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$500M snatched from budget

Population dispute may cut federal funds to Manitoba

Manitoba Finance Minister Jennifer Howard is in discussions with her federal counterpart Jim Flaherty.

BORIS MINKEVICH / WINNIPEG FREE PRESS ARCHIVES Enlarge Image

Manitoba Finance Minister Jennifer Howard is in discussions with her federal counterpart Jim Flaherty.

The province stands to lose $500 million in federal transfer payments over the next few years because of a dispute with Ottawa over Manitoba's population, Finance Minister Jennifer Howard says.

The discrepancy could also scuttle a pledge by the NDP to slay the deficit in two years.

"It is a huge challenge for us," Howard said Monday after she met with federal Finance Minister Jim Flaherty in Meech Lake, Que.

"We're going to have to take another look at what we're spending," she said. "That kind of revenue change means that we're going to have to look at areas like health care and education that people need. It may mean we're going to have to slow down on some of the tax changes that we've committed to."

Howard said the dispute centres on the province's belief that Statistics Canada underestimated Manitoba's population by 18,000 people in the census in 2011, a year of record flooding in southern Manitoba and the Interlake.

"What's most unfair about that is we know those people exist," Howard said. "We know from the number of people filing income tax in Manitoba that it's grown at a faster rate than StatsCan says the population is growing. We know because in the census year we had the flood and it would stand to reason you'd miss more people in a flood year."

She said because federal payments to the province are, for the most part, calculated on a per capita basis, the province will lose $37 million in federal funding in the current fiscal year -- the budget year ends March 31.

"They're clawing back money now for the past couple of years, but we have to pay it all this year," Howard said.

Going into the next budget, Howard said the population "under-accounting" will cost the province about $100 million in federal payments.

"That is a big hole in the 2014-15 budget," she said. "With a few months left to put it together we're going to have to find ways to address it if we can't get this corrected with Statistics Canada."

A year ago, Premier Greg Selinger said his government would need until 2016-17 to balance the books. Until then, the government had stuck to a more than two-year-old pledge to balance the books by 2014-15.

Howard said the 2016-17 target is in danger. "The long and short of it is that they've deleted 18,000 Manitobans and we still have to provide health care and education to those people."

"When you look forward, the numbers that we had been counting on in our medium-term forecast, that shows us in coming into balance in 2016-17, the revenue is going to be at least $100 million down next year.

"It's reasonable to expect that it would be $100 million down in future years. Over the next five years, that's half a billion dollars that we're going to have to find. Getting to balance in 2016-17 is going to be extraordinarily challenging if we don't have the revenue to do that."

Manitoba is the only province with a conflicting population count, she said.

Howard was in Meech Lake Monday with her provincial and territorial counterparts to learn the Harper government's level of transfer payments to the provinces in the coming year and discuss the future of the Canada Pension Plan. Federal transfers include health, social and equalization payments.

Howard said regardless of Ottawa's decision, the province will still work toward the 2016-17 target.

"Balancing in 2016-17 (means) a $50-million surplus. If I now have $100 million in less revenue, that now becomes a lot harder. I don't think it's impossible, but it means some very tough choices."

Progressive Conservative finance critic Cameron Friesen said the population miscount excuse is beyond belief.

"No one in Manitoba should have a lot of faith in the power of the NDP government to forecast anything," he said.

Friesen said the NDP is mired in red ink because it can't rein in spending.

He said the year-end results for 2012-13 showed the government went $186 million over its original core-deficit projection of $504 million because of its spending problem.

"It's been two years since the 2011 stats came out and this is the first time the government is raising it publicly that they're taking issue," Friesen said.

"I think what's clear is that this is a government looking at places to lay blame."

Howard said the government only became aware of the population discrepancy last summer and in the past few months has raised the issue with Flaherty and Prime Minister Stephen Harper.

She said the province will ask Statistics Canada to look at the issue.

"We believe that for whatever reason there is an error here," she said, adding the province will help pay for the proposed study.

"We'll live by the results," she said. "But I cannot give up on a half a billion in revenue over the next few years."

bruce.owen@freepress.mb.ca

History

Updated on Tuesday, December 17, 2013 at 7:08 AM CST:
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