Wab Kinew aims to erase Manitoba deficit ‘as soon as possible’

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The Manitoba government is looking to erase its budget deficit “as soon as possible,” but must balance that goal with the need for significant investments in health care, Premier Wab Kinew says.

The provincial New Democratic Party, which swept to a majority victory in October’s election, will release the first budget of their mandate on April 2, the Premier announced Monday at an Economic Club of Canada event in Toronto.

“We were elected to fix health care, and we’re going to need to make those investments. And we know that Manitobans are sick of austerity and sick of cuts,” Mr. Kinew told reporters after the event. “Growing the economy is a big priority, but Manitobans also want us to be balanced when it comes to the books.”

The fiscal situation in Manitoba deteriorated over the course of 2023. Within weeks of taking power, the NDP projected the deficit for this fiscal year would more than quadruple to $1.6-billion, compared with the budget estimate from the previous Progress Conservative government.

That would be the largest deficit in Manitoba’s history in nominal terms, not including the first year of the pandemic. The NDP blamed the PCs for not adjusting their fiscal projections as necessary in an election year.

The province’s fiscal update said the deterioration was owing to several factors. Tax revenues were lower than projected because of a slowing economy, while Manitoba Hydro swung to a financial loss as low water conditions hampered export sales of electricity. The province also saw a substantial increase in health care expenditures, accounting for higher wage settlements with workers and overtime pay.

Under the NDP, Manitoba has also suspended the provincial gas tax for at least the first six months of this year, which is curbing expenses for drivers, but will also result in a net loss of $82-million in projected revenues this fiscal year. The government has also asked Manitoba Hydro to find a way of freezing electricity rates for a year, as promised in the election campaign.

The coming budget is “going to have the investments in health care that we campaigned on, it’s going to have important affordability measures,” Mr. Kinew said.

While the Premier’s speech was light on specifics in the budget, he said the document would focus on finding ways to strengthen the province’s pillar industries, to bulk up supply chains for a low-carbon economy and to bring more people into the labour force. After the budget, a delegation from Manitoba will travel to Washington, aimed at building the province’s relationship with the U.S., which Mr. Kinew described as his “most important trading partner.”

As part of his visit to Toronto, the Premier also appeared at the annual PDAC mining conference to sell Manitoba as an investment location for resource extraction.

“Manitoba is a stable, friendly jurisdiction, and you can source minerals, advanced manufacturing products with higher environmental standards, higher labour standards and higher respect for human rights than any other jurisdiction in the world,” he said at Monday’s Economic Club event.

Manitoba has a reputation for being a relatively diversified economy that doesn’t ride the boom-and-bust cycles of its Prairie neighbours. Still, like other provinces, Manitoba faces a sluggish year of growth as restrictive interest rates weigh on economic activity.

CIBC Capital Markets recently projected that Manitoba’s economy would grow by 1 per cent this year – higher than national growth, but weaker than in Alberta and Saskatchewan. Other private-sector forecasters have projected meagre growth of less than 1 per cent in Manitoba this year, in line with general weakness across the country.

“The biggest change since our last provincial outlook may well be on the fiscal side,” says a January report from Marc Desormeaux, principal economist at Desjardins Securities. “That leaves less room to offer economic support if conditions dictate and may put hydro rate relief announced during the recent election campaign on ice.”