PCs to limit borrowing, cap Hydro debt

Hey there, time traveller!
This article was published 08/03/2022 (1499 days ago), so information in it may no longer be current.

The Progressive Conservative government has proposed legislation to cap provincial borrowing and place a debt ceiling on Manitoba Hydro.

On Tuesday, Finance Minister Cameron Friesen introduced Bill 16, the Financial Administration Amendment Act, in a bid to increase financial accountability and reporting.

The legislation would set borrowing limits for the provincial government at $44.4 billion and cap the debt Manitoba Hydro can take on at $29.3 billion.

Currently, government and departmental borrowing is authorized annually, and incrementally, through the Loan Act and entails a complicated reconciliation process if authorized amounts go unspent, Friesen said.

Under proposed amendments, lawmakers would set a comprehensive borrowing limit for the province and Manitoba Hydro, taking into consideration current debt, anticipated operational and capital expenses over two fiscal years, plus a contingency buffer.

Hydro, a Crown corporation, would be considered apart from the government to differentiate taxpayer-supported debt from ratepayer-supported debt, Friesen said.

“That number will be something that Manitobans can see,” Friesen said Tuesday. “They can look to and it can provide guidance to governments as we work towards things like balancing our books and returning our books to stability after challenges that we faced during COVID-19.”

Friesen said the proposed borrowing limit was set approximately 20 per cent higher than the current debt load on the recommendation of the finance department. It provides enough room so emergency debates, or other requests for borrowing, would not be necessary.

Borrowing limits for the province and Manitoba Hydro would also be adjusted annually through budget implementation legislation and included in budget material.

“The idea of setting a limit, we believe, is important,” Friesen said.

The province must borrow to operate and it will take at least eight years to reach a balanced budget, he said.

“It acts as a form of accountability to government. It also provides better transparency for legislators.”

He noted authorized borrowing amounts set aside as contingency would be held centrally and dispersed as needed.

“The current conditions, inflation, geopolitical risk, other factors, those are all things that governments must plan for but sometimes planning is not enough and you need to have that coverage,” Friesen said.

“If something came up that was unexpected, you would still have that ability to go back and say ‘We believe more is needed,’ but it creates an open process by which the legislature would then become responsible to hear that argument for more, considerate it, debate it, and make a decision,” he said.

The province’s current debt is approaching $30 billion while Manitoba Hydro has $23.5 billion in debt.

The minister said the borrowing limit will not affect the normal operations of Manitoba Hydro or put pressure on the utility to increase rates. Senior management with the corporation participated in consultation on the borrowing limits, he added.

The bill would require the reinstatement of detailed budget information, which the Tories were accused of hiding last year.

The legislation would require the government to divulge details of each department’s spending every year, including staffing levels, with comparable numbers for the previous year. It also would require departments to release objectives for the fiscal year and how they will be achieved.

Those details are contained in documents called supplementary estimates.

The New Democrats complained last year when those estimates contained fewer estimates than usual.

“Last year the PCs broke the rules and hid their cuts from Manitobans, but the NDP fought back,” finance critic Mark Wasyliw said in a statement late Tuesday.

“Despite this new bill, we know Premier Stefanson and the PCs will keep making secret cuts that hurt families, but you can count on Wab Kinew and the NDP to demand better.”

The province said the federal government and other provinces have also replaced annual loan act appropriations with borrowing authority limits.

— with files from The Canadian Press

danielle.dasilva@freepress.mb.ca