#1GETTING THE JOB DONE BUDGET 2019 Manitoba's Economic, Fiscal and Borrowing Program Update April 2019 Manitoba#2GETTING THE JOB DONE BUDGET 2019 Province of Manitoba ✓ Central geographical location ✓ Fifth-largest provincial population at 1.34 million and one of the fastest growing in Canada ✓ Nominal Gross Domestic Product at $73.1 billion, among the most diversified and most stable economy in Canada. ✓ Sound credit rating: Moody's: Aa2 (stable) and S&P: A+ (stable) ✓ Next provincial election is to take place. October 6, 2020. 。 Manitoba has a set date for general elections, although the law allows for the election to be called before the set date. Prince Rupert Vancouver LEGEND Inland Port Partners CN Rail Lines CP Rail Lines BNSF Rail Lines Other Rail Lines Highway Routes Rankin Inlet Churchill Thompson Edmonton Saskatoon Calgary Winnipeg. Regina Fort Worth Dallas San Antonio Guanajuato Manzanillo Lazaro Cardenas Quebec Halifax Montreal Toronto -Minneapolis-St. Paul Windsor Detroit -Chicago Des Moines Kansas City New Orleans Ottawa 20 Jan. 2010 Manitoba#3GETTING THE JOB DONE BUDGET 2019 Clear and Transparent Fiscal Plan Responsible Recovery Keeping our Promises Manitobans Making Choices Getting the Job Done GETTING THE JOB DONE BUDGET 2019 Correcting the Course Your Province. Your Plan. Your Priorities. Responsible Recovery MANITOBA BUDGET 2016 Correcting the Course MANITOBA BUDGET 2017 Manitoba Manitoba Keeping our promises. Real progress for Manitobans. Budget 2018 Manitoba Manitoba Manitoba#40 GETTING THE JOB DONE BUDGET 2019 200 Budget Results Summary Budget Plan vs. Budget Result of Net Income (Deficit), 2011-12 to 2019-20b (Millions of Dollars) (f = forecast and b = budget) Previous Government New Administration (200) (400) Budget Plan (438) Budget Plan (357) Budget Plan (460) Budget Plan (422) Budget Plan (518) (600) Budget Result (560) Budget Result Budget Result (600) (539) (800) (1,000) (1,200) Budget Result (1,001) 2011-12 2012-13 2013-14 2014-15 2015-16 (932) Q3 Report Result (470) Budget 2019 Plan (360) Budget Result (789) Budget Result (695) Budget Plan (521) Budget Plan Budget Result Budget Plan (840) (911) 2016-17 2017-18 2018-19f 2019-20b Manitoba#52016-17 0 GETTING THE JOB DONE BUDGET 2019 200 Measured Steps Towards Balance Summary Budget Plan, Results and Projections of Net Income (Deficit), 2016-17 to 2022-23p (Millions of Dollars) (f = forecast, b = budget and p = projection) (200) Projection (128) Projection (28) (400) Q3 Report (470) Budget 2019 Projection (273) (600) Actual (789) Actual (695) (360) Budget 2018 (521) (800) Budget 2017 (1,000) Budget 2016 (840) (911) Better than (1,200) Budget Targets 2017-18 2018-19f 2019-20b 2020-21p 2021-22p 2022-23p Manitoba#6GETTING THE JOB DONE BUDGET 2019 Mandate to Restore Credit Rating "The gradual pace of deficit reduction reflects the government's objective of balancing the budget in a measured and responsible fashion without jeopardizing service delivery, while reducing the overall tax burden and making life more affordable for Manitobans." (Paul LeBane - DBRS - March 8, 2019) "This "bending" of the capital cost curve has resulted in strategic infrastructure spending returning to "sustainable levels", (Catherine Maltais - National Bank of Canada - March 8, 2019) Moody's Credit Ratings S&P Credit Ratings BC Aaa SK Aaa AB Aa1 MB Aa2 ос Aa2 MB ON Aa2 NS Aa2 ON NB Aa2 382 2 2 3 2 BC AAA SK AA Qc AA - NS A + A + AB A + A+ NB A+ PE Aa2 PE A NL Aa3 NL A Manitoba#7GETTING THE JOB DONE BUDGET 2019 Fiscal Responsibility and Economic Growth Strategy ✓ Reducing the Deficit 。 Summary deficit at $360 million (2019/20), lowest in six years. ✓ Rebuilding the Rainy Day Fund 。 Given economic and fiscal risks, Manitoba's rainy day fund is being replenished to a projected. $265 million by the end of the fiscal year (2019/20). ✓ Investing in Front-line Services o Record level of funding for health care, education and families in each budget. ✓ Supporting Victim Services o Funding to target drug-related criminal activity including methamphetamine. 。 29 new positions for Manitoba RCMP. Manitoba#8GETTING THE JOB DONE BUDGET 2019 Fiscal Responsibility and Economic Growth Strategy ✓ Public Sector Transformation 。 The Idea Fund and Learning Fund to drive innovation and generate savings in the Public Service. o Gradual, orderly and sustainable reduction in labour costs through an 8% natural attrition rate. ✓ Summary Budgeting 。 Government Reporting Entities to report budgets using the same accounting method. ✓ Financing and Administrative Consolidation o Enhanced Cash Management Functions - Entities to use the Province as their primary lender. 。 Shopping smarter - centralizing procurement across agencies. Manitoba#9GETTING THE JOB DONE BUDGET 2019 Fiscal Responsibility and Economic Growth Strategy ✓ Investing in Key Strategic Infrastructure o Annual commitment to spend at least $1 billion on infrastructure ($1.5 billion in 2019/20). 。 Conducting Return on Investment (ROI) reviews for all capital projects. o Almost $314 million in support to municipalities in 2019/20. ✓ The Economic Growth Action Plan o Establish three strategic partner organizations to deliver programming related to innovation, trade, investment and tourism. ✓ New Tax Increment Financing Framework (TIF) o Targeting development through strategic use of TIF. Manitoba#10GETTING THE JOB DONE BUDGET 2019 Improving Tax Competitiveness Manitoba's Retail Sales Tax rate cut to 7% (July 2019). ✓ Second last Province to index Basic Personal Amount and personal income tax brackets to the rate of inflation. ✓ Manitoba has no small business income taxes for corporate income below $500,000. ✓ Manitoba's general corporate income tax rate of 12% remains below the Canadian provincial average. ✓ Manitoba has a number of targeted corporate and community development tax credits to support economic growth. % 1PST Manitoba#11GETTING THE JOB DONE BUDGET 2019 Encouraging Private Sector Industrial Investment ✓ Reduced the number of red tape regulatory requirements by more than 24,000. ✓ Leading the nation in private sector capital investment in 2018. Capital Investment In Manufacturing, 2006-2019 (Millions of Dollars) (i = intentions) 1000 900 800 ✓ Leading the nation in manufacturing capital spending since 2015. 700 600 o Canada Goose Ubisoft o Amazon Web Services o Maple Leaf Foods 。 Roquette 500 。 Simplot 。 BellMTS 400 300 200 。 CN Rail 100 o McCain Foods o True North Square 0 expected for 2018/19. ✓ Film industry growing; $250 million worth of production 2006 2007 2008 2009 2010 2011 Manitoba 2012 2013 2014 2015 2016 2017 2018 2019i#12GETTING THE JOB DONE BUDGET 2019 Encouraging Private Sector Residential Investment ✓ Record setting pace of capital spending on residential building in Manitoba over the past two years. Capital Investment: Residential Buildings, December 2015 - December 2018 (12-Month Moving Sum in Millions of Dollars) 3900 ✓ Strong fundamentals: 3700 。 Over the past three years, population has increased by 1.5% annually, the second fastest among provinces. 3500 。 Strong average weekly earnings growth in 2017 and 3300 2018. 3100 ○ Among the most affordable housing in Canada. 2900 ✓ Results: 2700 o 14,877 new housing units started in the last two years, best two year total since 1986/87. 2500 。 5,836 rental apartment units added in the last two years, generating monthly income. Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Manitoba Jun-18 Nov-18#13GETTING THE JOB DONE BUDGET 2019 Most Stable Economy in Canada GDP by Industry Shares, 2017 Agriculture, Forestry and Fishing 4.3% ✓ Economic activity and jobs are not Education Services, 5.6% Health and Social. Services 9.0% Public Administration. 7.7% Accommodation, Food, Arts, Entertainment, Information and. Culture 5.5% Administration, Management of Companies and Other. Services 4.1% Professional and Scientific 3.3% Mining, Oil and Gas 3.3% Utilities 3.4% focused on one particular sector. Construction 8.0% Long-term progress is balanced by growth across different sectors. Manufacturing 9.7% Wholesale 6.4% Retail 5.7% Real Estate, Rental and Leasing 3.9% Finance and Insurance 5.5% -Transportation and Warehousing 5.9% Goods-Producing Commercial Services Non-Commercial Services Manitoba#14Manitoba's Broad Export Base GETTING THE JOB DONE BUDGET 2019 ✓ Grains, Oilseeds and Livestock ✓ Aerospace Components and Service ✓ Transit and Inter-City Buses ✓ Processed Food Products ✓ Machinery and Equipment ✓ Mining and Oil Extraction. ✓ Electricity (Mostly Hydro) ✓ Industrial Chemicals ✓ Pharmaceuticals NEW FLYER ZERO EMISSIONS FUEL CELL ELECTRIC ZERO EMISSIONS HYDROGEN POWERED R1925 Manitoba Manitoba Pork#15GETTING THE JOB DONE BUDGET 2019 Strong Population Growth – Resilient Labour Market - 1.8 1.6 1.4 1.2 1.0 22% 0.8 0.6 0.4 0.2 Annual Population Growth, 1999 – 2018 Unemployment Rate, 2019 Year-to-Date 14.0 (Per Cent) (Per Cent) Recently among the strongest population growth in the Country 20-Year Average 0.6% 12.0 Consistently among the lowest unemployment in the Country 10.0 9.7 8.2 8.0 7.0 6.5 6.0 5.8 5.8 5.3 5.3 5.4 4.6 4.0 2.0 11.6 0.0 0.0 1999 2002 2005 2008 2011 2014 2017 BC MB QC SK ON CAN NS AB NB PE NL Manitoba#16GETTING THE JOB DONE BUDGET 2019 Economic Outlook 2019f - 2020f ✓ Forecasts reflect moderating growth in Canada, U.S. and China, which are Manitoba's key export markets. ✓ Manitoba has a number of large commercial and industrial capital projects currently underway and recently announced that will offset some of the downward pressure. Manitoba Finance Survey of Economic Forecasts (As at April 2019) 2019f 2020f Manitoba Canada Manitoba Canada Per Cent Growth Unless Noted (f = forecast) Real GDP 1.7 1.9 1.5 1.8 Nominal GDP 3.6 3.9 3.6 3.9 Employment 0.8 1.0 0.7 0.8 Unemployment Rate (%) 5.8 5.7 5.8 5.8 Consumer Prices 1.9 2.0 2.1 2.1 Manitoba#17GETTING THE JOB DONE BUDGET 2019 ✓ 97.2% of electricity generation is hydro, 2.7% is wind and 0.1% is thermal. Roughly 1/4 of the electricity generated is exported outside of Manitoba (U.S., Canada). ✓ Manitoba Hydro's current generation capacity is 5,648 MW, with an additional 5,110 MW more of potential generation identified. North America's Clean Energy Leader 20 20 18 16 14 12 10 8 6 + 2 T Manitoba Quebec British Columbia Retail Price of Electricity (Cents/kWh $C) Saskatchewan Texas Wyoming Kentucky North Dakota South Dakota Minnesota Wisconsin Ontario California 0 Manitoba#18GETTING THE JOB DONE BUDGET 2019 Manitoba Hydro Capital Initiatives ✓ Manitoba Hydro is currently investing in a major generation project and has put into service a major transmission project. Keeyask Hydro Generating Station Project Design Capacity: 695 MW Anticipated First Unit in Service Date: 2020-21 Anticipated Cost: $8.7B Bipole III Transmission Line Project Design Capacity: 1,364 km In Service Date: July 4, 2018 Anticipated Cost: Approx. $4.8B Manitoba#19GETTING THE JOB DONE BUDGET 2019 C$6.7 billion Refunding Maturing Debt $3.0 billion New Cash Requirements $3.7 billion Borrowing Requirements $740M Other Crowns & Org. $388M General Programs $353M Capital Investments $2,200M Manitoba Hydro ✓ Budget 2019 was tabled on March 7, 2019. ✓ Expected borrowing requirements for fiscal year 2019/20 are C$6.7 billion. ✓ Planned funding through both domestic and international capital markets. ✓ To date, we have funded $3.4 billion, 50.2% of our needs for fiscal 2019/20. Manitoba#20GETTING THE JOB DONE BUDGET 2019 AUD MTN 4% U.S. Global 16% FRN 5% EMTN 12% MTN 9% CAD Public Debentures 53% Funding Sources GBP, JPY, NZD, HKD, EURO Savings Bonds 1% (discontinued in 2016) Manitoba#21GETTING THE JOB DONE BUDGET 2019 Borrowing Program (C$ Billion) ■Future Expectations International ■Domestic 8.0 7.0 6.0 ----- 5.0 4.0 3.0 2.0 1.0 0.0 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2019/20B Manitoba#220.0 0.5 1.0 1.5 2.0 GETTING THE JOB DONE BUDGET 2019 (C$ Billion) 4.0 3.5 3.0 2.5 Debt Maturity Profile Manitoba conducts prudent debt management practices and has achieved a stable level of debt maturity profile over the intermediate term. 2025 2027 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 2063 Manitoba#23Thank You! GETTING THE JOB DONE BUDGET 2019 More information at: www.manitoba.ca/finance/ Manitoba