Budget 2025 takes further steps towards repairing public services while also providing stimulus for the provincial economy to counter 25% tariffs from the United States and continued tariffs by China.
For the 2025/26 fiscal year Manitoba is projecting a $796 million deficit, down from $1.2 billion last year.
Continuing the rebuild of public services
Rebuilding public services and repairing relationships with public sector workers remains a central feature of Budget 2025. In total, expenditure is set to increase by $1.7 billion, with most increases captured by Health, Education, and Post-Secondary Education. In each of these areas, expenditure increases are helping wages catch up after years of austerity. Health funding alone is increasing by $1.2 billion in Budget 2025, an increase of 14.9 per cent.
Modest steps to shore up revenue
The province is also taking modest steps to shore up provincial tax revenue. Thresholds for the Basic Personal Amount and income tax brackets will be frozen beginning in 2025/26, a tax change that only provides $82 million this year, but will deliver larger revenue increases in future years.
Federal transfers to Manitoba will increase by $639 million in 2025/26, making up 35 per cent of provincial revenue. Manitoba is still heavily dependent upon federal transfers, a formula that may be up for debate in the next federal election.
Stimulus spending to counter tariffs
To prepare for 25 per cent tariffs from the United States and tariffs from China, the province has prepared stimulus measures including a $500 million increase in capital expenditure and a $500 million contingency fund to support exporting industries. Together these two investments provide a stimulus of 1 per cent of GDP in the event of tariffs. Budget 2025 projects that provincial GDP would contract by 3.8 per cent in 2025/26 in the event all currently announced tariffs remain in place long-term, indicating the province should be prepared to go much further to provide stimulus.
Capital expenditures include $881 million to complete Hydro repairs, $660 million for healthcare facilities, and $206 million for roads and highways. A $300 million loan guarantee program is included for wind energy generating partnerships with Indigenous communities across Manitoba, a program that was announced in the throne speech.
Missed the mark on housing and childcare spaces
While infrastructure investments are welcome, investments in housing and childcare continue to miss the mark. Investments in social housing are projected to increase, expanding the supply of public and non-profit housing by 670 units this year, up from 350 the previous year. This addition remains below the target of 1,000 unit per year over 10 years required to reduce waitlists and meet current housing demand.
Budget 2025 also increases investment in new childcare spaces with plans to build 4,600 spaces over two years. This is a major increase but leaves Manitoba far behind the commitment to build 23,000 spaces by 2026.
Given the gap between announced stimulus and the potential GDP decline resulting from tariffs, the province should expand investments in public housing construction and childcare spaces.
Little progress on poverty and income inequality
Budget 2025 does reduce income clawbacks for EIA recipients, an important policy changes, but the budget does not go far enough to protect the 225,000 low-income Manitobans from the impacts of an economic downturn and reverse income inequality.
EIA rates remain frozen for 2025/26. At the same time no increase in EIA monies for food and other basics was made available, a rate which has been frozen since 2022. The amount people on EIA can earn was increased from $200 a month to $500 a month, albeit at the same claw back rate of 70% for the amount earned beyond $500.
The budget also provides a very modest $50 increase in the renters tax credit, but does not provide additional measures to support renters who have seen their housing costs soar.
With upper income earners having benefited financially in the last several years, Budget 2025 misses an opportunity to bring Manitoba to introduce a fourth income tax bracket, which would bring Manitoba in line with other provinces. This measure could help reduce levels of income inequality which increased significantly since the COVID-19 pandemic.
