Selinger hints he may scrap Manitoba balanced budget law altogether

Premier Greg Selinger is hinting that the Manitoba government may do away with two-decade-old balanced budget legislation altogether, not long after he said the province is reconsidering the law.

Running a deficit while leading in economic growth not inherently contradictory, says premier

Premier Greg Selinger came out over the weekend saying the Manitoba government is reconsidering two-decade-old balanced budget legislation so the province can be free to spend more than it pulls in. On Monday, he went a hair further, hinting they may do away with the law altogether. 2:04

Manitoba Premier Greg Selinger came out over the weekend saying the government is reconsidering two-decade-old balanced budget legislation so the province can be free to spend more than it pulls in.

On Monday, he went a hair further, hinting they may do away with the law altogether.

The Balanced Budget, Fiscal Management and Taxpayer Accountability Act was introduced by a Progressive Conservative government in the 1980s and lays out the consequences for running deficits — for instance, shrinking the salaries of ministers in the event of a deficit.

Cabinet ministers, including the premier and finance minister, can receive a 20 per cent reduction to their salaries.

But because of the 2008 recession, the Selinger government revised the law, making it OK to run deficits during the "economic recovery period" slated to end this year.

In 2012, the government extended that deadline to 2016-17, and now it wants to push that date back even further to 2018-19. In order to do that, the province would have to change the law again.

Far from any minor changes, Selinger suggested on Monday that the law as it stands might get scrapped.

"You have a long-term commitment to fiscal prudence and fiscal responsibility," Selinger said.

"Every province does that whether they have balanced budget legislation or not."

Changed transparency rules

The province has already changed the rules on how transparent it has to be with its finances. It has refused to show CBC News what it and its agencies' deficits are expected to be in the near future, as it has in previous years.

This year and in 2014, Manitoba's economy is forecast to outpace several other provinces. Selinger said running a deficit while leading in growth is not inherently contradictory.

"Manitoba is doing very well relative to everyone else, but the overall forecast for growth around the world has actually been ramped down this year," Selinger said, adding that many governments are making changes to their balanced budget legislation as a result of that forecast.

But John McCallum, an economist and professor at the University of Manitoba, said continued deficits will hurt the province — especially if interest rates bounce back.

"It will terribly squeeze the ability to provide goods and services in Manitoba," McCallum said. "This is a pretty substantial deficit this year, in an economy that's not going to do all that badly this year.

"The debt can keep going up. No one is going to die, but it needs to be fixed."

With files from The Canadian Press

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