In a matter of a week, the Manitoba government took the economic projections it spent months labouring over, and threw them out the window.
The arrival of a pandemic can do that to any good economist.
In the days since the province’s first cases of COVID-19 were reported on March 12, the Progressive Conservative government under Brian Pallister discarded many of the budget forecasts it wanted to release the day before, if the NDP hadn’t delayed the process.
The province did away with estimating a deficit or projecting revenues. It wouldn’t guess how much each government department may spend on COVID-19.
It did away, too, with an economic growth rate of 1.3 per cent, which seemed an optimistic forecast even last week, before the novel coronavirus knocked out businesses and laid off many workers.
It’s clear a lot has changed in the eight days it took to release the budget and create an emergency supplement dealing with COVID-19. Both documents were released on Thursday.
Is past fiscal prudence enough?
Yet, there wasn’t much change in those eight days in how the government plans to protect the economy.
A news release attached to the emergency budget supplement stresses four measures that will help the province deal with COVID-19.
It cites a replenishing of the rainy-day fund, a reserve set aside for unexpected emergencies.
It highlights $10 billion in debt it says the government has forgone through “prudent budgeting” in four years of governance.
The release credits Ottawa for promising $18 million in emergency supports and boasts, rightfully, of the diversified economy that’s helped this province cushion major economic downturns before, and may again.
While those measures are practical, most of them aren’t being enacted by Pallister’s government as a result of COVID-19.
We already knew an economy like Manitoba’s, that doesn’t rely on a single sector, has a better shot at weathering economic storms. We already knew the province’s cost-cutting diligence has put Manitoba in a better financial position. As for the $18 million in aid, that comes from Ottawa, not Manitoba.
The new measure the province is highlighting involves filling the rainy-day fund quicker than expected. An extra $229 million will flow into the reserve by the end of the month, which stashes money for crises like floods, fires and, now, pandemics. Another $71 million will be added by the end of the fiscal year.
But that course of action isn’t entirely new. In the budget documents prepared before the confirmed arrival of COVID-19, the province was already planning to put $300 million into the rainy day fund in 2020-21 — just not as quickly.
And replenishing that reserve, which shriveled under the NDP, has long been a target of the Tories, along with whittling away at the deficit.
Premier Pallister is effectively asking Manitobans, before the economic downturn gets worse, to trust him. He’s already plotted a course toward fiscal stability — he’s basically saying, and we shouldn’t steer away now.
Pallister still banking on tax cuts
Amid this uncertainty, he’s moving ahead with an agenda that has offered tax cuts and slashed the deficit, all while delivering on core services.
“Our decisions have allowed us to be in a fiscal position that is much, much stronger than what we inherited four years ago,” Pallister said Thursday, referring to the previous NDP government.
He still insists tax cuts are appropriate at this precarious time. The relief gives extra cash to Manitobans in need, he says, but it also costs the province’s treasury at a time when it may be lacking.
He does concede, though, that the coronavirus may make it harder to balance the budget going forward.
“We are aiming to do that and we fully intend to do it, but we will address the high priorities of Manitobans, whether it’s COVID or it’s any other circumstance,” he said.
“But I have no reason to believe, at this point in time, that we will not be able to achieve our goal by the end of this term.”
It seems Pallister will now get a chance to show if his previous measures to stave off financial instability will have staying power once the economy declines.
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