There is no greater loss to Manitoba's taxpayers than $269 million in public debt servicing costs. Every day Manitoba's debt costs taxpayers $736,986 or $30,707 an hour. These do not add to services for Manitobans and are the result of irresponsible spending patterns which exceeded revenues. The current government should be working hard to keep Manitoba's budget balanced as a key first step, but real debt reduction will be essential for finding medium and long-term savings above and beyond any exercise in reducing and reallocating spending. The government must look to reduced Manitoba's $16.4 billion debt.

Keeping debt on the books has two harmful effects on Manitoba's budget. First, it increases the cost of servicing the debt, which at present is the government's third largest spending envelope eating up 16.2 per cent of total spending. Second, it saddles future generations of Manitoba taxpayers with obligations that can only be paid with hard-earned tax dollars. As a result, money that could go to valuable programs is wasted while services, such as chiropractic care, eye exams and physiotherapy, are cut.

Under the existing balanced budget law, $110 million in debt will be paid down this year and even though the law does include an escalator clause, the concern is that the province continues to add more debt - it sort of like making the minimum payment on your credit card.

The CTF is proposing the government to be more aggressive in its debt elimination efforts, and to that end recommends the adoption of a mandated debt retirement payment based on 2.5 percent of own source revenues (total revenues less any federal transfers). If the province were to adopt this measure, Manitoba could have the debt eliminated by 2057.

While Manitoba's debt situation has improved marginally over the past few years, the province must focus on debt reduction, not debt management.

This provincial budget represents an important opportunity for the NDP government and for Manitoba taxpayers. Demand for tax relief is real and warranted. Tax cuts are essential for sustained economic growth. In the immediate term, improved and efficient delivery of government services and through the divestiture of some crown corporations can help offset foregone tax revenue over the next few years.

Experience with balanced across the board tax cuts in other jurisdictions, such as the federal government's 2000 tax cuts, shows that within five years government revenues rise. By 2005, despite $45 billion in tax cuts, Ottawa's revenues were actually higher. Ottawa's fiscal success was a reflection of economic growth. The CTF's tax cut proposals for the 2006 budget are as follows:

• Reduce the first rate from 10.9 to 10 percent;
• Reduce the middle rate from 13.5 to 13 percent; and
• Reduce the top rate from 17.4 to 16.5 percent.

The CTF is also recommending an increase of the Basic Personal Exemption to $9,000 which amounts to a tax cut for everyone; indexing tax brackets to the rate of inflation is also part of this formula as any further tax reductions are meaningless without indexation.

Unlike an extra-parliamentary interest group, the AG has no specific axe to grind or constituency to represent. Instead, as a servant of the legislature it is the AG's job to research government programs to ensure they are meeting their stated objectives and that taxpayers are receiving
value for dollar.

In order to narrow Manitoba's accountability and transparency gap, greater resources should be devoted to the province's auditor general.. As guardian of the public purse and of the public trust, no other expenditure is worth every penny as these offices are. Manitoba's taxpayers, voters, and citizens deserve no less. Currently the AG's office is working on 3 investigations, yet over 80 requests have come into the office which they likely will not have the opportunity to look at due to lack of resources. With such a significant backlog of potential investigations, the CTF is recommending a $500,000 increase to the AG's budget which will hire three more investigators and provide funds to expand the current office.

The CTF's full submission is available by clicking here.