$270 million surplus can be the first step toward financial stability
Manitoba Premier-Designate Wab Kinew is inheriting a surprise $270 million surplus for 2022. This is his chance to keep the province in the black and he needs to take it.
Kinew said his New Democratic Party will ensure the province’s fiscal house is in order, and his goal is to present a balanced budget by 2027. This surprise surplus is the best opportunity he is going to get to balance the budget. Taxpayers can’t afford to be on the hook for any more government debt.
Since 2009, Manitoba’s budget has only been balanced twice. During that time, the government has increased the debt by 170 percent.
By the end of this year, Manitoba’s government debt is projected to be about $31 billion, by which time an individual Manitoban’s per-capita share of the provincial debt will reach almost $22,000.
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Despite recent history, the Manitoba NDP has a track record of fiscally responsible premiers. Gary Doer, who was premier for about a decade, balanced the budget more often than not during his tenure. The Progressive Conservatives only managed to balance the budget once during the last seven years. Kinew can renew that legacy.
Kinew’s biggest challenge will be balancing his new spending election promises while not breaking the provincial bank. And Kinew promised all kinds of new spending in the lead-up to election night.
Most of those spending promises are directed at healthcare. He committed to spending money recruiting more doctors and nurses and opening additional emergency rooms.
In total, all the new spending promises will cost taxpayers about $418 million next year, according to the NDP platform. The NDP also budgeted $165 million in their platform to save Manitobans money by cutting the gas tax. Over the course of four years, the NDP plans to introduce about $2.3 billion in new spending.
That $2.3 billion is a lot of money the government can only get from three ways: raising taxes, going into more debt or finding savings.
Kinew has stated that he will not raise taxes. That’s the right move. Manitobans already pay too much tax and can’t afford to pay anymore.
Instead, Kinew plans on using budget 2023’s emergency fund to lessen his proposed spending’s impact on the deficit. However, the outgoing government claims that this money is already spoken for to pay for new labour agreements.
Borrowing money isn’t an option either; the taxpayer credit card balance is already too high. This year, the interest payments on the debt will cost taxpayers $1.3 billion. That’s $908 per Manitoban. That’s enough money to cut the provincial sales tax (PST) in half. By the time Kinew’s plan brings the budget back to balance, at least $5.2 billion will have been wasted on interest payments.
The NDP platform committed to hiring 400 new doctors. If the Manitoba government didn’t have to spend $1.3 billion on interest payments every year, it could pay the average salary of more than 5,100 new doctors.
More debt is not the answer. Instead, Kinew needs to find savings and cutting corporate welfare is a good place to start.
Kinew’s first step should be to axe the more than $95 million of corporate welfare introduced in the latest budget. This includes an extra $50 million to a venture capital fund, $35 million in business loans, and $10 million to the Manitoba Mineral Development Fund.
From 2007 to 2019, the Manitoba government spent $6.3 billion on corporate welfare, according to the Fraser Institute. Stopping the corporate welfare gravy train and refusing to hand out any future subsidies would put Kinew well on his way to balancing the budget.
It’s time to get to work. Kinew will be pushed by all sides to open up the fiscal floodgates and spend. Instead, he needs to find savings and keep the surpluses going.
Gage Haubrich is the Prairie Director for the Canadian Taxpayers Federation.
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