Budget 2017: death by 1,000 cuts

By Molly McCracken

Social policy lowlights

Despite pundits’ claims that “its not as bad as it could be” there are a myriad of program cuts and tax cuts in this budget. As the weeks go by more impacts will invariably be felt in our community. Yet poverty and social inequality continue to grow and the climate crisis looms. Every year without investment in these critical areas is huge loss to all Manitobans.
This provincial government’s myopic focus on the debt and deficit fueled perceptions that this would be an austerity budget. Austerity is cutting services and public spending while also cutting taxes. While this is not austerity as seen in the European Union, the province reduced spending, services and taxes. The government could have moved faster to pay down the deficit by not reducing its revenues $34 million by indexing the basic personal exemption to inflation and indexing the tax brackets. This reveals the incongruity of this government’s policies.
Tax cuts are not unique to this government. The neoliberal mantra of tax cuts and fiscal restraint resulted in the previous government cumulatively reducing taxes by $1 billion annually over its time in office. Interestingly this is approximately the size of the current Manitoba deficit. It may seem simplistic but if those taxes were still being collected, Manitoba would not have a deficit. The province has cut tax revenue and expenditures previously. So what is left to cut and how will it impact our lives? Here are some lowlights.
Not increasing funding to inflation reduces government revenues relative to increases in costs. This started with the January announcement that education funding to school divisions would only be increased to 1 percent. The Manitoba Consumer Price Index for 2016/17 as reported by Statistics Canada is 2.3 percent. Without enough of an increase from the province, the cost of education is transferred to property taxes. In the Winnipeg School Division this means an increase to property taxes of 3.89 percent.
Child care
Budget 2017 included a commitment to 501 funded child care spaces and 50 family home spaces. Meanwhile the wait list for child care has grown 22 percent in the past year from 12,000 to 14,658 children. The overall increase to the child care budget of $6.2 million is insufficient to cover the 500 new spaces so plainly the province is expecting to lean on the $15 million soon to be flowing from the federal government. Child care advocates are concerned the federal dollars will also be used to promote the expansion of for-profit care and its attendant problems of profit motive over quality. The budget does not get ahead of the wait list; more and more families will continue to struggle without needed child care.
Notably this provincial government has moved away from their focus on expansion of child care via family home providers. During the election they ran almost exclusively on expanding this waning sector. Dr. Susan Prentice’s recent research finds that family home child care is on the decline across Canada. Family home child care frequently closes and six out of seven providers are untrained and over-represented in quality breaches, Prentice finds. Many do not accept provincial funding, leaving family home providers to set their own fees far above the reach of low-income families.
In January 2016, the Manitoba Early Learning and Child Care Commission released its report. The Commission laid out a realistic set of recommendations for universal services. Investing in Manitoba’s childcare system is more than worth the costs. Additional federal and provincial investments are needed, which are more than returned back to the economy in the form of taxes paid by parents and educational benefits to children. The new provincial government has yet to announce their plan on child care. They should use the Commission’s report and invest adequately in childcare as early learning is education and economic development.

Minimum wage
There was no information about an increase to the minimum wage in this Budget. The Minister of Finance said in the media something is forthcoming. Without an increase minimum wage workers struggle with rising cost of living on meager earnings. The loss just due to the Consumer Price Index in 2016/ 17 was $400/ year and with the CPI at 2.3 percent this year, the loss to minimum wage earners is $530/ year for a total of $920 lost. At $11/ hour the minimum wage is insufficient and falls well below what’s needed to lift workers out of poverty. Most minimum wage workers are adult women working full time.
The View from Here: Manitobans Call for a Renewed Poverty Reduction Plan recommends minimum wage be set at $15.53 in 2014 dollars and indexed to inflation at this level. This can be done in pre-announced stages so employers can prepare for this increase, with the goal of achieving this level by 2020. Make Poverty History Manitoba and the Manitoba Federation of Labour both endorse this approach.
Community Development & Non-Profits
Many were watching the budget for impacts to key community development programs that support place-based poverty reduction efforts and community-based initiatives.
In August the province “paused” funding to Community Places, the key provincial fund for community capital improvements, used across the province for everything from community centres, ice rinks, to childcare centres and playgrounds. Community Places continues with an allocation of $5.1 million, it is unclear if this is more or less than the previous year due to budgetary changes described below. The Neighbourhoods Alive! project-based Neighbourhood Renewal Fund was also paused at this time. This resulted in $900,000 unspent provincial dollars. Budget 2017 reduces NA! by this amount, from $5.97 million in 2016/17 to $5.08 million for 2017/18.
During the budget lock-up we learned the government is developing a new process for allocating community development dollars. The Neighbourhood Renewal Corporations, of which there are twelve, have reported receiving an agreement for the first quarter of 2017/18 for their core funding. It is anticipated that this yet-to-be developed process will allocate the NRC’s funding for the second quarter. To date there is no information about the structure of this funding and if it will be a multi-year agreement or not. NRCs are the backbone of the communities they work within, organizing holistic five-year plans on safety, recreation, housing and civil engagement. This creates a high-level of uncertainty in their work, in the community and with staffing.
NRCs and other non-profits in the inner city also rely on the Neighbourhood Renewal Fund (NRF) that was paused last year. With the reorganization of the NA! funding, community development programs who would have applied to the NRF for funding last fall for the money to flow this April are left high and dry. These grassroots programs are at risk of folding.
NRCs also administered small grants funding to a multitude of groups within their neighbourhoods. Through a community-led process groups could apply to the NRC for small projects to enhance health and safety in neighbourhoods with high rates of poverty, such as tot and senior’s activities, Indigenous youth recreation or community clean-ups. At a community consultation in March in the North End, over 100 people discussed the positive impacts of the NRF and small grants funding in their communities. The North End Community Renewal Corporation itself supported 70 local initiatives through this fund. With no news on the structure of the community development funding, these community efforts remain in limbo.
Budget 2017 reorganizes the Urban Development Initiative and the Rural Economic Development initiative, allocating some of this funding to related departments and the remainder in a new fund called Community Development Initiatives. The way this funding will roll out is yet to be determined.
The homeless shelter Main Street Project is one of the first to see the impact of the cuts that are still to filter down from this budget. MGEU announced that eight of its members working at this homeless shelter have been laid off. Two more may be affected into the future. Main Street Project supports clients with detox, accessing resources, housing and food.
Round-up of more cuts
Infrastructure spending is down $162 million from $803 million last year to $641 this year. Notably this government is counting infrastructure development differently than the previous government, including regular road maintenance, municipal infrastructure and other facilities now. More analysis of infrastructure spending is needed to ascertain if, due to changes in definitions and budget lines, infrastructure spending is further reduced.
Departments are cut: $1 million from both Sustainable Development and Sport, Culture and Heritage. Grants to cultural organizations will be cut $703,000 from $9.8 million to $9.1 million. The Department of Growth, Enterprise and Trade is cut $4 million; Indigenous and Municipal Relations down $7 million and the Legislative Assembly down $11 million. It is not clear how these reductions will be made.
Plus there are staff cuts across many departments and on a line-by-line basis. For example Active Living, Population and Public Health was cut by $508,000. The impact of these cuts is unclear but they are more significant than can be simply dealt with through attrition.
Cooperative Development was cut by $145,000 and the Co-op Development Tax Credit was eliminated. The Cooperative Development Strategy was cancelled by the province with nothing to replace it.
Elimination of the Affordable Utility Rate Accountability Act
Budget 2017 announced this act was being repealed. The Act was introduced in 2012, and required an independent accountant to publish a report on the comparative cost of utilities, electricity, natural gas, and auto insurance. The last report published in 2015 found that Manitoba’s average utility cost is $2,965 and lower than all other provinces by $686. If the report shows the cost of the utility bundle for any province to be lower than the cost for Manitoba, the Minister of Finance must prepare a plan to return Manitoba to the lowest cost position. By eliminating this Act, this responsibility to reporting and oversight to utilities ends.

What’s next?
This government is still committed to reducing the PST to 7 percent by 2020. This will result in a loss of $300 million annual revenue with no plan to replace it. It should be noted that all provinces east of Manitoba have provincial sales taxes of 8 percent or higher. These cuts will continue under a government dedicated to cutting to the bone. In the process those who rely on public services be impacted and the public sector will shrink. What a shame when the potential of pooling our collective resources to achieve social inclusion and climate justice is so large.
Molly McCracken is the director of the Canadian Centre for Policy Alternatives – Manitoba