This column was originally printed in the Winnipeg Free Press on May 19, 2016

 Deficit puts a heavy burden on Manitoba families

According to the new Progressive Conservative government, the average family of four in Manitoba owes $3,066 because of last year’s provincial deficit. The Manitoba government overspent its income by more than $1 billion. Annual interest payments on that debt will be tens of millions.

The political debate about the specific deficit number will go to and fro, but the important point is that Manitobans will be paying for this debt for generations. This is not a theoretical number. The people who lent Manitoba this money expect to be repaid with interest.

But the political to and fro is still worth exploring. The new PC government certainly has every incentive to exaggerate the number and make the NDP look bad. And the NDP has every incentive to argue the converse. The reality is that most Manitobans are probably right to question both sides.

Here are the numbers. In the 2015 budget, the NDP projected a core deficit of $422 million. Last March, the NDP released an update that showed the government had blown up the core deficit to $666 million. In fact, the NDP routinely missed its projections by hundreds of millions so it’s not hard to imagine the books the left behind after the election were works of fiction.

Moody’s, an international bond rating agency, provided an objective third party perspective when it downgraded the province’s credit rating because of the “deterioration in Manitoba’s financial metrics.” Bond rating agencies don’t care about public opinion polls or which party is in charge. They care about numbers. And Moody’s didn’t like what it saw in Manitoba’s numbers.

It’s important to calculate the numbers as accurately as possible, but the reaction to those numbers are even more important. On this front, there is an objective difference between the new government and the old one.

When DBRS, another bond rating agency, criticized the NDP’s financial performance, Minister Dewar’s response was telling.

“We have a plan,” said Minister Dewar. “Our plan is working.”

According to the NDP, massive deficits that were routinely millions of dollars higher than projected were happening according to plan and the plan was working.

Minister Friesen is taking a decidedly different tone.

“The consequences of this pattern of over-spending budgets are alarming,” said Minister Friesen. “It will take time to undo the damage we have inherited and to correct the course.”

The difference of opinion over the extent of the deficit is less important than the difference in opinion over what to do about it. The NDP opted to do nothing. The PC’s say the finances need to be fixed.

The PC’s are embarking on a value-for-money audit across government. The government has to find savings and that comes down to setting priorities. There isn’t enough money for every program. Bad programs, and even some good programs, will have to be cut to save vital programs. This is not a matter of political philosophy, but rather a matter of mathematical reality.

But why is it necessary? The NDP say they were able to borrow at will without resorting to any “austerity.” What was wrong with the way things were going?

Manitobans are paying a high price for previous governments’ deficits. According to the 2015 budget, it cost $842 million just to cover the interest on the provincial debt for one year. That’s before the current deficit ballooned by hundreds of millions of dollars. That’s money that went to bond fund managers rather than schools or hospitals or even paying down the debt.

The interest on the provincial debt costs the average family of four in Manitoba $2,600 every year. Making hard decisions in government is still easier than the hard work Manitoban families have to do to earn the $2,600 they ultimately pay to cover interest charges. But acknowledging the danger of the deficit means that burden may someday be lightened.