Dismantling balanced budget law ‘tragic’

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This article was published 26/03/2010 (5651 days ago), so information in it may no longer be current.

One of the architects of the province’s first balanced budget law said it is "tragic" the Selinger government will further eviscerate the legislation, which was a legacy of the Filmon Tory years.

"We all realized it was something that could be changed, but in the end it was there for self-discipline," said Clayton Manness, who served as finance minister under former Progressive Conservative premier Gary Filmon from 1988-93.

"It was to remind those who cared in the past and those in the future that as a province we are foolhardy if we allow that deficit to grow."

The NDP government has said it plans to rewrite the balanced budget law in part to let cabinet ministers avoid a 40 per cent pay cut. The law requires cabinet ministers to take a 20 per cent pay cut whenever the province’s finances are in deficit over a four-year average. If the same thing happens in a second consecutive year, the pay cut doubles to 40 per cent.

Premier Greg Selinger has said the 40 per cent provision will be eliminated as the province deals with the unforeseen impact of the recession on its bottom line.

MLAs will also take a 20 per cent pay cut this year, which is intended to show leadership to the unions.

In question period Thursday, Progressive Conservative Leader Hugh McFadyen criticized Selinger, saying the pending change was done more out of convenience than frugality.

Selinger countered that he and his NDP government had no intention of clinging to "legislation of another era" or being dragged back to an "ideological hobby horse" and "claptrap of the 1990s."

But Manness said the Selinger government’s five-year economic recovery plan that calls for consecutive budget deficits at the same time as an 1.8 per cent spending increase ignores the basic rule of money management.

Manness said in an interview that Finance Minister Rosann Wowchuk’s budget relies too much on forecast revenue growth of 3.2 per cent annually and not enough on tough cuts to spending.

"We don’t have the ability to bring in gobs of money," Manness said. "Unless Manitoba hits big oil or big something, like big minerals, you don’t get these $25-million surprise jumps.

"That’s the folly here, because if Wowchuk is saying five years down they’ll have this revenue coming in again, well, you may never get there, and all of a sudden somebody has got to impose significantly higher taxes."

What the NDP does have up its sleeve is the sympathy of the public sector unions, he said.

"The high card that this government has that our government never did have is that they can, in spite of what (Peter Olfert, president of the Manitoba Government and General Employees Union) is saying, they can really bring moral suasion to bear with the public sector unions. I think behind the scenes they can obtain a freeze.

"Even within education circles, I’m pretty sure they can get an element of peace for up to two years."

It’s estimated health-care workers and 13,500 civil servants could save the province "in excess of $100 million" by accepting wage freezes over the next two years.

Manness also questioned how government will pay down its debt at a time when interest rates are forecasted to go up.

Total debt including Crown debt and pension liability is $23.4 billion.

bruce.owen@freepress.mb.ca