Deficit numbers can’t be trusted

Hey there, time traveller!
This article was published 07/12/2023 (693 days ago), so information in it may no longer be current.

“I think that Manitobans want to remove this continuing increase in the debt. Because if you continue to increase debts, all you do is chew away at social services.

— Former Filmon-era Finance Minister Clayton Manness, August 1988

“It’s painful to see that kind of a deficit when you take over as a new government because it puts you in a deep hole.”

— Former NDP Finance Minister Greg Selinger, November 1999

“It’s not one isolated incident that we can point to. This is an overall failure to properly manage the finances of the province.”

— Former PC Finance Minister Cameron Friesen, May 2016

“They failed to properly plan for this fiscal year. They also very clearly attempted to obscure what was actually happening here with our fiscal situation.”

— Current NDP Finance Minister Adrien Sala, December 2023

If you read through the quotes above — uttered by newly-minted finance ministers of the day who have come and gone over the last several provincial administrations — you might well come to the conclusion that Manitoba has been led by a series of fiscal charlatans.

And you might well be right.

The problem is that every incoming government plays fast and loose with the government books to make everything look worse than it really may be.

Recall when the former PC government under Brian Pallister first came to power in 2016. They had made very few election promises that year, stating that they simply didn’t believe the numbers coming out of the NDP government of Greg Selinger.

In March of that year, the Selinger government released a third-quarter update in that pegged the provincial deficit at $646 million, up from earlier forecasts of $421 million. The update stated the province’s economic growth had slowed to two per cent from 2.5, and tax revenue had declined by $148 million.

That same report also showed the summary deficit, which includes Crown corporations and government agencies, was projected to spike to $773 million by year’s end — or $351 million higher than predicted the previous April.

Lo and behold, Pallister’s finance minister pegged the projected Manitoba deficit at $1.011 billion – significantly higher than the Selinger government’s original estimates.

It’s also worth noting that only a few months after Friesen roasted the NDP for a billion-dollar boondoggle, audited statements placed the actual spending deficit at $846 million, far closer to the $773 summary deficit proposed by the outgoing NDP government.

Compare that to the stated $262 million deficit decried by the newly-elected government of Gary Doer in 1999. Brandon Sun’s editorial writer of the day said the outgoing Filmon government’s shortfall raised “huge questions about the Filmon Team’s commitment to fiscal prudence in its last months of governing,” and represented “a significant spending problem … that must be solved now.”

After more than two decades of finger pointing and deficit spending, fiscal prudence seems like such a quaint idea, doesn’t it?

Just yesterday, only a few days after Premier Wab Kinew promised consistent and better spending for Manitoba’s municipalities during the recent Association of Manitoba Municipalities conference here in Brandon, he and his new Finance Minister Adrien Sala offered up a whopper of a fiscal update, stating that the projected deficit for the current fiscal year is expected to swell to $1.6 billion, up from the $363 million projected by the outgoing Stefanson government.

Sala even echoed Cameron Friesen’s comments with his own “reckless spending and mismanagement” by the Tories quip.

And yet, like Gary Doer before him, Kinew maintained they would keep nearly all of their spending promises, and balance the budget in one term. Reporters were right to question how he expects to do so.

It is likely true that a sluggish economy has contributed to a revenue shortfall of $719 million below estimates, and it’s also true that drought conditions have contributed to lower-than-expected revenue from Manitoba Hydro. And when you factor in new collective agreements with provincial workers and inflation, it’s not unfair to state the numbers have likely changed. But a deficit of $1.6 billion seems out of whack. All it did was serve to characterize the Tories as a bunch of liars.

Of course, Opposition Leader Heather Stefanson fired back that the NDP numbers were false, and exclaimed that the NDP are merely “playing politics” and “trying to inflate the numbers.”

Though she could not offer any alternative numbers beyond her government’s announced $270 million surplus for the 2022-23 fiscal year, released just before the election, Stefanson likely knows of what she speaks. The Tories were equally guilty of inflating deficit numbers to kick the NDP on their way out the door in 2016.

The reality is that provincial governments have a lot of leeway when it comes to cooking the book …. sorry, planning the budget. They can spend cash they don’t need to in order to make deficits look higher, or find ways to bend and weave the numbers so that they look less daunting to the public. And it’s mostly done for political gain and partisan gamesmanship.

We’re talking a numbers game to the tune of hundreds of millions of dollars.

Our advice? Take everything you just heard this week with a rather large helping of salt.

— Matt Goerzen, editor