View From the Legislature

Last week Manitoba Finance reported its final fiscal results for last year’s budget while providing an update on the first three months of the current fiscal year. The reports indicated that Manitoba has undergone a resurgent economy while still providing reason for caution in the months ahead.

The final numbers for the last fiscal year (April 2021-March 2022) show a strong economic recovery marked by low unemployment and significantly higher than expected consumer demand. This had the positive effect of reducing the projected deficit significantly, from an expected deficit of $2.1 billion to a year-end deficit of $704 million. This was largely attributable to higher employment, increased economic activity and increased transfer payments.

The substantial reduction in the deficit is positive economic news and was achieved while still maintaining increased investments in almost all areas of government. This includes increasing health investments by $180 million for more surgeries and diagnostic tests and investing over $1.5 billion in strategic infrastructure. In addition, there were measures to make life more affordable for families including increasing the Education Property Tax Rebate.

Looking at the first three months of the current fiscal year, the economic recovery continued and was buoyed by strong Manitoba Hydro revenues. As a result, the projected year-end deficit has dropped to $202 million for the current fiscal year. This improvement comes while the province has introduced and is distributing financial relief support to families and seniors. As an example, last month Manitoba announced an additional $96 million for affordability programs in an effort to help ease the burden of high costs.

While these are strong and welcomed economic results for the province, there are reasons for caution as finance officials look ahead to the coming months. Rising interest rates by the Bank of Canada are intended to slow the economy as record levels of inflation are being experienced across Canada. High food and fuel costs are a significant concern for many Manitobans. Broader concerns around the globe, including the prolonged Russian invasion of Ukraine and supply chain challenges need to be monitored carefully as there remains significant volatility in all economic sectors.

Manitoba finance officials will continue to monitor what is expected to be an economic slowdown in the months ahead and the impact that has on the finances of the province and Manitobans. While doing so, Manitoba remains committed to providing record investments in health care, education, social services, and support to families.

Overall, Manitoba has been able to invest in priority areas over the past two difficult years and has seen significant economic growth in the past few months. This is positive news even as there is reason to be cautious about the uncertainty that remains on a number of economic fronts.