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Pallister and balanced-budget law go back to 1993

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Provincial Conservative Leader Brian Pallister and Manitoba's balanced-budget law -- the law that requires a provincial referendum to raise taxes -- go back a long way, to 1993.

In June 1993, almost two years before then-premier Gary Filmon's government introduced Canada's first balanced-budget law, Pallister, then simply the Progressive Conservative MLA for Portage la Prairie, wrote the right-leaning Fraser Institute to ask whether the U.S. had balanced-budget laws and if they were effective.

He received a reply from then-Fraser Institute policy analyst John Robson, now a columnist with the Ottawa Sun, described by one of his former colleagues at the Ottawa Citizen as "a real conservative who has never wavered from his principles."

Robson assured Pallister in a quite lengthy article published in the May 1994 Fraser Forum that there were, in fact, many balanced-budget laws in the U.S., but they weren't very effective.

Robson's feature article, entitled Yes, Mr. Pallister. There is a Balanced-Budget Amendment, was anything but encouraging. Forty-eight of the 50 American states had constitutionalized balanced-budget provisions. But by 1990, these states had an accumulated total debt of $860 billion.

In an effort to find hope in despair, Robson did point out that because of the balanced-budget provisions, "the problem became visible much more quickly." But when he turned to Canada, his prognosis became even bleaker.

"Unfortunately, and this is the part of my reply you may find the most depressing... legislative controls like the U.S. Gramm-Rudman Act, or various expenditure-control measures by our own federal government, apparently can't do it either," Robson continued. "The condition of our provinces and of Ottawa suggest that legislative restraint is not very reliable. Politics is hard to manage. Even the U.S. Congress doesn't pass laws binding on itself."

He concluded the only real sanction is public opinion.

Manitoba, thanks to Pallister, took one additional giant step in the seminal Filmon government budget of 1995. Not only did the books have to be balanced, but a provincewide referendum would also be required to raise taxes.

As any economist will tell you -- and any family knows -- it is virtually impossible to never, ever, go into debt. An absolute prohibition on household debt -- pay as you go and if you can't pay you don't go -- would crash the economy overnight. Just think: The vast majority of Canadians couldn't afford to get a university education, couldn't afford a house, couldn't afford a car, furniture, flat-screen TVs, computers, cellphones or annual holidays.

Well, the same thing would apply to governments. If governments could never ever go into debt, today's world would be quickly transported back hundreds of years. Who would be paying for the schools, the hospitals, the roads -- all the social and economic infrastructure of the 21st century?

"It will not be easy to bring in a constitutional requirement of the sort that interests you in Manitoba," Robson wrote Pallister. "It may require there, and elsewhere in Canada, much more of a revolution in the fundamental structure of our public policy than people like Pierre Trudeau or Joe Clark seem to have understood.

"Ultimately, any balanced-budget provisions, or any other provisions, must be underpinned by an alert public opinion," Robson wrote. "In the U.S. as here it is an open question whether it still lies there. But the very fact of debating these measures might go a long way toward creating such a public opinion...

"All these things are worth bearing in mind when devising constitutional restraints on government. The enterprise is tricky. But the essence of my reply is that yes, they do have them in most U.S. states, yes, they work, and yes we need them here, in Manitoba, in all the other provinces, and federally," Robson concluded.

We need a lot of things -- in Manitoba and in Canada. Yet every year we cut taxes, especially progressive taxes, the taxes that deliver the dollars, we add an ever-accelerating debt to our crumbling social and economic infrastructure. That's the real debt -- the debt that matters.

As former U.S. Supreme Court Justice Oliver Wendell Holmes said in 1904, "Taxes are the price we pay for civilization."


Frances Russell is a Winnipeg

author and commentator.

Republished from the Winnipeg Free Press print edition April 26, 2013 A11

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