Manitoba·Analysis

From economic growth to taxing the rich, plenty of budget demands for Manitoba PCs

PC Finance Minister Cameron Friesen has limited choices on where to spend as his government promises no tax increases and vows to cut the deficit.

Brian Pallister's government faces calls to spur economic growth, spend on social and physical infrastructure

The Progressive Conservative government's second budget could pit deficit fighting against non-profits and spending on roads. (Gary Solilak/CBC)

Paul Thomas has been watching governments and budgets in Manitoba for decades and sums up the process of presenting the fiscal ledger to the people in a short line.

"Budgets are about choices," Thomas says.

The professor emeritus of political studies at the University of Manitoba argues that a budget shows more insight into where a government is heading than virtually any action a political leader can take.

"Decisions on taxes and spending are a clearer expression of the real priorities of governments than all the rhetoric in throne speeches and statements by the premier," Thomas says.

The choices for Premier Brian Pallister and Finance Minister Cameron Friesen in the budget they'll release Tuesday are not enviable.

Whatever fiscal rhetoric the Progressive Conservative government used to win last year's election, they doubled-down after the victory and for months heaped scorn on the spending habits of the previous government, and the need to slay the financial dragon they believe is the province's deficit. 

Though the forecast deficit number has shrunk since the Tories took office, the most recent calculation of $872 million for the fiscal year that ended in March means the government is still borrowing big to cover its spending.

The PCs basically passed an NDP-written budget last year — and now it's all on the Tory watch. But they have plenty of advice if they want it.

Growth too slow for Business Council

The province's current growth rate is too slow for the Business Council of Manitoba.

"We have to have some pretty careful, thoughtful thinking on how we are going to generate some economic growth beyond two per cent a year. We have to grow the economy faster," says Business Council president Don Leitch, admitting that is not an easy challenge.

The Manitoba Business Council's Don Leitch says controlling spending must be balanced with growing the economy. (Business Council of Manitoba)

The council is on board with the Pallister promise to cut the deficit and says Manitoba must present that plan to calm financial watchers who could downgrade the province's credit rating. Leitch says more economic activity will grow government revenue and help repair the finances faster.

Leitch also says the Pallister government must pull the trigger on many capital projects and schemes that have been on hold for a year, or in some cases longer.

"There have been lots of nods and general commitments, but the time has now come, basically, for them to say which ones are going ahead now and which ones are not going ahead," Leitch says.

Leitch says there is private money on the table for several large projects that will be in jeopardy.

"If it's not a go, say so," he says.

Some major projects in Manitoba have not only private sector funds, but federal money committed as well. An expansion at the Assiniboine Park Conservancy and the new Inuit Art Centre at the Winnipeg Art Gallery are two of many that are waiting for a funding decision from the province.

Leitch is also anxious to see the province's carbon tax scheme introduced, would like to see Manitoba start to reduce its payroll taxes and wants to see some investments in infrastructure related to trade — specifically upgrades and improvements to roads that connect to trade markets.

Deficit not 'a definition of a crisis': CCPA

For some, the deficit isn't the bogeyman it's been painted out to be by the PCs.

"They keep talking about a $1-billion deficit as if that is somehow a definition of a crisis, and it isn't," says Lynne Fernandez with the Canadian Centre for Policy Alternatives.

Lynne Fernandez of the Centre for Policy Alternatives says the Tories have to thaw funding for non-profits. (CBC News)

Fernandez says the deficit is something to be concerned about, but a much slower return to a balanced budget would ease the shock on some segments of the population. She says the economy is stable and the province's debt-to-GDP ratio is "reasonable."

As for raising revenue, the CCPA would like to see a new tax bracket added for high-income earners and possibly for corporations. She pours cold water on the PC government's plan to raise the basic personal tax exemption.

"That's going to take hundreds of millions of dollars out of revenue and it's not going to benefit low-income people very much," Fernandez says.

Low-income families may see a bump of perhaps $16 dollars a year from such an exemption, Fernandez says, with the actual benefit being much more significant for high-income earners.

Make up your minds

If there is continuity between the Business Council's perspective and that of the CCPA, it might be on decision making.

Fernandez looks across the breadth of Manitoba's non-profit sector — the many organizations that work in communities with vulnerable populations — and sees a long period of limbo.

"They [the PC government] have consulted with them, yet they are frozen. Their funds are frozen and [they] won't know what the response will be until the budget," Fernandez says.

Beyond committing to keeping those community organizations going, Fernandez acknowledges there should be investments in physical infrastructure, and money for social infrastructure as well.

Invest, don't spend: Construction Association

Manitoba's earth movers and builders are hoping the infrastructure money that is spent is spent wisely.

The Manitoba Heavy Construction Association's Chris Lorenc says the provincial government is a major player in purchasing construction services, but he wants targeted investment.

The Manitoba Heavy Construction Association's Chris Lorenc says the government can't stay at zero increases on infrastructure spending for long. (Manitoba Heavy Construction Association)

"Regardless of the nature of the programs that the government will be addressing in the budget, we hope what underpins the message is some seasoned wisdom with a strategy that focuses on a return on investment," Lorenc said.

He says the best return on investment in infrastructure comes from focusing on bolstering trade. He says he understands the government's effort to return to balanced budgets, but wants to see a signal in the upcoming budget that if the government stands pat on infrastructure spending today, it will make up for it in the future.

"We're hopeful that if not in this budget, that in near budgets, inflation becomes a part of the discussion," Lorenc said.

He says over time, a lack of increases in infrastructure spending is equivalent to a cut when inflation is factored in over several years.

"A billion dollars [in infrastructure spending] today won't buy you a billion dollars next year and it won't buy you a billion dollars two years down the road," he says.

Lorenc represents an industry that knows the needs are greater than any government can afford to pay. The infrastructure deficit in the city of Winnipeg alone is pegged at over $7 billion and the province has plenty of things to fix as well.

"It's not like you have to search for a highway to pay attention to," Lorenc says.

ABOUT THE AUTHOR

Sean Kavanagh

Civic affairs - city hall reporter

Born and raised in Winnipeg, Sean has had a chance to live in some of Canada's other beautiful places (Whistler, B.C., and Lake of the Woods, Ont.) as well as in Europe and the United States. In more than 15 years of reporting, Sean has covered some of the seminal events in Manitoba, from floods to elections, including as the CBC's provincial affairs reporter.

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