Manitoba has tough choices as it faces $1.3B deficit: experts

With both Manitoba and Canada facing deficits far exceeding what they had hoped, experts warn drastic measures will be needed but fear Manitobans will be the ones paying.

This comes as Manitoba Finance Minister Adrien Sala presented a financial update Monday, projecting a $1.3 billion shortfall. A deficit more than $500 million over what was forecasted.

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“We're seeing significant cost overruns in health, and to put it simply, we're seeing too much money being spent in the boardroom rather than at the bedside,” Sala told reporters Monday.

But the province isn’t alone.

In Ottawa, the fall economic statement revealed a $61.9 billion deficit—more than $21 billion over what the feds promised last year. This, the government said, is driven largely by $18 billion in Indigenous claims expenses.

The feds also listed $24.2 billion in new spending over six years, including $1.3 billion for border security.

The red ink has Manitoba Chambers of Commerce President and CEO Chuck Davidson concerned.

“It’s overspending,” he said. “It's a recognition that we have an easy time spending money, but we've got a more difficult time in terms of raising the revenues that are needed.”

He said deficits like this—both provincial and federal—can dissuade businesses from setting up shop locally.

“We're not in sort of robust economic times,” said Philippe Cyrenne, an economics professor at the University of Winnipeg.

He said the question now is what the two levels of government will do with these deficits—push them down the line or pay them off now.

“That usually means either cutting spending or raising taxes,” he said.

The Canadian Centre for Policy Alternatives (CCPA) said the province should reverse changes to personal income taxes, raise the corporate income tax rate, and reinstate the gas tax.

“The size of the deficit in the past two fiscal updates shows that this loss of revenue is unsustainable—these tax cuts must be reversed,” Molly McCracken, Manitoba director of CCPA, said in a release.

Sala said the current deficit is lower than the nearly $2 billion shortfall last year. He said the province is auditing most regional health authorities and is finding some savings.

“We've already saved $4.7 million in printing services. We've saved $3.6 million in office supplies and furniture, and we've saved $14.6 million on workstations inside both government and the broader public service,” Sala said.

Despite the deficit, Sala said the province is still “100 per cent” committed to balancing the budget by 2027. But to reach that target, Davidson worries Manitobans will be the ones paying.

“We still fail to see exactly what that path looks like,” he said. “It's not as simple as going from a $1.3 billion deficit to balancing the budget in two years without some sort of drastic measures.”