The 2008 Manitoba Budget Address

Fiscal Plan

Mr. Speaker, Budget 2008 is a balanced budget fully reflecting Generally Accepted Accounting Principles. It builds on the achievements of the past eight budgets including:

• balancing the budget every year;
  
  
• making the largest debt and pension payments in Manitoba history;
  
  
• funding the government’s full share of employee pensions for the first time in more than 40 years;
  
  
• reducing the province’s net debt to GDP ratio and lowering debt servicing costs; and
  
  
• saving wisely for the future.

Budget 2008 continues our commitment to sound fiscal management. In 1998, the Auditor General criticized the Manitoba government for publishing two sets of financial statements which made it difficult for the public to see and understand the full financial position of their government. Our government acted to correct this situation.

Manitoba’s comprehensive accounting of government’s finances consolidates core government operations with projections for all Crown organizations, government business entities and public sector organizations such as regional health authorities, school divisions, universities, and colleges to produce a summary budget.

Mr. Speaker, Budget 2008 is balanced, with a projected summary budget surplus of $96 million. The budget’s core operations are also fully supported with core government revenues, including funding prepaid by the federal government for joint federal-provincial priorities, exceeding core government expenditures. This means our government has balanced the budget for nine consecutive years.

We will complete the transition to summary budgeting and reporting by updating balanced budget legislation based on advice of the Deloitte & Touche review. Our budget outlook projects continued balanced budgets into the future.

Overall, Budget 2008 provides for a 3.3% growth in core expenditures as well as on a summary basis, and a $110 million payment on our general purpose debt and pension liabilities. This brings our total debt and pension payments to $924 million over nine years – the largest such payment in Manitoba’s history.

Mr. Speaker, we are proud of the progress we have made addressing the province’s debt, particularly the unfunded pension liabilities. Over 40 years ago, the Manitoba Government stopped funding the employer’s share of the pensions for civil servants and teachers. This liability had grown to $2.7 billion by 1999. Left unchecked, it was projected to reach $8.9 billion by 2028.

Rather than let the pension liability continue to grow unchecked, we started the first-ever plan to eliminate the pension liability. We began to address the accumulated liability without increasing the Province’s net debt burden.

We started making current service pension contributions again - starting with the contributions for new employees. Building on this, in 2007/08 we funded 75% of the unfunded liability of the Teachers’ Retirement Allowances Fund, strengthening the pension plan and generating long-term savings to the province.

Budget 2008 continues to address the unfunded pension liability by committing to begin funding the Civil Service Superannuation Fund. Mr. Speaker, with today’s budget I am proud to say that Manitoba is now funding its full share of current service pension contributions for all employees.

Since our government took office, Manitoba’s net debt to GDP ratio has been reduced by more than 30 per cent, from 31.4% in 1999/00 to an estimated 21.7% in 2008/09. We are planning for continued reductions in Manitoba’s net debt to GDP ratio over the medium term.

We have also reduced the cost of the debt to taxpayers, with servicing costs now just 6.5 cents on the dollar, down more than 50% from 13.2 cents in 1999.

An important part of our fiscal approach has been to save prudently for the future. We have more than doubled the Fiscal Stabilization Fund from $265 million to a projected balance of $683 million at the end of 2007/08. It will continue to be available to support the core operations of government.

Mr. Speaker, Manitoba has earned six credit rating improvements since 1999, and Budget 2008 follows the same sound fiscal approach that has proven successful for the past eight years.