Lazy post-budget analysis

I bet you thought I was talking about Hugh. Nope. I'm going to take the easy way out and let the banks do the talking.

“A Rare Show of Balance
Manitoba’s FY2009/10 budget takes a balanced approach against a weakening economic backdrop…. Longer term, the Province is committed to keeping the bottom line in the black, with another small surplus projected in FY2010/11. Though the Province will tap its reserve fund for $110 min, Manitoba will be one of the select few to balance the books this coming fiscal year.

This budget also builds on the Province’s infrastructure spending program, with capital investment increasing to $1.6 bin. This reflects a $625 min boost, with a continued focus on transportation, social housing health care infrastructure.

Manitoba’s economy will continue to fare relatively well amid the downturn thanks to its diversified range of sectors, still-buoyant capital spending and strong population growth.”

BMO Capital Markets
March 25, 2009


“Manitoba’s 2009-10 Budget – Focused on a Steady Course
Despite the economic slowdown, Manitoba forecasts a small consolidated surplus of $48million for fiscal 2009-10 (FY10)….

Manitoba presents a carefully managed plan to further its longer-term policy objectives, aided by its diversified economy that is noted for its resilience. In FY10, the government will continue to pursue fiscal repair, enhance key services and trim the provincial tax burden, albeit at a sharply slower pace given the soft economy and the need for fiscal stimulus.

One noteworthy change will be dropping the small business corporate income tax rate to zero on December 1, 2010. In light of the financial market turmoil, efforts to provide financing for Manitoba businesses through loans, loan guarantees and venture capital are increased this year.

In the near-term, several factors offer Manitoba a fiscal cushion, including the four-year averaging period in its balanced budget legislation, a healthy balance in its Fiscal Stabilization Account and interest charges that now absorb just 6¢ of each revenue dollar.”

Scotiabank Group, Global Economic Research
Fiscal Pulse, March 25, 2009


“Manitoba will be rare among the provinces in staying in surplus in 2009/10, as its diversified economy sees a smaller hit from the global downturn, although capital spending will boost the debt/GDP ratio somewhat.

Manitoba will be rare among the provinces in planning to stay in surplus for 2009/10,despite facing a small 0.4% drop in revenues, largely owing to a 4.4% drop in income taxes.

A planned increase of $709 mn in the coming year would take net debt to 23.0% of GDP, an uptrend we have seen in all provincial budgets this year.

CIBC, Economics & Strategy
Provincial Budget Briefs, March 25, 2009


“The province’s economy outpaced the nation as a whole in 2008 with an estimated 2.2% real GDP growth and 6.3% nominal GDP growth.

Given the deterioration in the economy and the significant downward pressure on revenues, the Manitoba government could have taken the easy way out. Notably, it could have opted to run a deficit, as has become the norm across Canada and around the world in 2009, or it could have elected to postpone previously-announced tax cuts. However, the government chose not to take either of those paths…. Over the short term, the infrastructure spending and tax cuts will provide some much-needed stimulus to the economy. From a longer-term perspective, the province’s sound fiscal management – not to mention its steadily improving tax competitiveness – will stand it in particularly good stead.”

TD Bank Financial Group
TD Economics, The 2009 Manitoba Budget, March 25, 2009