Interest payments on its debt will reach $2.3 billion this year. Imagine the tax relief Manitoba could provide with that money
Since being elected, Premier Wab Kinew has not stopped singing a song of bringing fiscal sanity back to Manitoba.
But the tune of that song has fallen flat in the government’s latest budget. That’s because the budget ratchets up spending to record levels and projects an almost $800 million deficit. And the government isn’t planning to balance the budget until four years from now, in 2027-28. That’s a whole university degree’s worth of waiting.
That is the exact opposite of fiscal sanity. The Manitoba government has only balanced two out of its last 10 budgets. Kinew and his Finance Minister, Adrien Sala, don’t have the luxury of being able to push the deficit problem further into the future.
In Sala’s ministerial mandate letter, the document where the premier lines out what he expects of his finance minister, he says he expects Sala to “repair the damage to our finances caused by the previous government, strengthen Manitoba’s creditworthiness and balance the budget within the first term of government.”
 Wab Kinew |
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That’s not what’s happening in this government’s first budget. By the end of this year, the provincial debt will be $35.4 billion or $23,776 per Manitoban. Since 2019, the per-person debt in the province has grown by about 25 percent, and it’s growing by more than $740 a person this year alone.
But the interest payments on that debt are the problem, with much worse consequences for taxpayers.
The government is spending $2.3 billion on interest payments this year. That’s about $189 million per month. Imagine the priorities or tax relief the government could provide if it didn’t have to write a cheque for $189 million every month to cover the interest on the debt.
Sala said in his budget speech that the government’s plan is fiscally responsible because it charts a path to balance. But the problem with that is that governments of all types promise taxpayers that they will fix the budget in the future, but rarely follow through on that promise.
Former premier Heather Stefanson’s last budget predicted a $363 million deficit, but by the time the year was over it ballooned to more than $1.9 billion.
When Prime Minister Justin Trudeau was elected in 2015, he promised that the federal government would balance its budget in 2019. But that didn’t happen, and now, the federal government’s debt has doubled.
Even if the Kinew government finally balances the budget in 2027-28, the surplus will be a measly $18 million. That’s a rounding error in a provincial budget. A surplus that small could be pushed back into deficit by a stiff breeze. By the time the budget is balanced, the government will have wasted at least $9.6 billion in interest payments or about 40 percent of this year’s budget.
But the assumptions that the government is using to back the tiny surplus are the bigger problem.
The government predicts its revenues will increase by about $2.5 billion over the next four years. That’s not unrealistic. What is unrealistic is that it also predicts spending will only increase by $1.7 billion over the same time. But the government is increasing spending by about $1.4 billion this year compared to last year’s budget.
Kinew and Sala would have to have a serious change of heart if Manitobans are supposed to believe they will suddenly limit spending increases over four years to just over the amount they increased in one.
Taxpayers shouldn’t believe the fluff and they need to demand action. In politics, four years is a lifetime, and every year the government pushes back a balanced budget means more debt and more crushing interest payments.
Manitobans can’t afford for the government to maybe give them a balanced budget four years from now. Taxpayers know those government promises aren’t often kept. Kinew needs to give taxpayers a balanced budget now, not the promise of one in the future.
Gage Haubrich is the Prairie Director for the Canadian Taxpayers Federation.
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