Mild criticism for new PC government's fiscal debut
Hard to slay deficit without spending, says Canadian Taxpayers' Federation
The first budget tabled by Brian Pallister's Progressive Conservative government elicited only mild criticism from right-of-centre political allies who appeared willing to give the new provincial government the benefit of the doubt.
On Tuesday, PC Finance Minister Cameron Friesen tabled a 2016-17 spending plan that calls for a $890-million deficit, no plans to balance the books until after 2020 and spending increases for all but two provincial departments.
The Canadian Taxpayers Federation nonetheless praised the provincial budget on the basis of Friesen's plan to index personal-income-tax brackets to the rate of inflation.
"Ending bracket creep is a major victory for taxpayers. Before, if you got a cost-of-living increase in your salary, it might bump you into a higher-tax bracket. Ultimately, you'll end up paying more taxes even though you were no richer than before," said Todd MacKay, prairie director for the CTF.
MacKay nonetheless said he was concerned by the increase in provincial spending as well as a deficit more than double what the previous NDP government forecasted for 2015-16. That deficit was initially projected to be $422 million but was later adjusted to $1 billion.
Hard to slay deficit without cutting spending
MacKay compared trying to balance a budget without trimming spending to "trying to fix a leaky boat with a shotgun" and urged Pallister to get the province's finances under control.
"Nobody that I'm aware of has been able to slay a deficit without trimming spending. Stephen Harper didn't do it. Jean Chretien didn't do it that way. Roy Romanow, the NDP premier of Saskatchewan, trimmed spending in order to balance the budget," he said.
Winnipeg Mayor Brian Bowman, who moderate conservatives once considered a run for the Manitoba PC leadership, also praised the provincial budget, which offered Winnipeg $2.2 million in additional funding — an increase of 0.7 per cent — over 2015-16.
While that falls short of the city's funding requests, the mayor took a diplomatic tack.
"Let's be fair. Manitobans provided a decisive mandate to this new government. Getting the financial house in order is a significant part of their commitment to Manitobans," Bowman said.
"I will note we balance our budget. We're required by legislation and we take that very seriously. So moving to a balanced budget is something I certainly welcome on a personal level."
Bowman also said an apparent provincial freeze on funding for Winnipeg's police and fire-paramedic services could have implications on Winnipeg's 2017 budget.
It's a moderate and simple budget, according to Michael Benarroch, an economist and Dean of the University of Manitoba's Asper School of Business. He said he was surprised to hear how long it would take to balance the budget.
"The tax breaks that they are giving are actually valued less than the removal of the education tax relief, that's going to put a few million dollars in the government's pocket. They got a little bit more money from the federal government that they are going to be using," he said. "They've amalgamated some departments and they are really looking to hold the line on spending at three per cent and they are saying that's going to be held going into the future."
He said combining all of those factors over time will slowly reduce the deficit. If interest rates rise, which he says is unlikely in the next year or two, that deficit could leave the province with a hefty debt service.
Criticism subdued
Criticism from Pallister's opponents at the Manitoba Legislature was also relatively subdued.
NDP opposition leader Flor Marcelino said she needed more time to study the budget, noting she is concerned there is no increase coming to the minimum provincial wage but said her party agrees with preventing wealthier seniors from receiving a property-tax rebate brought in by the Selinger government.
"We were expecting, just as Manitobans, a conservative budget. Something that showed some fiscal responsibility or some reigning back on something. We really did not find that," Bokhari said.
"That was something that they advocated for. That was something that they promised and that really didn't happen."
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