Manitoba projects lower deficit of $2B as ‘significant uncertainty’ remains

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This article was published 16/12/2020 (1427 days ago), so information in it may no longer be current.

After going on a wild roller-coaster ride since the pre-pandemic budget in March, Manitoba’s deficit is expected to be nearly $1 billion lower than the $2.9 billion projected in September, the province said Thursday.

Finance Minister Scott Fielding released an updated outlook for the 2020-21 fiscal year that shows the projected deficit is $2.048 billion.

Before the budget was tabled on March 19, a week after the World Health Organization declared COVID-19 a pandemic, the province was on track to have a deficit of just $220 million.

While the deficit will be nearly 10 times that, thanks to lost tax revenue and mounting bills associated with responding to the pandemic, it’s a rosier picture than the almost $3-billion deficit the province forecast in September. It’s nowhere near the $5-billion, worst-case-scenario deficit the government predicted earlier this year. In the spring, the Manitoba legislature approved supplementary borrowing of $5 billion to address pandemic funding needs.

The province credits its improved financial outlook to receiving federal transfer supports of $648 million, to offset nearly 20 per cent of the $3.2 billion the government said it has promised to spend on the health, social and economic impacts of the pandemic.

“We are striving for balance,” Premier Brian Pallister said at a news conference with Fielding.

NDP Leader Wab Kinew accused Pallister of failing to prepare for a second wave of the pandemic while holding onto “an austerity agenda.”

“For the premier to come out and make it seem like a good news story when his cuts and failure to prepare have caused this second wave to be so damaging to our province, just shows how out of touch he is,” Kinew told reporters.

Fielding said the two financial priorities are to protect Manitobans and help businesses that have been affected by COVID-19. The government will spend $633 million more on health care than what it had initially budgeted. It plans to continue spending to support individuals and businesses even as the COVID-19 vaccines roll out, he said.

Pallister said Manitoba has “the most generous programs per capita, outside of some programs in P.E.I., in Canada” to support small businesses, and is working on a strategy with the business community to introduce another $50 million in funding.

“I think that what the vast majority of our small business people would like is that we beat COVID together, so they can get back to doing what they do best, which is providing goods and services to Manitobans,” the premier said.

“They’d much prefer us to be able to reopen safely as soon as possible. So we’re continuing to make that our No. 1 priority, focus on getting those COVID numbers down as soon as possible to save lives and also, as a consequence, to help our small business community bounce back.”

The province is benefiting from reduced borrowing rates because it has $800 million in a rainy day fund, Pallister said.

NDP finance critic Mark Wasyliw said the Progressive Conservative government is benefiting from “rock bottom” rates thanks to Ottawa and the Bank of Canada, while struggling Manitobans go bust.

“They’re sitting like Scrooge McDuck on a bank account with a huge pile of money and they’re refusing to spend it because of one man’s ego and political legacy,” Wasyliw said of Pallister, whose stated mission since becoming premier is to balance Manitoba’s books.

“There are people who are losing their livelihood, who have built businesses from scratch, and they’re seeing their dreams disappear on them overnight,” through no fault of their own, the finance critic told reporters Thursday. “We said, ‘You’ve got to shut down your business to keep your neighbour safe’ and they said, ‘I’ll gladly do it’. Where is their government when they need it?”

Fielding said Manitoba will spend $633 million more than pre-pandemic budgeted amounts on health care, including $522 million for personal protective equipment.

Liberal Leader Dougald Lamont said nearly 10 per cent of the province’s PPE investment was unusable. “The Progressive Conservatives are currently being sued over $50 million in masks that could not be used, and they bought $1.2-million in recalled hand sanitizer made from fuel-grade ethanol,” Lamont told reporters.

Most of the province’s promised pandemic spending isn’t new; it comes from the federal government and provincial programs that have been cut, said Lamont.

The NDP’s Wasyliw contends that much of it may never get spent or help the vulnerable Manitobans whom Fielding says they want to help.

“People are getting evicted, have their rent going up by 30 per cent and hydro (rates) are going up by three per cent,” Wasyliw said. The province has made cuts to social assistance, the civil service, schools and post-secondary institutions while introducing tax cuts that primarily help wealthy Manitobans, the finance critic said.

“When you make these cuts, you put people out of work…You go into a tailspin and it makes it harder to pay your debts because there are fewer taxpayers and less money in the community.”

The fiscal update notes that at $2 billion, Manitoba is still facing a record deficit. It warns that the fiscal year is not over and the impact of a possible “third wave” of COVID-19 infections is unknown.

“There remains significant uncertainty in forecasting the remaining months, as Manitoba continues to realize the fiscal and economic impacts of the COVID-19 second wave and associated public health restrictions,” the mid-year report said.

The province’s revenue decline is largely related to decreased projections for income and other tax revenues, and decreased revenue from the Manitoba Liquor and Lotteries Corp., which has closed its casinos. Shutting down the casinos has cost the province about $40 million a month, Fielding said.

It’s uncertain when they will be able to reopen, along with the rest of the economy, even with the arrival of COVID-19 vaccines.

“These forecasts remain speculative because the trajectory of the pandemic in Manitoba and beyond our borders remains uncertain,” the fiscal update said.

— With files from Katie May

carol.sanders@freepress.mb.ca

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