Manitoba's 'alarming' deficit soars above $1B

Manitoba Finance Minister Cameron Friesen delivered a grim fiscal update on Wednesday, saying the province's deficit has surpassed $1 billion.

The $1.012-billion deficit is 52 per cent higher than what was presented in the March 2016 fiscal update by the then-governing NDP, Friesen said, accusing the New Democrats of misleading the public.

"In the lead up to the 2016 election, Manitobans were presented with an incomplete picture of the province's financial situation," he said.

"We now know the projected year-end deficit for 2015-16 exceeds $1 billion, an increase of $346 million over what was presented a mere two months ago.

"Seems they've misled the province. I can't speak to why, perhaps they put their own priorities first."

Last week, Premier Brian Pallister compared the process of examining Manitoba's books to peeling back the layers of an onion, saying he was hopeful his team was "near discovering how deep the hole is."

On Wednesday, Friesen called the NDP's reporting on the deficit "reckless," and he believed it was "not accidental they withheld information."

"Over the last decade, core budget expenditures were exceeded every single year," he said.

"The consequences of this pattern of overspending budgets are alarming. It will take time to undo the damage we have inherited and to correct the course, but we are confident in our team's ability to deliver for Manitobans."

• NDP to tax wealthiest Manitobans, summary deficit jumps $351M​
• Manitoba PCs tell government departments to curb spending, hiring​

Friesen said he will provide more details when the Progressive Conservative government tables its budget on May 31.

He said the PCs remain committed to balancing the provincial books and introducing tax reforms, including dropping the PST by one per cent in their first term.

A news release from the party said the budget will "put the province back on the course toward a strong economy able to protect and improve the front-line services."

Pallister said he hopes the budget will pass before the summer recess.

'Harper-style austerity'

Shortly after Friesen's news conference, finance critic James Allum ripped into his claim the NDP low-balled the province's deficit numbers and lambasted the Tories for not providing any proof.

"It's no surprise that Mr. Friesen, at the behest of Mr. Pallister, would come out today with a number but no details, no information," he said. "This is a government that came in on the issues of accountability and transparency. We saw neither today.

Manitobans are going to pay a very heavy price. There are very big storm clouds in the future.- James Allum

"This is the oldest political trick in the Tory playbook — to drive up the deficit with no information, no numbers, no details, and then set Manitobans up for massive cuts to come.

"We might not see it happen this term, but certainly by the PCs second term in government, the Tories will "set up a Harper-style austerity that'll take away the programs and services that Manitobans rely on, and result in significant unemployment," Allum said.

"Manitobans are going to pay a very heavy price. There are very big storm clouds in the future."

He said the NDP stands by the deficit numbers it put forth in March and all of the financial accounting it has stated since coming into government. The province's auditor-general confirmed those numbers, he added.

"It's incumbent upon Mr. Friesen and Mr. Pallister to indicate why [the deficit is] larger," Allum said.

"He didn't do that."

Promise to cut PST still on 

The premier says he is committed to cutting the provincial sales tax, despite the province's growing deficit.

During the recent election campaign, Pallister vowed to cut one percentage point off the sales tax before the next election. Some other promises, however, may be affected, he said Wednesday. 

Pallister says the growing red ink could have an impact on the timing of some of his plans such as the pledge to raise income-tax brackets along with the rate of inflation, starting next year.

He said that might be pushed back.

Pallister said a priority now will be to make sure the new numbers don't drag down the province's credit rating. 

"This is dangerous because it takes millions of dollars away from priority things that we want to invest in and support. Like frontline services and wait times and … reducing ambulance fees," he said, adding that a dip in the credit rating could have an impact on Manitoba taxpayers due to higher interest rates. 

"There's only so much money in the pot. If we have to send it to happy money lenders in Toronto and New York it isn't here to help Manitoba seniors." 

'It's a big number'

"It's a big number, there's no doubt about that," said University of Manitoba's Asper School of Business Dean Michael Benarroch. "It's not the first time we've had such a big number. We had one a few years ago when we had the flood, but my biggest reaction was, what happened over the last four months to turn that from somewhere around $700 million to over a billion?

"Are things being reported now that weren't in the finances before or did the NDP go on a spending spree in the last few months? At this point, because this details weren't given, it's just kind of a shock to see it change so much in a short period of time."

Benarroch cast doubt on the government's abilities to keep other promises, in addition to cutting the PST. 

"If the Conservatives want to continue to spend a billion dollars on infrastructure a year they're going to be very challenged to try and balance the budget and also lower the PST."