans. Instead of borrowing money to send out rebate cheques to property owners, as the Tories have been doing, an NDP government could use at least some of those proceeds to reduce the projected deficit. That would make the credit-rating agencies happy (at least one of which, DBRS Morningstar, showed a little nervousness this week over the Tories’ Hail Mary budget).

Borrowing money to cut taxes is fiscally irresponsible. The NDP could end that by cancelling the rebate cheques and balancing the books quicker. It would be an opportunity for the NDP to out-fiscal-conservative the Tories.

If they did, they could afford to keep the Tories’ proposed income-tax cuts, including the increase to the personal exemption (which jumps to $15,000 this year) and the tax-bracket adjustments in 2024. The combined annual impact of those measures is $486 million, which could easily be incorporated into future NDP budgets.

All told, Manitoba is receiving a staggering $1.05 billion more in federal transfers in 2023 compared with last year, a 17 per cent increase.

The main reason: massive increase in transfer payments from the federal government, the vast majority of which are recurring revenues. (There is a $72-million one-time top-up this year to the Canada Health Transfer that will likely disappear next year).

All told, Manitoba is receiving a staggering $1.05 billion more in federal transfers in 2023 compared with last year, a 17 per cent increase. More than half of that is from equalization payments. Those revenues are expected to grow over time, at least for the foreseeable future.

Manitoba’s balance sheet will be in better shape in October than it was seven years ago when a defeated NDP government left behind a deficit of almost $1 billion. It’s something a new NDP government could build on, if it chose to be more like former NDP premier Gary Doer and less like his successor, former premier Greg Selinger, who ran the province’s finances into the ground.

Barring a severe economic downturn, the NDP could provide sustainable funding to key areas of government, cut some taxes and balance the books before it seeks re-election in 2027. Based on the financial projections presented in this week’s budget, that is very doable.

The deficit is projected to fall to $53 million by 2026-27, even under the Tories’ fully implemented tax cut/spending program (based on the economic outlook of nine private-sector economic forecasters). Cancelling the property tax rebate and the proposed payroll tax cut to eliminate the deficit earlier, while boosting spending in priority areas, would be good politics and good policy.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.

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