Manitoba Must Trim Spending as Interest Costs Rise
REGINA, SK: The Canadian Taxpayers Federation (CTF) is calling on the Manitoba government to trim spending as interest payments on the provincial debt are going up by millions, according to the province’s third-quarter fiscal update.
“Manitoba has a choice: it can make the tough choices to trim spending now or it can wait until rising interest costs force deeper cuts later,” said Todd MacKay, Prairie Director for the Canadian Taxpayers Federation. “Runaway deficits simply aren’t sustainable and the government needs to take action to trim spending.”
While unexpectedly higher revenues have reduced the projected operational deficit from $1 billion to $872 million, this year’s interest payments on the provincial debt are going up from $874 million to $938 million.
Manitoba has already been hit with credit rating downgrades due to its soaring debt. Credit ratings from bond rating agencies are similar to personal credit scores. When a family misses car payments their credit score is likely to suffer and they will face higher interest payments when their mortgage is renegotiated. Similarly, credit rating downgrades can increase borrowing costs for governments.
The Manitoba government also introduced legislation to freeze government employee wages for two years and limit raises to 0.75 per cent and 1 per cent in the subsequent two years.
“The Manitoba government obviously can’t afford to give raises while it’s running a massive deficit,” said MacKay. “Interest on the current debt is taking nearly a billion dollars a year from Manitoba that doesn’t go into schools, hospitals or much needed tax relief. Trimming spending isn’t easy, but procrastinating will only make it harder as those interest costs continue to go up.”
For more information contact:
Todd MacKay cell: 306-582-7717