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Manitoba government looking at financial loss this year due to recession, flu

WINNIPEG - Manitoba's NDP government is blaming swine flu, flooding and the global recession for a looming nine-figure deficit, but critics said the real problem is reckless spending.

WINNIPEG - Manitoba's NDP government is blaming swine flu, flooding and the global recession for a looming nine-figure deficit, but critics said the real problem is reckless spending.

A $48-million surplus originally predicted for the current fiscal year in last spring's budget has turned into a $592-million deficit, the province said Tuesday in its quarterly fiscal report.

"There's a global recession and we have said right from the beginning that .. we are not immune," Finance Minister Rosann Wowchuk said.

Corporate income taxes are now forecast to come in $93 million lower than first predicted. The recession is also being blamed for lower energy prices, causing profits at the Crown-owned Manitoba Hydro to drop $145 million.

The province has also spent more than it expected. Some $150 million has gone toward fighting the H1N1 flu outbreak and flooding that swamped the Red River Valley in April. Many government departments are spending above their budgets - $82 million more in health care and $37 million extra in child and family services, for example.

The Opposition Progressive Conservatives put the blame on Premier Greg Selinger, who was finance minister for 10 years before taking over the premier's job in October. The Tories say he should have prepared for tough economic times.

"He had 10 years of the most upbeat, optimistic economy that this province has ever faced and didn't plan, didn't put into place the necessary protections for Manitobans," finance critic Rick Borotsik said. "The other provinces ... reduced their debt over the last 10 years. We didn't."

The Canadian Taxpayers Federation called on the government to put some capital projects on hold and freeze public-sector wages for two years.

"The deficit could be eliminated sooner rather than later," federation spokesman Colin Craig said in a written statement.

But Wowchuk rejected calls to cut spending. Some departments are looking to contain costs, she said, but a recession is not the time for deep cuts.

"We have put restraint in departments to reduce spending ... and we have made investments in stimulus to keep our economy growing, so we've taken a balanced approach."

Manitoba's debt has grown in virtually every year in recent memory, although until now the economy has grown more rapidly. The result has been praise and better ratings from credit rating agencies.

Things will be different this year, as the debt continues to grow while the economy is forecast to shrink by 0.2 per cent.

"We have some challenges, but our challenges are not as great as those in other provinces, because if you look at the numbers, other provinces have a significantly higher number in their deficits," Wowchuk said.

 
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