This column was originally printed in the Winnipeg Sun on June 8, 2016

Playing chicken with icebergs while blindfolded is a particularly bad idea. A clear-eyed assessment of the impending danger is an important improvement. But, ultimately, slowing down and changing course is the only real way to reach safety.

“Manitoba’s new government recognizes the need for a plan to return our province to fiscal balance if we are to avoid further downgrades to our credit rating,” said new Tory Finance Minister Cameron Friesen in his first budget speech. “The steady growth of our provincial debt makes us vulnerable to increases in interest rates.”

Credit rating downgrades are a big danger for governments. When individuals spend too much money and rack up too much debt, the bank gets worried and jacks the interest rate when the time comes to renew the mortgage. It’s the same for governments – out of control spending and borrowing leads to credit downgrades and drives nervous lenders to look at increasing interest rates. It’s good to hear the new Tory finance minister, Cameron Friesen, acknowledge the threat.

Friesen’s clarity is a marked contrast to his predecessor.

In last year’s budget speech, former NDP Finance Minister Greg Dewar said “industry is telling us not to take our foot of the gas.”

When bond rating agency DBRS contradicted that statement by downgrading the province’s credit rating, Dewar kept his blinders firmly in place.

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

It’s good to see that the new government can see the problem with reckless spending, but what actions are they taking to fix the problem?

“We’re turning this canoe, if I can use a Manitoba analogy, we’re turning it carefully, because to turn it too rapidly is to risk our cargo,” said new Tory Premier Brian Pallister.

The new government’s budget increased spending by 3.2 per cent. It’s projecting a deficit of $911 million. Interest payments on the debt are now projected to be $874 million this year. The government says it will balance the budget within eight years.

Let’s get this straight. The new government is well aware of the dangers of overspending and debt, but it doesn’t want to rock the boat too much so it’s spending even more money? The underlying assumption is that a 3.2 per cent spending increase is inevitable.

Saskatchewan released its budget the day after Manitoba. Saskatchewan’s energy driven economy has been gut-punched by low commodity prices and it’s running a deficit, but it held spending increases to 2 per cent and committed to no spending increases next year. If Manitoba had held spending increases to 2 per cent, it would save $190 million. If the new government had simply held the line on the old government’s spending, it would have saved more than half a billion.

The province may be worried about turning the canoe too quickly, what about the risk of crashing their canoe into credit rating downgrades?

The day after the budget bond rating agency Moody’s issued a statement with a headline that declared: “budget offers weak fiscal outlook.” It went on to say a higher deficit and lengthy plan to get back to a balanced budget is a “credit negative.” It didn’t announce any changes to Manitoba’s credit rating, but it flashed bright warning lights.

If Manitoba doesn’t change course quickly, it’s a good bet that interest payments will top a billion dollars per year before the next election. And that’s if things go according to plan. If interest rates go up, especially in response to credit rating downgrades, that number could soar even higher even faster.

It’s good that Manitoba is now taking a clear-eyed view of the fiscal danger it’s facing. But it also needs to avoid that danger by trimming spending. It would be tragic if it slowly turns the canoe out of concern for the cargo only to crash straight into credit rating downgrades that pull the province down even further.