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Budget highlights progress: Fielding


Budget 2020 continues moving Manitoba forward and building a brighter future for all Manitobans, Finance Minister Scott Fielding said as he presented the provincial budget in the Manitoba legislature last week.
“In just four years, Manitoba has made tremendous progress on the road to recovery,” Fielding said.
“Budget 2020 continues the hard work by focusing on the issues that matter most to Manitobans - by providing better services, protecting our environment, making our communities stronger and safer, making life more affordable, and building a better, brighter and more prosperous future for all Manitobans and their families.”
The province is introducing a “made-in-Manitoba Green Levy” effective July 1, at a flat $25 per tonne. In order to offset the impact of the levy, the government will lower the PST rate to six per cent as of July 1.
“Budget 2020 delivers significant tax reductions which, combined with the 2019 tax cuts, are the largest in Manitoba history. Manitoba will be the only province that has cut its sales tax in recent years and we’ve done it twice,” Fielding said.
“This PST rate reduction will ensure that all who pay the Green Levy will benefit through a lower sales tax rate.”
Combined with last year’s PST rate reduction to seven per cent, Fielding estimated this additional reduction and implementation of the Green Levy will grow the provincial nominal GDP by $108 million. It will increase labour income by an estimated $50 million annually and generate an estimated 1,042 person-years of employment growth.
The PST reduction is expected to create an average annual savings of approximately $345 per household, with approximately 510,000 households in Manitoba. Combined with an additional $131 in savings estimated to be passed along by Manitoba businesses, it results in total average savings of $476 per year to Manitoba households.
The budget also included a replenishment of the rainy day fund to the tune $300 million by the end of 2020-21. This will result in a balance of $872 million, at which point the rainy day fund will be fully funded.
“Our province will be in a far stronger position to respond to unforeseen emergencies and we have never been as prepared to deal with those situations,” Fielding said.
“While the previous government left Manitoba without the resources to respond to natural disasters, our government is replenishing the rainy day fund.”
Additionally, the emergency expenditures contingency is increased to $100 million, which is effectively $86 million higher than it was in 2016, and an incremental $45 million available for infrastructure projects aimed at improving environmental resiliency. Budget 2020 also allocates a total of $101 million for the Lake Manitoba and Lake St. Martin Outlet Channels Project.
The expected provincial deficit for Budget 2020 has been reduced to $220 million, an improvement of $140 million over the previous year. Fielding also reconfirmed the government is on track to balance the budget within its current term. The province is also forecasting that its debt-to-GDP ratios will be declining over the next four years, which is a significant signal of improving fiscal health, the minister noted.
“Supported by strong revenue growth and responsible expenditure controls, we are now one step closer to delivering a balanced budget during the current term of government,” Fielding said.
“We have modestly exceeded our plans each year and we are predicting, for the fourth year in a row, an improvement to our earlier forecasts. We have reduced the deficit each year, while making record investments in health, in education and for families. We have made life more affordable for Manitobans by cutting the retail sales tax rate, by ending income tax bracket creep and by eliminating many other fees.”
Budget 2020 provides record investments in health care at $6.8 billion and education with $1.3 billion in operating grants to public school divisions. The Manitoba Health, Seniors and Active Living budget includes funding for a range of capital projects, such as the Health Sciences Centre master campus plan and St. Boniface Hospital redevelopment, with a total strategic infrastructure budget of $1.8 billion. A $160-million investment on capital projects in the Kindergarten to Grade 12 education system will result in 4,425 new classroom spaces either open or under construction by the end of the 2020-21 fiscal year as the government builds seven new schools and several major additions and renovations.
Following the reading of the budget, NDP leader Wab Kinew was in the media saying the government needs to step up during the pandemic, suggesting the province should top up the income for people on employment insurance and help with child-care fees.
Kinew alsdo questioned the need for a PST cut.
“It doesn’t seem like it makes a lot of sense now,” he said, adding tax savings would be minimal since most expenses are PST-exempt groceries.
The Manitoba Liberals say the government’s budget calculations are based on extremely optimistic projections for revenue that do not take into consideration the impacts of measures to combat pandemic COVID-19.
As well, Liberal leader Dougald Lamont said the claim that Manitoba’s economy is strong ignores the fact that more than half of Manitobans are on the brink of insolvency, low oil prices, and the effects of the COVID-19 pandemic.
Many of the PCs economic and revenue estimates are no longer accurate, he said. The government’s estimate of 1.3 per cent GDP growth and low unemployment rate is no longer likely. Additionally, their prediction for income tax revenue and from Manitoba Liquor and Lotteries is too high - a revenue increase of $712 million is unlikely to materialize because of a possible pandemic recession.
The budget acknowledges the wild variation, and that the COVID-19 pandemic could result in a $682-million in costs if GDP drops by 2.4 per cent. In China and other countries, GDP has dropped by 10 per cent, he said.
“The PCs are managing to cut, freeze, and run up debt all at the same time. It is a trifecta of fiscal incompetence at a time of crisis,” Lamont said.
“The fact that the NDP held up the budget is shameful, but the fact that the PCs have done nothing but tack on a vague promise of help while cutting everything else is an abdication of leadership.”
Manitoba Liberals say a complete economic update is still required.
The PCs are, once again, not adequately funding health care at a time that we are seeing major changes in the system and an expected surge in the system as a result of COVID-19, Lamont said. In this year’s budget, there is no clear indication of how the government will address the COVID-19 pandemic and whether any investments will be made to address needs in health care.
As well, Lamont said the budget does not properly address environmental concerns
To view Budget 2020 documents, visit manitoba.ca/budget2020.