POLITICS

$19B question: Manitoba debt continues to grow as party leaders focus elsewhere

09/13/2011 06:12 EDT | Updated 01/12/2012 02:21 EST
WINNIPEG - Regardless of who wins Manitoba's provincial election Oct. 4, the province's debt may continue to grow for years, if not decades.

None of the three major parties has put forward a plan to reduce, or even limit, the growth of a debt that has risen almost every year in recent memory and is forecast to reach $18.9 billion by the end of the current fiscal year.

Premier Greg Selinger, who served as NDP finance minister for a decade before taking over the leader's chair in 2009, said he is willing to let the debt rise as long as the economy grows at or near the same rate.

"Debt as a proportion of the economy will continue to shrink over time," Selinger said Tuesday.

"But we also believe that good capital planning helps grow the economy faster than the absence of it, and capital planning requires some long-term commitments for things like hospitals and schools and good roads and clean water and sewers.

"Those things generate not only healthier citizens, but more assets that you can use to have economic growth."

Progressive Conservative Leader Hugh McFadyen has chided the NDP over the rising debt load, but isn't committing his party to paying it down either. His first goal, he said Tuesday, is to stop annual budget deficits by 2018.

"Right now, our focus is on a balanced and realistic approach to getting the budget back to balance by 2018, and then we'll be in a position to start to pay down debt."

Manitoba is in the middle of five years of deficits planned by the NDP government and starting with the 2009 recession. McFadyen has accused the New Democrats of underestimating the amount of red ink and predicts it will take longer than that to get the books balanced again.

But even in years when the government runs surpluses, its debt often increases to account for long-term commitments to large construction projects and other items not counted in annual figures. Under both NDP and Tory governments, the debt has grown each year. A rare exception was in 1996-97 when the province sold off Manitoba Telephone System and applied the money to the debt.

It's not that Manitoba is in bad shape compared with the rest of the country. When measured as a percentage of the economy, the debt is the fourth-lowest among the provinces. Credit rating agencies have repeatedly raised the province's status in the last decade and low interest rates have reduced interest payments.

But there are some voices trying to drum up concern. Colin Craig, regional director of the Canadian Taxpayers Federation, has been driving around Winnipeg with a large electronic debt clock. He has tried to get at least one of the parties to commit to a firm debt strategy.

"The debt is going up by about $4.3 million a day, and yet all three parties are out promising even more spending. Where's the money coming from?" Craig said.

"It's a little like continuing to have a high credit card balance and spending money on interest charges."

The parties are focusing on issues that they say are of prime concern to voters -- health care, crime and education. No one is contemplating cutting the overall debt, let alone paying it off any time soon.

"Our objective always is to grow the economy and when you grow the economy, that reduces your debt costs as a portion of your budget," Selinger said.