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Former Manitoba government presented 'incomplete' financial picture, report says

WINNIPEG — Manitoba's former Progressive Conservative government presented an incomplete picture of the province's financial pressures, had aggressive energy-revenue assumptions and made significant spending commitments in the months leading up to the provincial election, says a consultant's report released Friday.

"From the release of the 2023-2024 budget to Oct. 3, 2023, budgetary decisions were made that collectively represent high budgetary risk," says the review by consulting firm MNP.

The review was ordered by the incoming NDP government shortly after the Oct. 3 election. In December, the government said the deficit was on track to end up at $1.6 billion — more than quadruple the original number in the spring budget and the highest shortfall in the province's history outside of the COVID-19 pandemic.

The report found instances where the Tory government appeared over-optimistic on revenues.

The Tory budget predicted a large surplus at Manitoba Hydro. And even as drought conditions caused power-generating water levels to drop sharply, the government did not reflect the change in its first quarter fiscal update in the summer. There was a caution of uncertainty about Hydro's profits given the weather but no new dollar figure.

The Tory government also assumed tax revenues would remain stable, even though it was cutting income taxes and facing a possible economic downturn, the report says.

It also promised to spend $200 million to hire more health-care workers in July, says the report, but it did not include the figure in its quarterly fiscal update issued the next day.

"It would have been reasonable to expect the government to have included this in the 2023-2024 first quarter report and fiscal economic update released the next day on July 28, 2023, but it was absent."

The Tories had also opened up the purse strings, boosting spending in their last budget by almost 10 per cent from the previous year, the report says.

On Friday, Finance Minister Adrien Sala accused the Tories of having misled the public in the election campaign.

"In an election year, they were desperate to hang on to power," Sala said.

The Tories rejected the report's findings.

"This is a political document with unaudited figures and incomplete information. The NDP neglected to mention that they are in charge for half of this budget’s fiscal year," Tory finance critic Obby Khan said in a statement.

Despite the larger deficit and the report's findings, the NDP government committed to maintain income tax cuts that were in the Tory budget and took effect last month.

The cuts include raising personal income tax brackets and are expected to cost the treasury $486 million annually. The NDP promised during the election campaign it would follow through on that part of the Tory budget.

"Our commitments were clear on this, and we're planning on delivering on our commitments," Sala said Friday.

This report by The Canadian Press was first published Feb. 23, 2024.

Steve Lambert, The Canadian Press