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Re-branding Manitoba's Balanced Budget Law

Author: Adrienne Batra 2006/06/14
Launching a re-branding strategy for the province wasn't the only campaign the NDP government launched this week. The day before the legislative session ended, the government took under advisement recommendations to change Manitoba's Balanced Budget, Taxpayers Protection and Debt Retirement Act (BBL).

Adopted in 1995, Manitoba's BBL is widely considered to be the most effective and comprehensive taxpayer protection law in the country on account of its wide scope and stiff penalties to politicians who violate it. This legislation requires the Operating Budget to be balanced and mandatory debt payments be made each year. The BBL also includes a real enforcement mechanism that docks the pay of provincial cabinet ministers by 20 percent if a deficit is incurred in one year, and 40 percent if a deficit is carried over two or more years.

The recommendations to the NDP government, paid for by the taxpayers of Manitoba, include no longer using the Fiscal Stabilization Fund to balance the books, balancing the books on a four-year cycle (as opposed to each fiscal year) and elimination of mandatory debt repayment.

These recommendations come at a time when the province is moving towards implementing Generally Accepted Accounting Principle (GAAP), a commendable measure as it requires the province to finally include crown corporations, school boards and health authorities when reporting the state of the province's finances. But what should be raising alarm bells for Manitobans is the government's desire to abandon mandatory debt repayment and living within their means.

At a time when revenues are at an all-time high, $8.6 billion, and the debt has soared to $20.3 billion, the last thing the province should be doing is cooking up ways to spend more and add to the debt. Further, it is a hard sell to suggest that if a deficit is incurred for three years, that the government will be able to magically balance the books in year four. It is irresponsible spending by the current and previous governments that has turned Manitoba into an economic basket case, throwing away two measures that have helped keep the provinces finances from falling to its knees is foolish.

There are those that correctly point out that circumstances may not allow a government to balance its books. They suggest that such legislation restricts the government's ability to govern. However, the BBL takes these concerns into consideration as there are three provisions that allow for deficits: natural disasters that could not have been anticipated; Canada is at war or under the apprehension of war; and a reduction in revenue by 5 percent or more in the fiscal year (other than a reduction resulting form a change in Manitoba's taxation laws).

There may be required changes to the BBL to incorporate GAAP, but they should not be amendments that water down the legislation. It is one of our most important pieces of legislation, the province must move towards strengthening it for current and future generations of taxpayers.


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