POLITICS

Manitoba premier looks at changing law that requires balanced budgets

05/03/2015 05:00 EDT | Updated 05/03/2016 05:12 EDT
WINNIPEG - Manitoba's NDP government is looking at a major reworking of its balanced budget law after years of altering, amending and tinkering with the legislation that, in theory, is supposed to prevent deficits.

"The minister of finance will do consultations with the community and with experts and come up with an approach that makes sense, if there are going to be any changes at all," Premier Greg Selinger said in an interview.

"Now's the time to take a look at it, to ensure that we have an approach that is sensible for the economy of Manitoba and for the fiscal realities we're facing, as well as ensuring that there's accountability and transparency going forward."

The Balanced Budget, Fiscal Management and Taxpayer Accountability Act was introduced by a Progressive Conservative government two decades ago.

It forbids deficits except in cases of natural disasters or war and, as a penalty, cuts cabinet ministers' salaries any time the government is in the red. It also requires a referendum before the provincial sales tax, income tax or the business payroll tax can be raised.

When the government started running deficits in 2009, it suspended sections of the law and cut in half the salary reduction for cabinet ministers. Manitoba was one of several provinces that changed its balanced budget legislation to deal with the global recession.

The NDP has since added more loopholes that permit deficits when Crown corporation profits or federal transfer payments drop sharply.

Each time, the changes were leapt upon by the opposition.

"It allows them to be criticized by the political right as being poor managers of the economy," said Karine Levasseur, who teaches political science at the University of Manitoba.

One possible change has already been hinted at by the government.

The law currently requires the government to avoid a deficit on all its public finances, including Crown corporations. In last week's budget, Finance Minister Greg Dewar said the government was no longer aiming at balancing the broader public budget, but only the "core" budget — government departments. He also pushed back the target for balancing the budget to 2019 from 2017.

If the government moves to a core budget, it could have more ways to avoid a deficit. It could, for example, take money out of a Crown corporation and put it into government revenues.

Selinger said any new accounting system will be transparent.

"You have to ... report, no matter what system you use these days. It's all in the bottom line. The question is, what's the most appropriate way to report that and be transparent to Manitobans, while protecting core services and making sure we grow the economy."

The government may also do away with the law's requirement for a referendum on tax increases. It suspended that provision in 2013 when it raised the sales tax to eight per cent from seven.

The Opposition Tories took the matter to court and argued the government was effectively breaking the law. But the judge sided with the NDP, saying governments have the right to suspend or alter laws, as long as they pass the amendments through the legislature.