Budget 2018: The Most Disappointing Budget Ever

Premier Pallister’s Trump-esque statement that budget 2018 was going to be the “best budget ever” has fallen a bit flat.

Instead of a bold plan to deal with climate change, poverty and our crumbling infrastructure, we are presented with two alarmist scenarios to justify further tax cuts and a lack of decisive action: the recent tax cuts in the US and our provincial debt.

Ever since the Conservatives have been elected, they’ve been ringing the alarm bells about our deficit, and much of the media and business sector lobbyists have been uncritically echoing their concerns, with one recent report labelling the deficit as ‘massive’.

Manitoba does not have a massive deficit. It has a manageable deficit that is decreasing at the same time the economy is growing. In other words, the two elements of our Debt/GDP (Gross Domestic Product) ratio are both moving in the right direction. The top numerator is decreasing and the bottom denominator is increasing.

The ratio tells us how much our total debt is as a percentage of the size of our economy. According to this year’s budget analysis, our Debt/GDP ratio is 34.3%, down from last year’s 35.7%.

Very few economists would argue that a Debt/GDP ratio of 34.3% is of great concern. Nonetheless, we continue being distracted by debt alarm bells and missing other important issues that should be dealt with. In fact, many important problems like poverty and our infrastructure deficit could be greatly improved by deficit spending. In a low interest rate climate, it makes sense to invest in programs that will, in the long run, reduce spending on healthcare, incarceration and the increased cost to repair rapidly deteriorating infrastructure.

Critics will point to the growing possibility that interest rates will continue to increase, raising our debt servicing costs. We have a long way to go before the cost of investing outweighs the benefits, but it is true that there is another way to reduce our deficit.

A deficit is affected by both expenditures and revenues. Maybe revenues need to increase, but few governments consider this possibility. Even the former NDP government reduced taxes by a cumulative $1 billion over its mandate. But this race to the taxation bottom is dangerous because without resource royalties from oil to fill the tax revenue gap – such as enjoyed by Alberta and Saskatchewan – constantly falling revenues can only mean cuts to services and dis-investment in social programs and infrastructure maintenance. Consider what is happening in the US.

The budget speech points to the huge tax cuts in the US as a justification for lowering taxes here. There are many reasons why one would not want to hold up the US as an example to be followed, with the highest rate of income inequality in the G8 countries as the main concern. In some states, ultra-low taxes are wreaking havoc across the board. According to The Economist magazine, Oklahoma and Kansas have cut their education budgets so deeply that teachers have to take part time jobs to make ends meet, and school districts are only able to offer classes 4 days a week. There is an exodus of teachers to higher-paying states. Police cannot fill the gas tanks in their cars and under-resourced prisons are close to the breaking point.

We are far from that point in Manitoba, but it is worrisome that we have to compete with that level of underspending. At some point, Canadian jurisdictions have to say enough to tax cuts. The best budget ever would explain why responsible taxation is needed to provide adequate services to citizens and to implement policies that deal with big issues: crumbling infrastructure, an ageing population, educating children.

Instead we will have, by the end of 2020, an estimated $250 million cut resulting from the indexing of the personal tax brackets ($10 million/year) and the increase of the Basic Personal Exemption ($230 million by end of 2020). The change in the indexation lowers everyone’s taxes, even those who could afford to pay more, and Manitobans in the lowest tax bracket will realize a $42 benefit by 2020; higher income Manitobans will see a $255 benefit over the same period.   The end result is less to spend on a variety of programs that could help Manitobans whose income is so low they don’t pay any income tax. Does the individual benefit really offset the cumulative loss of revenues that pay for services we all use?

Also of great concern is the promise to reduce the PST by 1 per cent by 2020. This decrease will remove a further $300 million from revenues, an amount that is awkwardly touted as offsetting the carbon tax.

The carbon tax is not just a mechanism to remediate the negative effects of climate change, it should discourage us from polluting. Most of Manitoba’s GHGs are produced by our cars and trucks, so it makes sense to tax gasoline. The Conservatives should not try to sugar coat that policy by suggesting that the increase in the basic personal exemption or coming reduction in the PST will offset the carbon tax. It’s unlikely that Manitobans will connect those dots, and they shouldn’t: if you pollute, you should pay. True, if you’re low-income, you do need an offset, but you also need a reliable, publically funded transportation system. Such a system should be supported by the carbon tax.

The less-than-inflation increase in healthcare and education spending represents a cut in these departments, despite the more than $200 million increase in health, social and equalization transfers.

In contrast, the best budget ever would have used the carbon tax to fund bold programs that would electrify our transit system, and reward green industries while lowering GHGs. It would have introduced programs to help low-income Manitobans deal with heating costs, and at least covered inflation in healthcare and education spending.

The best budget ever would not have fixated on the budget deficit at the expense of helping low income Manitobans and infrastructure spending. It would not have presented the increase in the basic personal exemption as the best way to help Manitoba’s poorest. Instead, the best budget ever would have increased EIA rates so Manitoba’s most vulnerable could make ends meet.

The best budget ever would have had the courage to explain why taxes are a much needed tool that allows governments to support a healthy society, and why our debt level is not unreasonable.

Unfortunately, the best budget ever remains somewhere in our future.

Lynne Fernandez holds the Errol Black Chair in Labour Issues at the Canadian Centre for Policy Alternatives, Mb.

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Presentation on Quebec’s $5/ day child care system in Wpg – April 4th 7 pm

In 1997, Quebec launched an innovative experiment with $5/day childcare. Twenty years later, the Québec Association of Centres de la Petite Enfance led a Commission to study the provincial system. The Association is launching their findings in Winnipeg.

Come to learn about North America’s most remarkable childcare system!

Tuesday, April 4th • 7:00 pm in the Chapel, University of Saint-Boniface, 200 Avenue de la Cathédrale

English-language forum

Everyone welcome • Light reception to follow

Sponsored by: Child Care Coalition of Manitoba, Manitoba Child Care Association, Canadian Child Care Federation, Canadian Centre for Policy Alternatives – Manitoba, Department of Sociology (U of M), Women’s and Gender Studies Program (U of M), Fédération des parents du Manitoba, École technique et professionnelle de l’Université de Saint-Boniface, École de travail social de l’Université de Saint-Boniface, Réseau action femmes Manitoba

Poster can be found here: Poster English April 4

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Brewing up Debate: Alternatives to Austerity in Manitoba

Note time change!   Feb 9th start 6:00 pm – come for 5:30 and buy your snack and beverage of choice.


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Violence Against Trans People in Canada: A Primer


By Sadie McInnes

The word trans is used to describe, “Someone who presents, lives and/or identifies as a gender other than the one they were assigned at birth” (O’Doherty 2016: n.p.). It is also an umbrella term for those who are not cis (a prefix or adjective that means “not trans,” derived from the Latin word meaning “on the same side”).

Trans includes people who are “transgender, trans(s)exual, non-binary, genderqueer, agender, bigender, genderfluid, intersex, and sometimes those who crossdress” (Ibid.). The experience of being trans is different for everyone; as O’Doherty (2016: n.p.) writes, “some people will want to undergo surgeries and changes to their appearance, others will not. It is important to respect and support the terms people use to describe themselves and the decisions they make for their own bodies.” Continue reading

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New Report: What does it take to house a Syrian Refugee?

Supporting Refugee Housing and Resettlement Beyond the Syrian Refugee Crisis

By Ray Silvius, Hani Ataa Al-Ubeady, Dyland Chyz-Lund, Carlos Colorado and Emily Halldorson

In this report we demonstrate the specific constellation of events, initiatives, and supports that contributed to housing refugees from Syria who arrived in Manitoba beginning in November 2015.  Relative to those of other recent refugee arrivals to Canada, the ‘Syrian Case’ has been unique, insofar as a considerable amount of national attention was devoted to the matter.  The arrival of Syrians has been politically polarizing–indeed it became a decisive issue during the 2015 federal election in Canada and served as a touchstone for arguments for and against immigration to Canada, in general, as well as as supportive and reactionary sentiments about the presence of Muslims in Canadian Society.   Read more…..

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Carbon Pricing and Climate Mitigation Backgrounder Part I

By James Magnus-Johnston

The federal government has stated that if provinces don’t impose a price on carbon, it will impose its own price by 2018.  Trudeau has stated that “if neither price nor cap and trade is in place by 2018, the government of Canada will implement a price in that jurisdiction.”

Eight out of ten provinces will be designing their own mechanism to collect and “recycle” revenues under the new “Pan Canadian Framework on Clean Growth and Climate Change.” While Saskatchewan and Manitoba have chosen not to sign for now, Manitoba Premier Brian Pallister has stated support for a carbon price. He is currently withholding adoption until an agreement is reached over long-term health care funding. Continue reading

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Pulling back the curtain on University budget reports

By Cameron and Janet Merrill

The need to “tighten our belts” is heard so often in the public sector, it is pretty much accepted without question. This is certainly the case for Canadian universities: actions such as raising tuition fees, cutting programs, increasing class sizes and workloads, closing defined benefit pension plans, cutting salaries, discontinuing library subscriptions, and replacing tenure track positions with casual academic staff are seen as regrettable but necessary when claims of challenging fiscal times are repeated over and over. Continue reading

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