Focus on the public good, not the paycheque

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This article was published 06/01/2025 (608 days ago), so information in it may no longer be current.

The usual method is a carrot, not a stick.

Businesses often set fiscal targets that financially reward executives who are successful at meeting the budgets and goals approved by their boards of directors. Bonuses do exist, and they do get paid. Not always, but they do get paid.

But it’s rarer to hear of businesses that operate what could be seen as reverse-onus compensation — docking senior executives pay they’ve already received, or which has been committed to them, for failing to meet goals set earlier in the year — goals that changes in market forces beyond their control may make unattainable.

Because that puts those executives in a clear conflict of interest: it pitches their own continued financial interests against the interests of the wise stewardship of the companies they’re running. A company may well have interests that are much larger than slavishly sticking to an unreachable budget made at the beginning of a single fiscal year.

Bluntly, executives might wind up focusing on making budget in the short term to keep their pay, rather than on longer-term goals that are more important. It’s one thing to lose a year-end bonus — it’s something else again to find the money to pay back part of your salary.

And that brings us to the concept of laws that financially punishes cabinet ministers for failing to meet budget targets because they proactively choose to address new and important issues that may arise in provincial administration.

The Canadian Taxpayers Federation, in an op-ed in the Think Tank section of the Free Press on Dec. 31, argued for a full return to a law that penalized the cabinet personally for failing to deliver a balanced budget — and, in fact, a strengthening of it, saying, “Manitoba’s first balanced budget law was introduced 1995. Under that law, if the government failed to balance the budget, the extra pay an MLA receives for being a cabinet minister would be cut by 20 per cent. If the deficit continues into the next year, the extra pay was docked 40 per cent.

“That would mean this year cabinet ministers would see their pay slashed by about $12,000. If the deficit continues to next year, ministers would lose almost $24,000 in pay. That should inspire MLAs to do some cost-cutting.”

The CTF argued that the law lost its bite when a past government weakened those punishments, and said that should change.

“The government needs to bring back real punishments for politicians who fail to balance the budget. … If the government fails to balance the budget, all cabinet ministers, not just the finance minister, would receive a pay cut. That’s likely to make the ministers take a second look at their own budget spreadsheets,” CTF Prairie director Gage Haubrich wrote.

In other words, the idea is that there should be a financial penalty to make cabinet ministers focus on their personal finances, rather than reflecting broadly on all aspects of the common good. It might well be effective, to some degree — but focusing on their paycheque first is probably not the way we want provincial cabinet ministers to do their jobs.

Oh, and one other point, which, though smaller, is also important when it comes to penalties for failing to balance budgets. Government is not, in fact, a private business answerable to its board of directors, nor is it answerable solely to taxpayers.

Governments are answerable to every one of their citizens, which is why every citizen gets a vote, whether they make enough money to pay taxes or not. Public officials should receive their pay, and shouldn’t need carrots or sticks to convince them to do their jobs for the public good.