Manitoba's core infrastructure investment to rise slightly in 2017-18

MHCA
April 19, 2017
By MHCA
April 19, 2017 - There were no big surprises in the Pallister government’s budget. And the response, generally, has been that it was a moderate, middle-of-the-road blueprint for spending in 2017-18.

“We were glad to see that the provincial government has held to its pledge to keep core infrastructure investment at more than $1 billion,” said MHCA president Chris Lorenc said. “We will work within the government’s promise to invest at least $500 million annually in the highways capital budget. But we also sent the government the message that this investment needs to be protected against inflation, annually, with incremental increases to that budget line.”

The Pallister government has set aside $1.117 billion for core infrastructure investment, composed of $747 million for roads, highways, bridges and flood protection and up to $370 million for municipal, local and “other” provincial infrastructure. This compares to 2016-17’s expenditures, currently forecasted to come in at $1.087 billion, according to the budget.

“Investments in strategic capital stimulate the provincial economy, generate employment and increase household and business incomes,” Budget 2017 papers note. “It is important that the investment decisions are made in the context of stimulating the economy, are for the public good, but are also financially sustainable over the long term.”

Budget 2017 is being called “Responsible Recovery” – dove-tailing from 2016’s spending plan, which was dubbed “Correcting the Course.” It shows progress on priorities that have led the province’s spending and fiscal strategies, including reducing the annual deficit and curbing the growth in expenditures, year over year.

The reaction to the budget was fairly muted, with many observers noting it took a middle-of-the road approach. It is a document of restraint, not austerity. Manitobans, however, are still waiting to see the full effect of changes to the health system, including the shuttering of ERs, and the effect of capping public service costs.

Unlike in Saskatchewan, where the recent budget announcement contained tax increases, the Pallister government’s budget instead sought to leave taxes alone, while making some changes to tax credits and rebates.

Manitoba intends to get the province on the road to economic recovery without drastic action, aiming still to see it recognized as the “most improved province.”

Highlights of Budget 2017:

• Projected summary deficit of $840 million; down from $872 million forecast for 2016-17;
• Projected core (departmental) deficit of $779 million; down from $800-million in 2016-17 forecast;
• Tax freeze, with increase to basic personal exemption and tax brackets, to keep pace with inflation;
• Highways capital investment at $502 million, as committed to in November 2016, down from 2016-17’s budgeted $540 million;
• Water-related infrastructure budget rises to $60 million, up from 2016-17’s $45 million
• Health and education budgets are hld to tight increases, of 1.8% and 1.3% respectively, compared to the 2016-17 budget. Family services sees a 5.4% increase;
• Total expenditures: $13.8 billion, up 2.7% compared to new forecast for 2016-17;
• Total revenue: $13 billion;
• Projected individual income tax is driving Manitoba’s own-source revenue growth;
• No release as yet on what is the level 2017-18 in the Building Manitoba Fund, which was set at $284 million last year;
• No detail or discussion of the financial and economic impact of a carbon tax/pricing, to be introduced in 2018; and
• Manitoba’s GDP is expected to grow by 2% this year, in line with Canada’s GDP growth.

The importance of trade and transportation to the Manitoba economy was noted within the budget papers. Recent years have seen slower annual growth in international exports from the province. From 2007 to ’16, the share of international exports to real GDP in Manitoba fell from 33% to 27%. The share of interprovincial exports remained relatively stable, declining from 29% to 27%. Manitoba’s exports are predicted to rise in 2017, based on stronger economies in Canada and the U.S., and a depreciated Canadian dollar.

The budget papers also contained some detail out of the government’s “Fiscal Performance Review.” It noted that modernization of procurement across government was one of 11 key areas of cost-saving opportunities for the province.

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