The Manitoba government is staring down its largest deficit ever outside the pandemic.
Premier Wab Kinew and Finance Minister Adrien Sala, recently unveiled Manitoba’s latest fiscal update.
It was not filled with good news.
A projected $363 million deficit for 2023, is now replaced with a $1.6 billion deficit. Ouch.
Along with this deep deficit, the government is set to increase the debt by over $2 billion compared to the budget.
Higher deficits mean more debt and that means more money wasted on interest payments. The government projects that about $2.2 billion will be wasted this year on interest. That’s almost quadruple what the government plans to spend on agriculture.
The government needs to get back to basics: it must get spending down and balance the budget.
Now, obviously, Kinew is not the sole architect of this deficit. He has claimed that the previous government is to blame, while former premier Heather Stefanson has said that every item had been budgeted for.
Ultimately, the finger pointing doesn’t matter, what matters is it’s now Kinew’s job to get that deficit under control.
But what incentives does he have to do that? Kinew promised to spend big during the election campaign. This deficit is now at odds with him enacting his promises.
A keen political observer might point to the province’s balanced budget legislation. But that legislation has been changed and neutered since it was introduced.
If Kinew wants to be taken seriously on fiscal responsibility, he needs to put the bite back into Manitoba’s balanced budget law.
When business owners don’t balance their own budgets or they make bad business decisions, they pay for it with their wallet. The least Manitoba politicians can do is get some real skin in the game.
Former premier Gary Filmon brought in Manitoba’s first balanced budget law in 1995. It laid out some clear rules for what should happen to cabinet minister’s pay if they fail to balance the budgets of their departments.
Under the initial 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.
This year cabinet ministers will receive an about an extra $56,000 for their position. A 20 per cent pay cut would see them lose more than $10,000 and a 40 per cent pay cut would chop almost $23,000 off their paycheque.
That’s a big stick and a crunchy carrot. Keeping a hold of more than $10,000 is a good reason to buckle down and find a way to balance the budget.
But now the law is much less stringent.
Under the current law, a minister’s pay can still be cut by up to 40 per cent. But instead of being punished for any deficit, if the government lowers the deficit by some amount, but hasn’t balanced the budget, ministers still get to keep their pay.
Ministers are also exempt from the law for their first year on the job. And if the government eventually balances the budget, even years later, ministers get back the pay they were docked. Some punishment.
“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?” said then NDP leader Kinew when the law was being gutted in 2018.
He was right then, and it only makes sense for him to put that back into the law now that he’s premier. It shouldn’t take very long either, the premier just needs to replace the current law with the one from 1995.
Kinew needs to deal with this deficit and get spending down. But he also needs to work to prevent future deficits by strengthening Manitoba’s balanced budget law, so politicians face real punishments when they blow open the taxpayer piggy bank.
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