Despite serious warnings about getting their financial house in order, the NDP government continues to risk further degradation of front line services by heaping debt onto the backs of Manitobans.
“The NDP puts front line services and our financial security at risk by willfully ignoring warnings from independent financial experts to get expenditures under control – they show no signs of slowing down, or any understanding of just how risky this is,” said Opposition Leader Brian Pallister.
When interest rates are low, for example, the risk is even greater: an increase from 2 percent to 3 percent actually would represent a 50 per cent increase in debt servicing cost.
Last August, Moody’s investor service downgraded the province’s credit rating outlook from stable to negative for the first time ever, based on the ‘execution risk’ attached to the likelihood of government hitting its target of a balanced budget by 2016 and “ . . . the risk of a continued increase in Manitoba’s high debt burden beyond 2016-17.”
After missing a number of target dates for specific goals (balancing the books, surplus, etc.) the NDP government now admits they will no longer commit to any target dates. It remains to be seen what this recent development might mean when the financial ratings services do their next assessments.
All of the reasons Moody’s listed last year that could trigger a downgrade are now true. When borrowing costs more, people spend less and borrow less. Families understand this. Small business gets this. Unfortunately the Manitoba government continues to ignore all the red flags.
Government is spending more to service the province’s debt this year ($842 million) than it does on Infrastructure and Transportation, Housing and Community Development, and Conservation and Water Stewardship combined.