This column originally ran in the Winnipeg Sun on June 20, 2015
The worst lies always sound so nice. In politics, some of the craftiest examples are: “no problem” and “it’ll be easy.” Here’s the reality, in Manitoba we have a problem and it won’t be easy to fix.
Manitoba is freefalling into debt. The deficit this year is $422 million. The government says the budget won’t be balanced until 2019. This is on top of more than $30 billion in debt Manitoba has already racked up.
These simple facts are provoking some sweet-sounding lies.
The government is holding on to the no-problem lie. It says the economy will grow faster than the deficit and debt. It sounds good. Except that it isn’t true. In fact, it’s worse than the government says.
According to Manitoba’s core budget projections, the provincial debt will be higher by about $1.36 billion by 2019. That’s more than $1,000 in additional debt for every individual Manitoban. At 2.5 per cent interest, that extra debt will cost Manitobans about $34 million every year just to cover interest payments.
That’s the sugar-coated version. The government is also planning to take $45 million out of the rainy day fund. And then the government is counting on nearly $300 million from “in-year adjustments and/or lapse.” Put simply, this is money the government expects to have because expenses will be unexpectedly lower and/or revenues will be unexpectedly higher.
For those who would rather take the medicine straight, the debt will more likely go up by $1.75 billion or $1,348 per Manitoban. Interest payments will go up by $44 million.
The no-problem lie is getting hard to believe, but there’s growing temptation to buy the it’ll-be-easy lie.
This lie is often cited by government opponents based on the idea that the current government is so incompetent that it’ll be easy to find waste and the problem will be solved. This is the equivalent of diet pills and get-rich-quick schemes. The reality is that there are no short cuts.
For those unafraid of hard work, it’s worth sketching out a simple plan.
The government could reduce its projected spending increases by 2 per cent this year and next year and then by 1 per cent in each of the next two years. That’s not a reduction in spending overall, just a reduction in the projected increase in spending. We’ll also dispense with the withdrawals from the rainy day fund and $300 million in fantasy funding.
This plan would balance the budget in the 2016-17 fiscal year with a surplus of $97 million. By 2019, Manitoba would save more than $500 million to pay down the debt.
A simple plan is not to be confused with an easy plan. Some government programs will have to be cut. Some government employees will need to find new jobs. And government labour contracts will have to be settled with cost-of-living increases rather than the annual raises that have been routine in the past.
We have to be honest with ourselves about the choice before us. In 2019, we can fall further into debt by $1.75 billion and increase our interest payments by $44 million per year. Or we can do the hard work now, pay down half-a-billion dollars of debt and use those saved interest payments to pave roads and invest in health and education in 2019. Now is the time to choose which 2019 we want.
Todd MacKay is the Prairie Director for the Canadian Taxpayers Federation
