Deficit swells, province orders health audits

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This article was published 23/03/2024 (919 days ago), so information in it may no longer be current.

Manitoba’s finance minister has ordered audits into the finances of several health regions, including Prairie Mountain Health, as the projected deficit for the 2023-24 fiscal year ballooned to almost $2 billion.

Addressing media on Friday, Adrien Sala presented a third-quarter fiscal update showing an anticipated shortfall of $1.997 billion, up from the $1.634-billion figure he presented in December.

“I want to be clear that the increases in health-care expense were spurred by decisions made by the previous government, but were unbudgeted,” Sala said.

“They were not accounted for in budget 2023 and they were not accounted for in the first quarterly update as we headed into the election.”

As he did the last time he provided a fiscal update, Sala said the extra health expenses were from new collective agreements with workers that were not budgeted for by the previous Progressive Conservative government.

In an attempt to get a handle on health spending, Sala said the Northern Regional Health Authority will have a forensic audit of its finances while Shared Health as well as the Winnipeg, Interlake-Eastern and Prairie Mountain health regions will get less in-depth “comprehensive” financial audits.

Sala did not say what factors influenced the decision to order the audit other than Manitoba needing to get better value for its health spending and declined to offer specifics about what they would entail.

By email, Prairie Mountain Health chief financial officer Dan McGregor said “we welcome the opportunity to receive feedback and advice regarding industry best practices as part of our commitment to continuous improvement.”

The minister referenced longstanding lawsuits against the province being settled as another driver of the deficit, though multiple attempts by reporters to get Sala to divulge information about the suits in questions were unsuccessful.

However, a document released Friday tied the lawsuits to the justice and families departments.

Declining revenues are another factor, with Manitoba Hydro’s revenues expected to be $30 million less than last projected in December. Hydro is now expected to have a net loss of $640 million for the fiscal year.

On this front, Sala accused the Tories of having tried to hide the true picture of the Crown corporation’s finances heading into last October’s election.

The only Crown corporation exceeding its revenue projections for 2023-24 is Manitoba Liquor and Lotteries, projected to earn $52 million more than originally budgeted for.

A spokesperson for Sala’s office told the Sun after the media call that those figures are due to good sales for MBLL during the holiday season.

The 14-cent-per-litre gas-tax holiday implemented on Jan. 1 by the NDP is said to have lowered revenue projections by $82 million and the government is arguing that it led to Manitoba having the lowest inflation rate in Canada in February.

The finance minister wouldn’t say Friday whether his government will extend the holiday after the promised six-month implementation and that more details would come toward the end of that period.

High interest rates were listed as another factor in the deficit. Manitoba’s net debt-to-gross-domestic-product ratio has risen to 37.5 in 2023-24, up from the 34.6 per cent projected in the 2023 budget.

The gross domestic product by itself is declining by 2.2 per cent, up from the 1.3 per cent decrease projected in the 2023 budget.

On April 2, the government is poised to deliver its first budget since the election.

Despite the previous year’s deficit, Sala said he thinks Manitobans are going to be “very happy” with what his government announces that day and that his government is mindful of its promise to balance the budget by the end of its first term.

Though the fiscal document released Friday says Manitoba Agriculture is expecting a $130-million decrease in indemnity payments tied to reduced insurance claims, it is being offset by a reduction in revenue.

Manitoba Education is projecting a $77-million decrease in expenses compared to last year’s budget, partly attributed to a reduction in pension expenses and partly due to Assiniboine Community College receiving funds this year that will be spent in future years.

Education also saw a $73-million decrease in expenses tied to the child-care agreement between Manitoba and the federal government.

Because of a better than anticipated 2023 flood season, the province is forecasting a $71-million decrease from the budget in emergency expenses.

Reached by phone on Friday, Progressive Conservative finance critic and Fort Whyte MLA Obby Khan said the NDP are doubling down on a false narrative to shift the blame for overspending and setting the table for further years of deficit.

“The (health) spending was budgeted for in the budget,” Khan said. “They were either in the health line or they were within the internal service agreements within the budget. This is the current minister looking to pass the buck.”

He said the NDP have borrowed more than $10 billion since coming into office and Manitobans should be worried about that.

“They need to be open, honest and transparent with Manitoba about what’s actually happening,” Khan said. “You can’t go out there and light your hair on fire and say everything is bad and then talk about … (how) it’s going to be an amazing budget.”

Khan sent the Sun links to several orders-in-council authorizing government borrowing since the NDP took power.

They approved $8.5 billion in borrowing for general purposes, $750 million in borrowing for Manitoba Hydro and $710 million in borrowing through a special warrant for health and education spending.

Those orders authorize borrowing, but do not list how much of that money has been borrowed to this point. The document released with the third-quarter update said the special warrant was issued to cover higher than expected costs.

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