After preaching austerity for the past year and raising fears about deep spending cuts, the Progressive Conservative government has tabled a cautious, steady-as-she-goes budget that makes only modest progress in slaying a massive deficit.

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After preaching austerity for the past year and raising fears about deep spending cuts, the Progressive Conservative government has tabled a cautious, steady-as-she-goes budget that makes only modest progress in slaying a massive deficit.

The provincial budget, released Tuesday, contains no major shocks or surprises. There are no new taxes or tax increases.

Premier Brian Pallister said it sets the province on the right course.

"Today is a real positive step in the right direction. It’s a step on the road to recovery for Manitoba," he said.

One significant move — the phasing out of income tax rebates on tuition to university students and graduates over the next two years — had been predicted.

Most government departments will receive spending increases, with the Families Department enjoying a 5.4 per cent hike.

The budget provides support for 500 new licensed child-care spaces and 50 new home-based child-care spaces. About $12.8 million will be spent on social housing.

Overall operating expenditures are projected to increase by 2.1 per cent, with health receiving a 1.8 per cent hike and education and training going up 1.1 per cent.

College and university operating grants will be frozen.

The government expects to continue to post a large summary deficit — $840 million — down only $32 million from the $872 million forecast for last year. Finance Minister Cameron Friesen predicts the deficit will fall to $698 million next year and $549 million the following year.

If there was a surprise in Friesen’s financial blueprint, it was that it didn’t make greater progress in deficit reduction this year. Business leaders and a tax watchdog expressed concern at the slow pace of deficit reduction, but Pallister said large spending cuts would have undermined services. And he said he wasn’t about to increase taxes.

"It wasn’t the solution we chose, and it wasn’t the solution we ran on," he said of higher taxes.

One thing the premier did run on was a promise to reduce the PST by one percentage point during his government’s first term in office. When asked about that Tuesday, Pallister repeated his pledge, despite its $300-million cost and the fact he would likely have to borrow the money to pay for it.

Pallister defended the decision to discontinue the tuition rebate. Starting this year, students will no longer receive it. For graduates, the benefit is being reduced this year and eliminated next year.

"The tuition rebate program wasn’t working to keep students in Manitoba," the premier said. "We can’t continue to support programs that have no demonstrable positive effects."

'We can't continue to support programs that have no demonstrable positive effects' ‐ Premier Brian Pallister on phasing out tax rebates for university tuition

Instead, the money should go to lower the barriers to entering university in the first place, Pallister said.

Manitoba Finance Minister Cameron Friesen, flanked by Janice McKinnon (left) and Dave Angus (right) who are co-chairs of the advisory panel on fiscal performance, during his presentation of the 2017-2018 budget to the media. (Mike Deal / Winnipeg Free Press)</p>

Manitoba Finance Minister Cameron Friesen, flanked by Janice McKinnon (left) and Dave Angus (right) who are co-chairs of the advisory panel on fiscal performance, during his presentation of the 2017-2018 budget to the media. (Mike Deal / Winnipeg Free Press)

NDP interim leader Flor Marcelino said elimination of the tuition fee income tax rebate could make graduates think twice about whether they want to remain in the province or move to Manitoba.

"We believe the tax credit was needed to keep our graduates here working and living in Manitoba," she said.

Friesen said his second budget takes "steady, measured steps" toward balancing the budget over eight years.

"Our plan avoids drastic measures, choosing instead to steadily pursue and achieve improvements year over year," he said in his budget address. "This will allow us to reach our destination together, safely and securely."

There was no specific mention Tuesday of planned freezes to civil servant salaries or the budget impact of laying off department managers. Salary and employee benefit estimates for some departments are lower than was budgeted last year.

The finance minister said at least some of the savings would occur through "vacancy management."

For the second straight budget, there was no mention of an increase to the province’s minimum wage. Friesen hinted to reporters the government would be making an announcement soon in that regard.

Manitoba will spend more than $1.7 billion — about the same as last year — on strategic infrastructure, which includes everything from roads, bridges and flood-proofing to houses, schools and public housing.

Reductions are forecast for highway construction ($32 million) and highway maintenance ($4 million), with increases in water-related infrastructure.

The government said it is committed to the completion of outlet channels for Lake Manitoba and Lake St. Martin.

"A preferred route for the channels has been identified and engineering, environmental and indigenous consultation efforts are now concentrated on this route," Friesen said.

Friesen said key tax credits will be maintained, such as those to primary caregivers as well as to the mining and manufacturing industries. However, several others will be eliminated, including those for Neighbourhoods Alive, data processing investment, nutrient management and odour control.

Meanwhile, there was no word of a plan to bail out Manitoba Hydro. The Crown corporation had requested a large capital injection to improve its debt-equity situation, but it seems Hydro will be left to manage its debt problems on its own.

Todd MacKay, Prairie director of the Canadian Taxpayers Federation, said while he appreciated the "tiny" step the government took in eliminating the deficit, it is not enough.

"Look, if the economy sneezes the deficit is going to get bigger. They’re counting on increased revenues to take care of this deficit. Spending is up half a billion dollars," he lamented.

Manitoba Nurses Union president Sandi Mowat said her major concern is that the Pallister government plans major changes to the hospital system without an increase in health system investment. "We’ve very concerned about our patients’ outcomes," she said.

Mowat lauded planned improvements in renal care, but cautioned that "there’s no other health care investment we can see."

larry.kusch@freepress.mb.ca

Larry Kusch

Larry Kusch
Legislature reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.