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Behind The Government's Budget Spin

Author: Colin Craig 2014/03/18

Governments put their best foot forward when they table a budget. They tell you about all the good things and leave out the not-so flattering details.

All parties across the political spectrum craft their budget speeches in such a manner; after all, who wants to shine a big spotlight on their own faults and weaknesses? Yet, obviously taxpayers should be concerned about what governments don’t want to talk about in their budget propaganda. Here are a few important matters not mentioned in Manitoba’s recent budget speech.

First, Finance Minister Jennifer Howard claimed to be paying down the province’s debt. She noted: “since the onset of the global recession, our government has paid down a half billion dollars in debt from rainy day savings.”

While that sounds impressive, it’s actually quite deceptive. What she has done would be like you spending $1,000 on your Visa card and paying off $50 on your Mastercard. Then when your spouse asks how things are going with the credit card situation you only tell them about the $50 you paid off. That wouldn’t be upfront would it?

The Minister can tell you one pocket of debt is down, but overall the debt is way up. The government’s own budget documents show the province’s debt is up $13.3 billion since the global recession started in 2008-09. The debt is expected to hit $32.7 billion by the end of this coming fiscal year.

The government also claims the province’s deficit is improving. For those who need a refresher, the deficit is the difference between operating revenues and expenditures in a single year. The deficit has improved a bit; it will ‘only’ be $357 million this year. Yet back in 2012, the government expected a $23 million surplus by now.

Now let’s talk infrastructure. Remember how the government said it was putting all the extra money from raising the PST into infrastructure? Well, it’s actually a big shell game to get their hands on extra cash.

To understand what’s going on, imagine you pay your neighbour’s kid $20 to cut your lawn. Then you tell the kid you're giving him a $10 raise. However, before the raise kicks in, you cut his pay back to $15, so his new pay is only $25. You then pocket the extra $5.

The government claims it is putting all the extra PST revenue into infrastructure, but what it did is cut the old funding it used to put in. In 2011-12 the government spent  $793 million in 2011-12. Now the government is saying this “base funding” has been cut to only $729 million.

And instead of increasing the base funding like it used to each year, base funding will stay flat for at least the next five years. The extra PST revenue will then be added on top. Again, it’s a shell game and not all the money will be put into infrastructure.

Make no mistake, there are some good things in the budget. The government will surely tell you about them. But taxpayers need to be aware of the things they aren’t telling you about.

 

 

 

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