Sorting fiscal fact from fiction – Winnipeg Free Press

Opinion

An independent consulting firm hired by the province wouldn’t come right out and say it, but it did confirm — in so many words — that the former Progressive Conservative government’s decision to slash taxes and significantly increase spending in the months leading up to last year’s provincial election was imprudent.

Consulting firm MNP was commissioned by the NDP government to determine — among other things — whether the decision to cut income taxes while boosting spending in health care, education and other departments (and ignoring signs of a softening economy and reduced Manitoba Hydro revenues), was “fiscally irresponsible.”

That’s more of a political question than an accounting one. It’s likely why MNP refused to go that far when making its assessment.

“The definitions of both fiscal responsibility and fiscal accountability differ in literature, resulting in opportunity for varying interpretations,” MNP wrote in its report.

So instead of calling it fiscally irresponsible, the consulting firm said the Tories’ financial decisions caused “significant risk” to taxpayers. Suffice it to say the decision by the Tories to slash taxes at a time of declining revenues, while significantly increasing spending, will have a negative and long-lasting impact on the province’s books.

“When examined collectively, implementing all three fiscal strategies at the same time: increase in expenditure versus debt reduction, personal income tax revenue reductions, and increased expenditures (capital and operating), does represent higher than normal budgetary risk,” the report said.

To make matters worse, the former government did not reveal the true state of the province’s financial affairs in the months leading up to the Oct. 3, 2023 election, the report found. For example, there were clear signs that Manitoba Hydro was facing declining revenues, owing largely to low water levels. The economy was beginning to soften, causing taxation revenues to fall. And the Tories announced new spending plans after the 2023-24 budget was tabled, including an additional $200 million for the province’s Health Human Resource Action Plan.

None of those factors were included in the financial updates released to the public prior to the provincial election. Instead, the former government continued to claim it was running a $363-million deficit, which was later revised to $1.6 billion by the NDP government.

“Failing to do so provided an incomplete picture of the province’s fiscal realities,” MNP wrote.

What’s the message? Well, “murder will out” is probably a little over the top.

When an administration is in full control of the workings of government, with all the tools possible, it can massage the public message to be pretty much whatever it wants, especially in the short term run-up to an election.

And when a new government is elected, it can use the same tools to out the past administration, even bending the message in its own favour, through sins of omission or commission.