It's time to end the lie once and for all that the NDP government increased the PST to pay for expensive infrastructure, including flood repair.

Because it's simply not true.

Premier Greg Selinger and his NDP candidates insist the main reason they increased the PST to 8% in 2013 was to pay for the province's multi-year infrastructure plan.

The perception they wanted to create is that the extra money Manitobans pay in PST — about $300 million a year — is going directly into infrastructure spending, like building new bridges and roads and fortifying the province's flood protection assets.

It isn't. Provincial finances don't work that way.

The province borrows money to pay for infrastructure and it's paid off over 30 to 40 years. The money doesn't come directly from a sales tax or any tax. Even Selinger, when pressed, admitted as much when we questioned him about it during a recent Winnipeg Sun editorial board meeting.

"All our capital is debt-financed, usually over the life of the asset," said Selinger. "That's the accounting treatment they require us to use."

Right. So when the province says it's spending $1.1 billion on infrastructure this year, that money doesn't come out of the province's general revenues. It's debt-financed. The province then makes principal and interest payments on that debt.

As old debt, which carries higher interest charges, is paid off — and as other debt is refinanced at lower rates — the province saves on interest costs. And that helps offset the cost of the new debt.

"We've been able to keep our debt payments flat or declining because the new debt has been at very low rates of interest," said Selinger. "We've been able to get good traction in the marketplace."

As all governments have. It's a good time to borrow money because interest rates are historically low. That doesn't mean it's free money. It still has to be repaid over time. And the risk of interest rate hikes in the future are very real. About 11% of provincial government debt is financed through floating interest rates. According to Manitoba Finance, a one percentage point hike in interest rates would result in a $25-million annual increase in debt financing charges.

But spending $1 billion on infrastructure has a very small immediate impact on the provincial government's operating budget. The province's core debt financing charges only increased by $5 million to $205 million in 2015-16 from $200 million the year before.

Over time, as debt grows, those financing charges will rise. And if interest rates rise further, it will accelerate debt costs.

But for the time being, spending $1 billion a year on infrastructure doesn't cost the province $300 million a year in operating expenditures. So where does all that extra PST money go? It goes into general revenues and is used to pay day-to-day bills, including the government's bulging bureaucracy.

When questioned at length, Selinger acknowledged that the vast majority of the PST increase doesn't go into infrastructure spending, at least not in the short term, because today's borrowing for infrastructure has virtually no impact on current debt financing charges.

"There is a time when it will have to be addressed," said Selinger. "The money (the extra PST revenue) was put there to look after the core services which we needed to do in the short run as the economy was slowing down and to have the resources in the longer term to pay off the additional costs of the infrastructure."

So, the massive borrowing today for infrastructure has almost no impact on the annual operating deficit in the short term, Selinger admits. However, the PST money will be needed in the future to pay for higher debt servicing charges, he says.

That's not exactly what he tells the public.

He tells the public the PST was increased to pay for expensive infrastructure today.

And that's a lie.