http://www.cbc.ca/money/story/2008/04/09/manitoba-budget.html
Manitoba budget boosts spending by $395 Million
Manitoba’s economy is doing exceptionally well to the point where the government is willing to increase spending by $395 million. Finance Minister Greg Selinger is funding an extra $47 million into healthcare to reduce the waiting periods and to enhance other health-related areas. He has also decided to help the environment by funding $13 million for the ecoTrust funds. Selinger wanted to prepare Manitoba industries from the struggling U.S. economy by providing a buffer of eliminating general corporal capital tax. It is expected that businesses will save $25 million annually which will negate the income loss from the slow U.S. economy.
In this chapter, we are studying the impact of factors that influence a dramatic change in the flow of money. The slowing U.S. economy will reduce the aggregate demand for goods from Canada which will end up lowering business profits and ultimately having people being laid off. Also, the GDP will greatly be affected which will probably be another sign showing that unemployment is increasing if it were to happen. To equalize the GDP loss from the U.S. economy, Selinger has decided to decrease taxes for companies and also to spend an extra $395 million. The increase in spending will increase the aggregate demand therefore keeping GDP up. The decrease in taxes for companies will make it so that companies earn more money annually and therefore they can expand and have more workers rather than laying people off. With the increase of workers and the money that people can spend, GDP will be increased rather than decreased.
I think that Selinger made the right decision to increase the government’s spending in Manitoba by $395 million because it will act as a good buffer to prepare Manitoba’s economy from the decrease in demand from the United States. Also, the decrease in taxes for businesses will ensure that they will not suffer any profit losses and therefore people would not have to be laid off as a result. With these decisions made, the economy should not change at all and should remain the same throughout now until the nearby future.
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The surplus that Manitoba has obtained from it's economy is a wonderous sign of how the Canadian economy is thriving compared to other countries. I agree that Greg Selinger made the correct decision of funding sectors, such as healthcare and the environment. The elimination of corporal capital tax will also help Manitoba's GDP. With all these benefits businesses in Manitoba is receiving, they will surely be able to continue with the declining US economy. However, a decision I would have also made would be to use the surplus to purchase investments. This would assure a continual increase in spending, while supporting corporations.
By: Kevin Tran
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