Oh. There wasn’t one. The Net Debt to GDP ratio (which, we find out, is the critical indicator for determining when debt is a problem) is 35%. Although Dr. Di Matteo describes this as “pretty high, at the high end” even he acknowledges that 35% is somewhere in the middle compared to other Canadian provinces.
In Dr. Di Matteo’s opinion, Manitoba’s fiscal situation in 2016 was “challenging but not a crisis,” and if Manitoba didn’t take steps to correct it, the situation could get much worse. You do want to correct structural imbalances, and always run the risk that if interest rates go up, the debt servicing costs can quickly become overwhelming.
Ok. You’ve convinced me that there were and are fiscal challenges. But you haven’t convinced me that you need immediate and exceptional action to address them. Nor have you convinced me that freezing the wages of Manitoba’s public sector workers was a way, was a good way, or was a necessary way to correct the structural imbalance and/or reduce the debt. And you know why? You haven’t even tried. None of this was even mentioned.
What they did try was to rely on a projection of the Parliamentary Budget Office that predicted that if Manitoba didn’t change anything, the Province’s debt servicing costs would grow to 104.9% of the Province’s budget in 2042.
I’m not sure why anyone would bother with this. Sure, if all Manitoban governments from now until the next few decades of future, were so totally stupid and utterly incompetent that they wouldn’t do anything except continue to rack up the debt at the same rate, yep, the Province would be in some serious debt doo-doo. (Actually, this gets explained by Labour’s economics expert, Dr. Bealieu. These kinds of forecasting are just thought experiments to highlight the problem as a means of motivating action.)
Nevertheless, Dr. Di Matteo’s direct examination returned to and ended with some reasonableness. He said that while there was concern, not a crisis, you don’t want to wait for a crisis until you change course.
In numbers terms, the challenge would be to close the Fiscal Gap in Manitoba’s economy. I’m not sure how the Fiscal Gap is calculated but Dr. Di Matteo describes it as the gap between revenues and expenditures into line so that the Debt to GDP ratio doesn’t grow.
After all the figuring is done, what this means is that 20% of the current budget would have to be reduced, which, I gather would require either a 20% reduction in expenditures or an increase in taxes.