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Manitoba is Canada's Greece: Tory

Ex-finance minister blasts gutting of balanced-budget law

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Manitobans should be outraged the Selinger New Democrats plan to kibosh a 1995 law that says taxpayers should decide major tax increases, the chief architect of Manitoba's balanced-budget legislation said Wednesday.

"It's a sad day for Manitoba," former Tory finance minister Eric Stefanson said after the NDP introduced a bill to exempt them from calling a referendum on their planned hike to the provincial sales tax.

"Really, there's no other way to describe it other than a sad day in terms of protection for the taxpayers, in terms of fiscal responsibilty in our province, in terms of what's important for the future of this province and in terms of allowing Manitobans to have a say on that," he said.

The NDP wasted no time Wednesday in introducing legislation to give the government the green light to raise the sales tax one percentage point to eight per cent, effective July 1, a move announced in Tuesday's budget. A Finance Department official said Wednesday the PST would only be hiked on items already taxed at seven per cent.

He said for goods and services in which a lower percentage is charged, such as on home electricity, there will be no increase.

The hike is expected to put almost $300 million into provincial coffers in the first full year of implementation.

The NDP has called the bill the Manitoba Building and Renewal Funding and Fiscal Management Act. Premier Greg Selinger said it calls on the province to report annually to Manitobans on how much it collects and how it spends the money.

"We'll demonstrate what roads are built," he said. "We'll indicate which personal-care homes are put in place, which hospitals are improved, which schools are improved, which post-secondary and college institutions have investments in them. There's going to be an accountability for that every year."

Selinger and Finance Minister Stan Struthers say the tax increase is needed to meet the coming construction season, a looming spring flood and to stave off an economic downturn.

They pointed to the Bank of Canada's downgrading of its expectations Wednesday on economic growth for the country for the first half of this year. It lowered its growth forecast for 2013 by half a point to 1.5 per cent, saying it expects the economy to remain under capacity until mid-2015.

"This is exactly the right time to create jobs and do things that will grow the economy, Selinger said. "Manitoba has done very well through this recession and this will allow us to continue to do well in growing our economy."

Stefanson said the NDP is painting too gloomy a picture. Its own budget papers trumpet that Manitoba is expected to outperform national growth in 2013 with an average unemployment rate (5.3 per cent) below the national average (7.2 per cent).

Stefanson also said the rush to get the PST hike because of the construction season is a red herring as the province has already planned its capital projects for months.

Blaming spring flooding is another red herring as up to 90 per cent of what the province pays to fight floods is covered by Ottawa.

"The reality is that many of them are not believers in balancing their books," he said. "They're not believers in paying down their debt. They're not believers in fiscal responsibility."

A small number of Manitobans would agree. A Facebook page called No PST Hike sprang up after Tuesday's budget.

Despite no referendum -- the NDP has said it would cost millions of dollars -- Selinger said his government does not intend to limit public debate to pass the bill.

He said at the committee stage, Manitobans will not be restricted from airing their views. "Everybody can sign up to speak on the bill," he said.

The date of those sessions has not been set.

Stefanson said Manitobans should take the premier up on his offer.

"I hope Manitobans really start to pay attention to the damage that this government is doing to our province and start to take action and speak out and show up at legislative committees and do whatever needs to be done to send a loud and clear message to this government. They're on the wrong track."

Stefanson introduced the province's balanced-budget legislation in March 1995. Besides a tax referendum, it required balanced budgets except in the case of a natural disaster, war or a five per cent drop in provincial revenues in one year and annual deposits to a debt retirement fund aimed at eliminating the debt by 2028. Tuesday's budget forecasts Manitoba's net debt to rise to $17.7 billion this year, almost doubling during the past decade.

"A day of reckoning is going to come," Stefanson said. "We're on a path to be the Greece of Canada. That's what's quietly happening and Manitobans need to be made aware of that."

bruce.owen@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 18, 2013 A4

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Updated on Thursday, April 18, 2013 at 8:07 AM CDT: adds fact box

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