Manitoba was the only province to see a decrease in real disposable income in 2005, giving it the lowest real per capita disposable income when compared to the other western provinces, Ontario and the Canadian average, according to a study released by the Chartered Accountants of Manitoba.

Real disposable income in the province declined by 1.3%, the study found.

“We now have the lowest disposable income from Ontario west but you do have to balance that against Manitoba having the lowest cost of living,” said Gary Hannaford, CEO of the Institute of Chartered Accountants of Manitoba (ICAM). “In our analysis of the province as a place to live, work, and invest, the live section is where some of Manitoba’s advantages come into play against poor performance in other indicators,” he added.

The MB Check-Up shows that real per capita disposable income in Manitoba ($21,705) in 2005 fell behind Saskatchewan ($21,953) for the first time in over decade and is well behind the Canadian average of $24,099.

“What pushed Manitoba’s disposable income into the negative last year was the small increase in income growth in combination with a small increase in population, the high rate of inflation, and an increase in real direct taxes per capita paid,” Hannaford said.

The study shows that the rise in employment income very small (3.2%), suppressed by reduced farm incomes. Real per capita accrued net income of farm operators from farm production declined from $278 million in 2004 to a $38 million loss in 2005.

“This does not necessarily forecast a downward trend in disposable income. We expect to see moderate gains in real per capita disposable income in 2006,” Hannaford said. He noted that real GDP is forecast to be higher in 2006 than last year, that employment growth is expected to be double what it was in 2005 and to exceed population growth, and that the province is also expected to have lower inflation.

“When you combine those factors with the cuts to personal tax rates that the Manitoba government has made, we can reasonably expect to see a recovery in disposable income in 2006,” Hannaford said.

The MB Check-Up also shows that Manitoba has the second lowest debt/income ratio (0.65) within the compared jurisdictions. The ratio is low because Manitoba has the second lowest house values ($133,854 real average 2005 value) and the second lowest proportion of mortgage debt to total debt, the main factors affecting the debt to personal income ratio.

Hannaford noted however, Manitoban’s indebtedness had the highest rate of increase within our comparison last year (6.6%) and has been on an upward trend over the past five years.

The study is published annually by ICAM and provides an independent factual comparison of the four Western provinces, together with Ontario and the Canadian average using 15 key indicators to create a profile of each as a place to live, a place to work and a place to invest.