Fiscal sleight of hand a government tradition

“As part of Budget 2026, we will be reviewing and updating the reporting organizations included in the government reporting entity and getting ahead of forthcoming changes to accounting standards.”

— 2026 Budget speech, Manitoba Finance Minister Adrien Sala

Read enough government budget documents, and if you can keep your eyes from glazing over, you will become aware of one overarching truth — governments tend to play fast and loose with budget numbers.

This isn’t a new phenomenon by any means. And it really has little to do with what political hat you wear — all political parties tend to get creative with public accounts to suit their needs.

Those needs can and do change, depending on a variety of factors, but they tend to boil down to a handful of overarching themes — the promises made by government leadership, expediency and/or opportunity, and political pressure either from the opposition or from public opinion.

Need to make timely financial oversight more difficult? Try delaying the public reports. Want the deficit to appear smaller? Highlight a smaller “operating deficit” while pushing the actual budget debt to the back of the budget document. Or maybe rely on coming increases in federal transfer payments to cover favoured program costs.

There are a couple of well documented examples over the last dozen years of this kind of creative financial manipulation.

Longtime Manitobans may remember the frequent promises made by then NDP finance minister Greg Selinger to balance the provincial budget between 1999 and 2009 — promises he made again, and broke, when he eventually became premier after the departure of Gary Doer.

On the heals of the 2008 global recession, the NDP government of the day started running budget deficits in 2009, after having suspended sections of a Gary Filmon-era law that forbade the government from running deficits, except in cases of natural disasters or other emergencies. But once addicted to deficit spending, it’s difficult for politicians of a sort to wean themselves off of public largesse.

And so, in May 2015, then-premier Greg Selinger and then-finance minister Greg Dewar decided that the government was no longer going to balance the broader public budget, but focus instead on balancing the “core” budget — the revenues and expenditures of government departments.

While it meant that the debt accrued by Crown corporations such as Manitoba Hydro would not be reflected in the province’s budget deficit, the NDP would still be able to take money out of the Crown corporation and ferret it away in government revenues. It just wouldn’t be reflected in the “core” budget.

The very definition of “robbing Peter to pay Paul.”

In 2018 — almost two years after Progressive Conservative premier Brian Pallister came to power — the province’s auditor general of the day took direct aim at the government habit of reporting core government deficits or surpluses in public-facing documents, noting in his report that these figures presented an incomplete picture of government performance.

“The deficit reported in Manitoba’s Summary Financial Statements reflects the annual financial result of the province as a whole, and as a result presents a more relevant picture of the government’s finances than a core government deficit does,” wrote then-auditor general Norm Ricard on Aug. 24, 2018.

It’s worth recalling that Brian Pallister came to power without making any large election promises, saying he needed to “find out how deep the hole is” and claiming Manitoba faced a billion-dollar deficit because of the NDP’s financial incompetence.

This is the same premier who characterized the NDP’s handling of Manitoba Hydro as “the scandal of the century,” specially pointing to the Crown corporation’s rising debt load following the construction of the BiPole Three transmission line and the Keeyask generating station.

It was on this basis that Pallister justified implementing financial austerity measures, and so it was in his government’s interest not to balance the books too soon, if nothing else than to show how badly the Selinger government had screwed over the province.

A good example of this political expediency is the fact that auditor general Ricard blasted the provincial Tories in September of 2018 for the Pallister government’s decision to remove an $82-million surplus from the province’s summary budget. As the CBC reported, removing the WCB from the summary budget process hurt the government’s bottom line, adding a further $347 million to the deficit that fiscal year. This in spite of then-finance minister Scott Fielding’s assertion that the province does not control the activities of the WCB, and shouldn’t take credit for a surplus.

So, when a finance minister says they’re reviewing what “organizations” they intend to include in the budgeting process going forward — like Minister Sala just did in Tuesday’s budget speech — it’s worth taking note.

Even as the province is expected to receive an additional $355 million in federal equalization payments for the 2026-27 fiscal year — a 7.5 per cent increase — for a total of $5 billion, Manitoba will likely remain in a hefty deficit situation going forward. That could well be made worse if Manitoba Hydro suffers from yet another drought-induced deficit this year.

But Premier Wab Kinew has been promising to balance the budget since 2023 when his government took office, even as the fiscal book continues to ooze red ink.

If Kinew and Sala still aim to keep that election promise, they may well have to do a little creative accounting of their own.