Slaying the deficit could put cash back in Manitoba cabinet ministers' pockets
If the Progressive Conservative government balances its budget by the end of a second term, Manitoba cabinet ministers could get lump-sum paybacks of any money they were penalized for running a deficit.
The balanced-budget legislation updates were introduced this week as Bill 27, The Fiscal Responsibility and Taxpayer Protection Amendment Act — one of five pieces of legislation tabled Tuesday, following five others on Monday.
It includes what Finance Minister Cameron Friesen billed as a "jubilee clause." If ministers are fined for tabling deficit budgets — penalties that could be in the tens of thousands per year — once they eliminate the deficit, they get it all back in a lump sum.
"Why? Because accountability to Manitobans matters and fairness matters, but fairness to those ministers also matters," Friesen said.
Friesen said it wouldn't be responsible to project how much the total cost of those payouts might be.
Instead he's focused on reducing deficit spending and saving money on debt servicing.
Under Manitoba's balanced-budget legislation, a percentage of ministerial salaries are withheld every year until improvement is shown in reducing the deficit.
To avoid the penalties, ministers need to improve deficit spending by $100 million a year.
So ministers are OK this year — despite last week's budget projecting a $521-million pool of red ink at the end of fiscal 2019, that's $319 million better than the year before (a reduction of more than one-third).
But the net debt will hit $25 billion, thanks to $1 billion in debt-servicing costs.
"We're on track, and we're actually ahead of schedule on meeting that commitment. We plan to keep our word," Friesen said.
"But if at the end of the eight years we succeed and we have eliminated this almost $1-billion deficit for a benefit of all Manitobans, at that point in time, this legislation says, any amounts that were withheld would be returned to ministers."
Friesen noted that the Tories under former premier Gary Filmon introduced balanced-budget legislation to Manitoba, saying it was "watered down" by the NDP in subsequent years.
Premier Brian Pallister's PCs replaced the legislation entirely in May of last year, and after it was strengthened in committee hearings, settled on taking 20 per cent of cabinet members' $50,000-plus ministerial top-up pay, increasing to 40 per cent in a second consecutive year without meeting improvement targets.
But it's actually more complicated than that, with newly appointed ministers exempt from penalty in their first year and smaller amounts withheld if the deficit improves by less than $100 million.
"Why does it have to be so complicated? Why wouldn't they just pass a law that says if you run a deficit, you take a pay cut? That was the rule that was in place when they came in office," said NDP leader Wab Kinew.
"It might seem odd to bring amendments this early after legislation passed, but we saw opportunities here to make it even better," Friesen said.
Kinew argued scrapping the old balanced-budget legislation gave Tory ministers a year off the penalties, calling it "a 20 per cent raise" because of the first-year exemption.
"Let it go," he said. "Like that they should get a six-figure payout 10 years from now because the budget is balanced at some date to be determined? To me that doesn't make a lot of sense, and I think it doesn't make a lot of sense to people in the province."
Friesen said there will be annual reports on how much is held back from cabinet ministers' salaries. That will make clear how much is set to be paid when the deficit is cleared.
"If we don't make the target, they won't see a dime back," Friesen said.
