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Throne Speech calls for a heaping helping of debt

Author: Todd MacKay 2015/11/23
This column was originally printed in the Winnipeg Sun on Nov. 20, 2015

In reality, there are no such things as doctors’ orders. When doctors tell patients to eat better, they’re really presenting a choice. Overindulgence could lead to a heart attack while a healthier diet could mean less wheezing while playing with the grandkids.

Some patients heed the warning and some ignore it, but it’s rare to see patients react by ordering a dozen donuts. Manitobans got that rare reaction from the recent Manitoba Throne Speech.

Debt is already clogging Manitoba government finances. The total debt is well over $30 billion. The operational deficit will add a projected $422 million to that debt this year with no realistic plan to balance the budget in the future. The interest payments on the debt will be $842 million this year – that’s about $650 per Manitoban.

The Manitoba government’s recent Throne Speech notes that the province’s borrowing costs are “affordable for the long term.”

The government may believe it’s “affordable” to force Manitobans to waste more than $50 per month each on government interest charges, but bond rating agencies have diagnosed runaway spending and debt as serious issues.

How is the Manitoba government reacting? It’s ordering up another heaping helping of debt.

The Throne Speech promises another $10 billion in infrastructure spending. It promises thousands of daycare spaces. It promises money for electric buses and Inuit art and everything in between.

Promises are easy, but paying for them is hard. Reporters asked if the promises will drive up debt and taxes. Premier Greg Selinger shrugged.

“You have to be open to that,” admitted Premier Selinger.

The Conservatives delivered an alternative Throne Speech. They promise to reverse PST hike. In fact, they promise to restore Manitobans’ right to vote on tax hikes. They also promise to index tax brackets to inflation to stop bracket creep from stealthily increasing income taxes.

However, the Conservatives are cautiously quiet on the issue of deficit and debt. They state that “today’s debt is tomorrow’s taxes” and “reining in wasteful government spending helps keep taxes low.” But there are no commitments as to when Conservatives would end the borrowing or start paying down the debt.

This may be due to the instinct of all politicians to herald good news and downplay the bad news, but there’s likely more to it.

The current NDP government projects an operational deficit of $422 million, but that’s not the whole story. The Manitoba government used to release summary projections that include all government revenues and spending. This year it refused to provide those numbers despite numerous freedom-of-information requests from the Canadian Taxpayers Federation and others. It’s reasonable to suspect Manitoba’s finances are even worse than they appear and that makes it difficult to set specific deficit and debt reduction goals.

It may be difficult, but here’s a suggestion:

The next government should order an independent third-party review of the books to get a clear and non-partisan picture of the province’s finances. That information can inform a deficit and debt reduction plan. Making the mortgage payment is always the first line on every family budget, but governments only pay down debt if there’s extra cash at the end of the year. That needs to change. Balancing the books and paying down debt needs to be a top-level priority driven by a concrete plan rather than an annual afterthought.

In reality, Manitoba’s financial health will not be determined by politicians, but rather by Manitobans themselves. After all, politicians are followers not leaders. If Manitobans they want a government that will trim the excess spending and start moving toward a healthy balanced budget, politicians of all stripe would be foolish not to deliver.


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