Manitobans need mature, fiscally sound government, not political gimmickry

Opinion

Hey there, time traveller!
This article was published 24/12/2024 (290 days ago), so information in it may no longer be current.

It was always one of the many problems inherent in the provincial NDP’s so-called gas tax holiday: eventually the tax has to be reinstated.

That’s what the government did this week by announcing the tax will be charged again at the pumps, effective Jan. 1.

In an attempt to find a compromise, or to try to save face, Premier Wab Kinew decided to knock 1.5 cents off the tax, bringing it down to 12.5-cents-per-litre from the 14 cents it was prior to the temporary cut.

Manitobans likely won’t notice the 1.5-cent “savings,” but they will notice gas prices going up by 12.5 cents a litre next week.

The Kinew government said it brought in the tax holiday to reduce inflation growth and to help Manitobans with “affordability.” In reality, it did very little to reduce inflation. The consumer price index was already coming down across Canada, owing to high interest rates set by the Bank of Canada and the easing of global supply chain disruptions that began during the COVID-19 pandemic.

Whatever small inflationary benefits were gained during the gas tax holiday throughout 2024 will only be reversed come Jan. 1 when the 12.5-cent fuel price spike will put upward pressure on Manitoba’s consumer price index.

Meanwhile, most of those in need of financial support when inflation was high did not benefit from the gas tax holiday, since most low-income people don’t own vehicles. The people who benefited the most were those who drive gas-guzzlers.

The biggest downside to the gas tax holiday was the hit to the public treasury.

It was grossly irresponsible to cut taxes when the government is posting massive deficits and struggling to find resources to fund front-line services in health care, education, justice, child welfare and other areas.

The Kinew government had to borrow the estimated $340 million it lost in revenue from the gas tax cut in 2024. That liability will be added to government’s ballooning provincial debt.

The province will continue to borrow to pay for the 1.5-cent-per-litre gas tax cut, which represents a loss of about $28 million a year. That will also be tacked on to the province’s net debt, which future generations will have to repay.

The Kinew government revealed it is on track to post one of the province’s largest-ever deficits in 2024-25 at $1.3 billion, $513 million higher than projected in the 2024 budget.

Worse, the NDP has provided no specifics on how it plans to balance the budget. It continues to claim it will eliminate the deficit during its first term in office, yet has shown no evidence of how it hopes to achieve that.

Cutting taxes by any amount under those fiscal circumstances is bad governance. There continue to be long wait lists and staff shortages in health care and pressures in other front-line services that will require additional resources to solve. Where will the money come from to fund the demand for those services?

To make matters worse, the NDP is also freezing Manitoba Hydro rates effective Jan. 1, robbing the Crown utility of much-needed revenues to reduce crushing debt loads and to pay for expensive upgrades. The rate freeze will also have a negative impact on the deficit, since the finances of Crown corporations are included in the province’s bottom line.

Finance Minister Adrien Sala says the combined gas tax cut and Hydro rate freeze will make life more affordable for Manitobans. Perhaps. But it will also result in a deterioration of public services, a weakening of Hydro’s financial position and a larger provincial deficit and debt.

The same Manitobans who will enjoy more “affordability” will be paying more in servicing charges on the provincial debt, will be waiting longer in emergency rooms to see a doctor and will spend more time on wait lists to get surgery or access diagnostic tests. It doesn’t seem like a reasonable or smart trade-off.

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The province could hire a lot of doctors and nurses for $28 million a year.

The gas tax holiday was a political gimmick from the moment it was announced by the NDP during the 2023 provincial election campaign. The party didn’t need to adopt such careless promises to win the election. The former Progressive Conservative government imploded long before the election and was headed to the opposition benches whether or not the NDP promised to cut taxes.

What Manitobans want more than anything right now is for government to fix the province’s broken health-care system so patients can access medical services in a timely manner and have access to a family doctor.

Cutting taxes and freezing Hydro rates does nothing to contribute to that priority.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom Brodbeck is an award-winning author and columnist with over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.

Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are posted online or published in print – part of the Free Press’s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.