In government, as in life, it’s sometimes better to be lucky than good.
Case in point? Although the government and its agricultural, meteorological and hydrological experts are all cautious about saying it out loud, the drought conditions that have plagued Manitoba for much of the last two summers seemed to have come to an end.
It turns out the frequent warnings earlier this year that summer was going to be as dry, dusty and smoky as last year have been greatly exaggerated.
MIKAELA MACKENZIE / FREE PRESS
Dan believes that, at some point, Wab Kinew’s government will rush to take some indirect credit for the bountiful rainfall.
Thanks to historic amounts of rain in April, May and parts of June, moisture levels in the soil across the province are at or above normal levels, giving farmers a real shot to have a bounce-back year.
As well, the water levels in the province’s lakes and rivers are returning to historic normals or, in some cases, exceeding those benchmarks. Meanwhile, outflows from major bodies like Lake Winnipeg have surged to power Manitoba Hydro’s generating system.
You can also add into the mix the significant decrease in forest fires this summer.
How and why does all this add up to a stroke of good luck for Premier Wab Kinew and his NDP government? Let me count the ways.
On the agricultural front, all manner of crops across the province are expected to be robust this year as drought-ravaged farmers suddenly have the conditions for bumper harvests. Bigger harvests means little or no government income supports, which means more income for farmers and more income taxes collected by government.
Although some may bristle at having to pay more taxes, it’s actually a win-win for government and all the things it does.
The same holds true for the water levels in our lakes and rivers.
In this province, all sorts of economic fortunes are tied directly to the water levels. The biggest and most impactful connection is between water and Manitoba Hydro.
In regular years, Hydro’s network of generating stations creates enough electricity to meet demands within the province and export power to neighbouring jurisdictions. The combination of domestic load, firm export contracts and spot export sales can combine to make Hydro a fiscal juggernaut that pumps hundreds of millions of dollars into government coffers.
The income is important in two forms: first, government earns direct revenues by charging Hydro fees on the water it uses along with other taxes and surcharges for things like guaranteeing debt; second, the government also benefits indirectly from higher retained profits in Hydro’s coffers.
The provincial government lives and dies — practically and politically — from the bottom line of the summary budget. This includes all of the revenue and liabilities from programs delivered by government and through arm’s-length entities like Hydro.
When Hydro loses money, it is typically in such enormous proportions that it can, on its own, move a budget bottom line from surplus to deficit. In 2022-23, Hydro lost $248 million at year end, which was $639 million less than the former Progressive Conservative government had anticipated.
That over-estimation of Hydro profits was one of the leading causes of a budget deficit that soared to $1.9 billion in the 2023-24 fiscal year, which ended March 31.
That’s a really long way of saying that more water in lakes and rivers means more water through turbines, more electricity to sell as exports, more Hydro revenue, which means an major boost to the government’s bottom line.
You can bet that, at some point, the Kinew government will rush to take some indirect credit for the bountiful rainfall. That will likely happen if and when Finance Minister Adrien Sala can report a major reduction in the current budget deficit.
Sala is already hoping to take the $1.9-billion deficit he reported in the spring budget and reduce it to about $796 million in the 2024-25 fiscal year. If he is able to hit or exceed that target, you can bet that Hydro will have played a major part.
All that means even if the weather drove most of the deficit reduction — and right now, better weather and robust federal transfer payments are doing most of the heavy lifting — you can be sure Kinew and Sala will pat themselves on the back for improving Manitoba’s fiscal outlook.
In some ways, taking credit for things that are outside of your control is fair play for any governing party.
Even though no government can actually control the weather, governments do suffer condemnation from opposition critics when weather events drive unexpected expenditures or erode tax revenue. The cause of the added expenses may have been a flood or fire, but opposition critics will lambaste governments for not planning properly.
For now, the NDP can thank the heavens (and the clouds) for dumping record amounts of rain on a province that desperately needed it.
Going forward, Kinew and Sala should remember one overarching principle when politics and weather collide.
Government fortunes can change quickly, just like the weather.
dan.lett@winnipegfreepress.com
Dan Lett
Columnist
Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986. Read more about Dan.
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