Provincial Budget 2004

Services industry hit hard...

Yesterday's budget announcement contained both good and bad news for the services industry. The good news is that the NDP government has been able to project a balanced budget for 2004 without dipping into the "rainy-day fund." The government didn't draw from the fiscal stabilization fund as was widely expected by most observers. In fact, the government put a few million dollars back in the fund and paid down the debt.

The budget includes an overall spending increase of 2.2 per cent. Approximately $96 million will be spent to pay down the debt and pension liabilities. The largest budget line item continues to be Health at $3.13 billion (41% of spending and growing at 3.8% this year) with Education in second place at $1.65 billion (21.9% and up 3.4%). An additional $10 million will be spent on infrastructure this year.

On the side of tax reduction:

• The Education Support Levy is being reduced again in 2004, providing $10 million in savings of about $150 a year for a home valued at $125,000. (However, we are hearing outside of the budget process that school capital spending is to be curtailed.)
• Decrease in personal income taxes effective as of January, 2004.
• The budget announced minor changes on the corporate side, although it is difficult to determine when the changes will actually take effect.

The budget includes $47 million in new taxes:

• Land Transfer Tax: As of today, the tax on amounts over $200,000 increased by .5%.
• Tax on Diesel Fuel: Up 0.6 cents per liter as of April 30. There is the suggestion in the budget documents that this tax will assist with infrastructure development however it has not been dedicated as such.
• Cigarette taxes are up, as are taxes on cigars – both expected to generate $13 million.
• Liquor prices will increase to generate an additional $10 million.
• Starting July 1, all vehicle registration fees will increase by $23.

And the biggest impact to our industry is:

As of July 1, 2004, the Retail Sales Tax (PST) will apply to certain legal, accounting architectural, engineering, and security services. The 7% tax is expected to generate $17 million this year and about $24 million in 2005. However, based on the experience when electrical and mechanical labour was taxed in 2002, this may be a dramatic understatement. It will take a while to digest how this will impact the construction industry – there may be a push to complete design prior to July 1, and there may be attempts to avoid the tax by sourcing designs from other provinces. It does also mean that the architects, engineers, lawyers, and accountants will likely have to register and remit PST as well as endure visits from the PST auditor.

As for capital expenditure, the budget does not allocate new spending; rather it highlights projects already underway, and commitments made to share capital and infrastructure improvement around the province. The government reaffirms its commitment to spend $600 million over 5 years on highways, a program now in its third year, and suggests that this amounts to an increase of $10 million this year. Given the construction volume in Manitoba over the past few years, it is difficult to find fault in this approach.

For more budget information, the website address is: http://www.gov.mb.ca/finance/budget04 .

Back to Top

Workers Compensation Act Review

If it's not broke...

On February 25, 2004, the Honorable Nancy Allan, Minister of Labour and Immigration, announced that a four person Review Committee would be conducting public hearings on the Workers Compensation Act (WCA).

The hearings will occur throughout Manitoba on the dates and times listed on their website at www.wcbactreview.com. The site also includes many of the submissions received to date.

WCA will be preparing and delivering a brief to this panel in June. If you have issues or comments that you would like us to include, please forward them to wca@wpgca.com. Some of the items under discussion include expansion of the WCB coverage, waiting times and occupational disease.

Back to Top

Floodway Expansion

The struggle continues...

WCA continues to be very involved in the debate to ensure that all Manitoba contractors get a fair opportunity to bid for work on the upcoming Floodway Expansion Project. Our coalition of stakeholders continues to build and now includes WCA, Manitoba Heavy Construction, Merit Contractors, Construction Association of Rural Manitoba, the Winnipeg Chamber of Commerce, the Manitoba Chamber of Commerce, and the Federation of Independent Business. The issue continues to receive serious coverage in the local and provincial media, and is debated daily on the floor of the Legislature.

Last week the Floodway Expansion Authority hosted a meeting with all of the stakeholders present. This meeting was facilitated by Wally Fox-Decent at which the issues were discussed for the first time with this group. As a follow-up to that meeting, the Floodway Authority has committed to organizing a meeting for the stakeholders to specifically discuss the content of a proposed project agreement. WCA will be at this meeting. Also last week, the construction associations met with Water Stewardship Minister Steve Ashton to relay the industry's concerns with both the lack of open consultation and the suggestions that a Master Labour Agreement be used on the Floodway project.

Finally, we are having discussions with local federal MP's, including Treasury Board President Reg Alcock, to ensure that they understand the concerns of this industry. While discussions continue, we encourage your support and comments. If you wish to send a note to Premier Doer, his email address is premier@leg.gov.mb.ca. While he may not respond, rest assured that the number of sent messages are tallied and used to gauge public opinion on this issue.

Back to Top