Promises not enough to balance budgets

Opinion

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This article was published 02/01/2025 (259 days ago), so information in it may no longer be current.

Politicians, just like the rest of us, respond to incentives. You don’t clean the garage because you have a passion for cleanliness — you do it so your spouse doesn’t make you sleep on the couch again.

Manitoba politicians need new incentives to balance the budget because government fiscal updates have become a sombre affair for taxpayers.

The bite needs to be put back into Manitoba’s balanced-budget law so politicians who increase the deficit face consequences for wasting taxpayers’ money on interest payments on debt.

The government promised taxpayers a $796-million deficit in Budget 2024. That was bad enough.

The latest fiscal update shows that the government has blown that deficit up to $1.3 billion.

This will be the third-largest budget deficit in Manitoba history, only beaten by the pandemic and last year’s $2-billion deficit.

By the end of the year, the debt will be $34.6 billion. Debt interest charges will cost taxpayers $2.3 billion this year. That’s a cost of more than $1,500 per Manitoban.

The deficit is increasing because the government is spending more money than it told taxpayers it would. The update shows that the government is spending $475 million more than budgeted.

Finance Minister Adrien Sala is still promising that the government will balance the budget by 2027. The increased deficit makes that commitment a lot more difficult.

Manitoba governments have only balanced two budgets since 2009. And many finance ministers during that time promised balanced budgets, too.

To balance the budget according to the government’s own numbers, it will have to restrict spending increases to $1.2 billion more in total over the next three years. For perspective, the government increased spending by $845 million in 2024 alone.

Budgets aren’t balanced on promises — it takes concrete action to reduce spending. And refusing to act needs consequences.

A pay cut for ministers should be that consequence. And that used to be the law in Manitoba.

Manitoba’s first balanced-budget law was introduced in 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.

But the law was watered down in 2018. Now, instead of being punished for any deficit, ministers get to keep their pay if they lower it by some amount compared to the previous year. What’s most outrageous is that if ministers’ pay does end up being docked, they get it all back if they balance the budget at some point in the future. That’s barely an incentive to keep the province in the black.

The government needs to bring back real punishments for politicians who fail to balance the budget.

“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 NDP Leader Wab Kinew when the law was being watered down.

It’s time for Kinew to put his money where his mouth is — literally.

A law like this also places the blame equally around the cabinet table.

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.

The government needs to get spending under control and balance the budget. And it needs to make sure that politicians have skin in the game and face consequences when they saddle taxpayers with more government debt.

» Gage Haubrich is the Prairie director for the Canadian Taxpayers Federation. This column previously appeared in the Winnipeg Free Press.