Manitoba's new government plans to post an $890-million deficit at the end of its first fiscal year in power after making only modest changes to the province's finances.

The first provincial budget posted by the Progressive Conservative government, titled "Correcting the Course," calls for modest increases in spending for most provincial departments, some tax relief for low-income earners and a clawback of the seniors' school-tax rebate brought in by the previous NDP government.

Premier Brian Pallister's government plans to spend $890 million more than it receives in income on core government services for the 2016-17 fiscal year. That's more than twice the $422-million in red ink envisioned by the previous government under Greg Selinger for 2015-16, but a drop of $120 million from an actual deficit that was expected to be more like $1 billion.

When Crown corporations, regional health authorities and other non-core government agencies are included, the deficit is expected to be $911 million at the end of 2016-17.

Finance Minister Cameron Friesen, Manitoba's sixth finance minister in eight years, said the Tories will balance the budget during their next term in office, which would begin in 2020 if they win the next provincial election.

Rather than defy Manitoba's balanced-budget legislation, Friesen plans to suspend it in 2017 with "legislation that provides Manitoba taxpayers with enforceable protection, including the restoration of their right to vote on major tax increases."

Friesen said his government is taking a careful approach toward balancing the budget after the NDP spent several years overstating revenues and understating expenses.

The first provincial budget posted by the new Progressive Conservative government, titled "Correcting the Course," calls for modest increases in spending for most provincial departments, some tax relief for low-income earners and a clawback of the seniors' school-tax rebate brought in by the previous NDP government. 1:30

'Nothing hidden here'

"This is practical. There's nothing hidden here," Friesen said of the plan to wait until after 2020 to balance the budget. "We are relying on the advice of experts."

All but two government departments will see their budgets rise this year. Health and social services accounts for the greatest increases.

What's now known as Manitoba Health, Seniors and Active Living will receive an additional $300 million as its budget increases to $6 billion from $5.7 billion. The budget for the new Families Department will rise $100 million, to $1.9 billion from $1.8 billion.

On the other hand, the PCs have cut about $1 million from Manitoba Agriculture, whose budget drops to $180 million from $181 million last year. The budget for the executive council, which includes the premier's office, declines $200,000, to $4.1 million from $4.3 million.

The cut to agriculture funding is symbolic for a government with a strong rural political base, as the PCs captured every Manitoba seat outside of Winnipeg except for three northern ridings. Friesen characterized the drop as good news.

"Commodity prices have been strong. Part of the decrease you're seeing represents a drop in [crop] insurance payment amounts," he said.

Pallister said the delay on balanced budget legislation was the result of charting a new course.





Manitoba's new Finance Minister Cameron Friesen speaks at a news conference before the provincial budget is read. (Bert Savard/CBC) "We're turning this canoe, if I can use a Manitoba analogy, we're turning it carefully, because to turn it too rapidly is to risk our cargo," he said. "And our cargo is our most vulnerable people."

Clawback to seniors' property tax credit

The province also intends to save $37 million a year by clawing back on the seniors' property-tax credit, which used to offer homeowners as much as $470 a year in rebates. Now, seniors with family incomes over $63,500 will receive no rebate on their provincial taxes, while those with family incomes between $40,000 and $63,500 will receive smaller rebates.

"Tax policy must be principled," Friesen said during the budget lockup. "Those seniors who actually need the support will continue to receive it."

Other new tax measures will offer some relief. Beginning on Jan. 1, the province will remove 2,770 low-income earners from the provincial property-tax rolls by indexing the basic personal exemption to the rate of the inflation. This will cost the province $11.6 million a year.

Personal income-tax brackets will also be indexed to the rate of inflation, costing the province $12.8 million year.

The province also promises to spend $1.8 billion on infrastructure this year, but almost half that tab will be spent on health, education and housing. Actual capital spending within the Infrastructure Department — which is responsible for building roads — is down $41 million, to $606 million from $647 million.

A provincial finance official says this is due to the timing of certain projects. Friesen also hinted at cancelling some infrastructure commitments made by the previous NDP government.

"Projects not yet approved will be reviewed to assess their return on their investment and social problems," the finance minister said in his speech.

Pallister said seniors are being protected where it matters most.

"Manitoba seniors have told us that they want better access to health care. They want more personal care homes built. They want lower ambulance fees," he said. These are top priorities and we want to address those top priorities."

Premier Brian Pallister takes questions after the budget was tabled. (Tyson Koschik/CBC)

'Steady as she goes'

Chris Adams, political scientist at St. Paul's College at the University of Manitoba, described the budget as a "steady as she goes" financial plan that does not include any major surprises.

"This wasn't a Mike Harris 'Common Sense Revolution' budget, as some people worried about. It's more in tune with what we saw from Brad Wall's Saskatchewan Party when they defeated the Saskatchewan NDP in 2007," Adams said during the budget lockup at the Manitoba Legislature.

"Also, the premier didn't have a lot of time to get this budget together, so he's really taken what was happening over the past number of years and fine-tuned it. I think next year we'll see some bigger changes."

Adams said the budget is noteworthy for what it does not highlight: child care, Indigenous Manitobans, labour and training, all of which were priorities for the previous NDP government.

The first provincial budget posted by the new Progressive Conservative government calls for modest increases in spending for most provincial departments. (Bert Savard/CBC)

Budget highlights