Dreaming in deficit technicolour

Hey there, time traveller!
This article was published 18/04/2012 (4932 days ago), so information in it may no longer be current.

After increasing spending by $5.7 billion since 2000, Today’s NDP have come to the realization that the 12 budgets that preceded yesterday’s have effectively painted them into a fiscal corner.

While Manitobans, in large, have been willing to recognize the impact a slowing global economy had on the province and hold their noses at the multi-year deficits piling up, they also recognized that business as usual cannot continue.

No longer able to rely on their Ottawa-based sugar daddy to bail them out as they attempt to get their own fiscal house in order, the New Democrats are attempting to dig themselves out of a billion-dollar deficit hole.

The question for Manitobans is, how effective are they? And the short answer is, not very.

You will read, in today’s news, stories about lotteries and liquor being merged, about regional health authorities being reduced and about government finding efficiencies. It all sounds very good until you realize that we have been watching this program for years without apparent result.

Back in 2009 the NDP told us that they would require “all departments to review operating expenditures to identify potential reductions,” yet now they are telling us that they will find $128 million in internal review savings. Don’t get me wrong, governments should be reviewing their operations and programs on a regular basis, in both good and bad economic times, but is the government admitting that its previous “belt-tightening” efforts initiated three years ago have been a failure or is it that there is just that much waste left to trim?

How is it that in 2012, amalgamating regional health authorities from 11 to five will achieve $10 million in savings when amalgamating school divisions from 54 to 37 in 2001 was supposed to achieve the exact same savings, yet never did?

Restraint has never been a part of this government’s agenda. Because of this, we have seen our total debt rise by more than $6 billion in the last five years to an estimated $20.7 billion today and with deficits forecast for the next few years it will continue growing. Not even the NDP can ignore the simple fact that our debt servicing costs have increased $51 million since last year’s budget to an estimated $858 million. Over one-third of the promised internal review savings will be lost just to cover this increase. Think about that for a moment, over one-third of all savings the government is seeking to achieve are not going to repair roads, train more health-care professionals or reduce class sizes to 20, but instead will go into the black hole known as interest payments.

It’s also worth noting that the Bank of Canada is warning that the era of ultra-low interest rates may be coming to an end and the province’s own numbers indicate that a mere one per cent change in the interest rate will cost almost $20 million more in debt-servicing costs. Money that again will have to be found, reallocated or generated. We are not far off from annual debt costs of $1 billion; is this when Manitobans will finally notice the elephant in the room?

Of course, the other part of the budget is its goal of “raising revenues modestly” which is just another way of saying tax and fee hikes. The PST will be expanded, again, this time by $107 million by including insurance premiums, hair cuts and spa treatments. The cost of registering your vehicle has gone up another $35. Gasoline just went up another 2.5 cents per litre. (By the way, wasn’t it just two weeks ago that our premier, in response to gas going up nine cents per litre, was going to write a letter to the federal government?) Add it all up and a middle-income family needs to find approximately $300 annually. This all might be a bit more palatable if we saw some action on our already punishing income taxes, but alas, a middle-income family actually sees its provincial income taxes rise by $4 as compared to last year and while it may seem negligible, it’s salt in the wound. So not only do Manitobans pay a whopping $2,563 or 531 per cent more personal income tax than their Saskatchewan counterparts, but our government appears to have waved the white flag and surrendered to Regina.

While expanded shopping hours may, according to the Retail Council of Canada, be the “silver lining in an otherwise gray budget” it cannot hide the fact that if the NDP thinks that increasing budget-to-budget spending by 3.1 per cent actually shows restraint, then it is dreaming in technicolour.

 

Shannon Martin is the former director of provincial affairs for the Canadian Federation of Independent Business.