Tories table balanced-budget bill

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This article was published 13/03/2017 (3178 days ago), so information in it may no longer be current.

The Pallister government has introduced new balanced-budget legislation that sets no deadline for getting the province’s books into the black and penalizes cabinet ministers only if they fail to make “progress” each year in tackling what’s become a billion-dollar shortfall.

Bill 21 also contains several loopholes. Progress in slashing the deficit need not occur in a year in which there’s a natural disaster, such as a major flood, nor if there’s a reduction in revenue because of the actions of a regulator or another level of government.

The proposed legislation also specifically excludes the financial results of Manitoba Hydro in calculating the government’s annual surplus or deficit, while including the results of other non-core government entities, such as Manitoba Liquor & Lotteries.

Hydro, which is beset by debt, is projected to incur deficits for the foreseeable future, while Liquor & Lotteries is profitable.

The Pallister government has said it could take up two terms in office — eight years — to balance the province’s books.

Finance Minister Cameron Friesen said Monday this remains the government’s time frame for balancing the budget.

Bill 21 replaces a balanced-budget law repealed by the Progressive Conservatives last year.

The old law, enacted by the former Filmon government, had been watered down by the NDP.

“It’s a move in the right direction. It’s a bill that recognizes that Manitobans were left with a mess by the previous NDP government,” Friesen said after introducing the bill in the legislature Monday.

In December, the Finance Department said Manitoba was on pace to incur a deficit of a little more than $1 billion in the current fiscal year, which ends March 31. That’s $93 million more than Friesen budgeted last spring. The province’s deficit was $846 million in the last year under the NDP.

Under the old law, cabinet ministers lost 20 per cent of their pay when the government incurred a deficit. Under the proposed legislation, ministers would suffer a 20 per cent pay deduction if the government didn’t make progress in reducing the deficit or incurred a deficit once the books had been balanced. The ministerial pay cut would rise to 40 per cent if the government missed its target on successive years.

However, in order for ministers to suffer the full penalty prescribed under law, the government must exceed its legislative requirement by $100 million. If, for example, a deficit exceeds the legislated requirement by $30 million, ministers would have to forfeit only 30 per cent of their pay.

The baseline number on which the government will be judged is the deficit projection contained in this spring’s budget. Friesen is set to table his second budget on April 11.

Todd MacKay, Prairie director of the Canadian Taxpayers Federation, said Bill 21 is not aggressive enough in addressing the province’s fiscal problems.

“Just making the deficit smaller than last year isn’t good enough. It needs to be a lot smaller. This needs to be a matter of some urgency,” he said in an interview.

“This legislation is better than nothing, but it’s not as ambitious as we would have hoped. If all you’re doing is marginal progress each year, the budget may never be balanced.”

The Fiscal Responsibility and Taxpayer Protection Act would require the finance minister to table a budget by April 30 of each year, unless prevented by unusual circumstances or the legislature is dissolved for an election.

The minister must also table a strategy for achieving its fiscal objectives annually.

Under the old balanced-budget law, a new government was given a one-year grace period before cabinet ministers were penalized for running a deficit.

Pallister and his ministers have been criticized by the Opposition for accepting normal cabinet pay despite tabling a deficit budget last spring. However, they were within their rights to do so. Under the old law, cabinet ministers of a new government suffered no penalty in their first year in office.

Now, they won’t take a hit as long the deficit goes down — even marginally — year after year.

Meanwhile, the proposed legislation would restore a provision in the old law that prohibits increases to the income tax, provincial sales tax or corporate payroll tax without a referendum. However, the results of the referendum would be non-binding on the government.

That would give the government some wiggle room if a vote were close, Friesen said.

Fort Rouge NDP MLA Wab Kinew said PC cabinet ministers should have continued to take a pay cut for failing to balance the budget.

“I would say, lead by example,” he said outside the chamber, calling the bill “a piece of politics.”

“The bill that they brought forward has so many exceptions that I’m doubting that it’s going to be effective in reaching its stated goal,” Kinew said.

larry.kusch@freepress.mb.ca