On Wednesday March 25th, Premier Gary Doer stood up in the Manitoba Legislature and declared that the NDP government had balanced the budget. It was a statement so untrue it is a wonder he wasn’t blushing when he said it.
In fact, the most recent provincial NDP budget has $88 million more in expenses than it does in revenues. It also increases the provincial debt by nearly $800 million and it takes more than $100 million out of the province’s savings account. And yet the NDP government says this is a balanced budget?
Just imagine if you earned $40,000 a year but spent $45,000 in the same year. On top of that you took another $5,000 out of your savings account and a $10,000 loan. Regardless of the difficult times you might have faced during the year it is unlikely you would have considered the year to be “balanced” financially. But that is exactly what the NDP is claiming.
While the budget is not balanced, it is a spending budget. For every dollar of new tax cuts there are 13 dollars of new spending. Of course not all spending by government is bad. Much of it, such as building roads, building schools, supporting law enforcement, are worthwhile and important parts of what government is supposed to do. As well, some of the spending this year is intended to provide a stimulus to the economy which is suffering through a global downturn.
But while stimulus spending has its place during an economic downturn, other provinces such as Saskatchewan and New Brunswick have shown that reducing taxes also can provide a boost to the economy. It doesn’t all have to come from government spending, some of it should come from allowing people to keep more of their own earnings to invest in the economy through consumer spending. Unfortunately, Gary Doer and the NDP prefer to keep your money and spend it as they see fit.
Many economists such John McCallum from the University of Manitoba believe that the increased spending by the NDP government this year and the failure to maintain a balanced approach will come back to haunt the provincial finances next year. If the economic downturn lasts more than a year, Mr. McCallum suggests that the NDP government’s decision to spend everything this year in the hopes things turn around next year is a very serious gamble.
The 2009 budget is one of the most important that we have seen in many years. The NDP have presented a budget that is neither balanced nor cautious. It is a high spending, high debt budget that gambles on a short economic downturn. Everyone should keep their fingers crossed that this gamble is not a lost one.
