Finance minister spinning fact-free fallacy

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This article was published 02/04/2024 (862 days ago), so information in it may no longer be current.

Eleven days ago, Manitoba Finance Minister Adrien Sala announced the projected deficit for the current fiscal year has ballooned to $1.997 billion, more than $300 million higher than the $1.634-billion estimate he released in December.

Sala told the media: “The biggest drivers that have led to this increase in the scope of the deficit are tied to increases in health-care expenditures that are mostly driven by collective bargaining-related costs.”

He added that, “the increases in health-care expense were spurred by decisions made by the previous government, but were unbudgeted,” and that, “They were not accounted for in budget 2023, and they were not accounted for in the first quarterly update as we headed into the election.”

Sala blames the previous Progressive Conservative government for the deficit, but his spin doesn’t square with the facts.

Contrary to his claims, Budget 2023 included a contingency allocation of almost $521 million for the impact of collective bargaining agreements. That figure is found on page 157 of the government’s Estimates of Expenditure for the current fiscal year.

Beyond that, the existence and size of that contingency was discussed during the 2023 election campaign. In September, the NDP said they would pay for their campaign promises by reallocating $523.5 million in unspent “contingencies and unanticipated events” money in Budget 2023, and by redirecting another $66.1 million.

The Tories immediately responded that the unspent “contingencies” the NDP planned to spend had been specifically earmarked in Budget 2023 to fund collective agreements the government negotiated (NDP costed platform hinges on unspent government funds, Sept. 28, 2023).

If unbudgeted collective bargaining costs aren’t the reason for our super-sized deficit, what is?

The answer is found in the 2023-24 Third Quarter Report, which was also released by Sala’s Finance department 11 days ago. Page 7 of that document reveals that taxation revenue for the year is forecast to be $406 million below projections. In particular, fuel-tax revenue is projected to be $101 million less than expected “mainly due to the fuel tax holiday that came into effect on January 1, 2024.”

On top of that, federal transfers are estimated to be $195 million below budget and “net income from government business enterprises” is projected to be a whopping $639 million less than expected. In particular, Manitoba Hydro’s revenues are expected to be $640 million lower than budgeted, while MPIC is forecasting a $51-million shortfall.

That adds up to $1.24 billion in lower-than-expected revenue, which is likely unprecedented in Manitoba budget history.

On the expenditure side, page 10 of the Third Quarter Report says the Justice and Families departments are projected to be a total of $223 million over budget, while the government projects that it will pay out $44 million more in tax credits than was budgeted for.

That increases the deficit by another $267 million. Add that amount to the $1.24 billion revenue shortfall and that accounts for more than $1.5 billion — more than 75 per cent — of the projected deficit.

On that same page, it says that the Health department is expected to be $903 million over budget “as a result of continued impacts from the settled collective agreements, Health Human Resources Action Plan and overall price and volume increase in the health system.” The report doesn’t specify the cost of each of those categories, however.

If you reduce the $903-million figure by the $521-million contingency that was set aside in Budget 2023 for health-care collective agreements, it leaves a shortfall of $382 million. Don’t be surprised if most, if not all, of that cost overrun is caused by the latter two categories.

That’s a lot of numbers, all of which are found in the Third Quarter Report. They point to an obvious conclusion: The projected deficit for the current fiscal year has little, if anything, to do with the cost of collective agreements. Rather, it is largely the result of revenues being far lower than expected, and expenses being far higher.

Sala is not telling Manitobans the truth about the deficit. He is a pushing a narrative that is contradicted by his department’s own numbers.

That’s something to keep in mind as he attempts to spin Budget 2024 later today.

Deveryn Ross is a political commentator living in Brandon.

deverynrossletters@gmail.com

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