PCs to limit borrowing, cap debt Hydro
The Progressive Conservative government has proposed legislation to cap provincial borrowing and impose a debt cap on Manitoba Hydro.
On Tuesday, Finance Minister Cameron Friesen introduced Bill 16, the Financial Administration Amendment Act, in a bid to increase financial accountability and reporting.
The legislation would set the provincial government’s borrowing limits at $44.4 billion and cap the debt Manitoba Hydro can carry at $29.3 billion.
Currently, government and departmental borrowing is authorized annually, and incrementally, through the Loans Act and involves a complicated reconciliation process if authorized amounts are not spent, Friesen said.
Under the proposed changes, legislators would set an aggregate borrowing limit for the province and Manitoba Hydro, taking into account current debt, projected operating and capital expenditures over two fiscal years, and a buffer for contingencies.
Hydro, a crown corporation, would be considered separate from government to differentiate taxpayer-backed debt from taxpayer-backed debt, Friesen said.
“That number will be something Manitobans will be able to see,” Friesen said Tuesday. “They can look to and it can provide guidance to governments as we work on things like balancing our books and bringing our books back to stability after the challenges we faced during COVID-19.”
Friesen said the proposed borrowing limit was about 20% higher than the current debt load on the finance department’s recommendation. It provides enough space that emergency debates or other loan applications are not necessary.
Provincial and Manitoba Hydro borrowing limits would also be adjusted annually through the Budget Implementation Act and included in the Estimates documents.
“We think the idea of setting a limit is important,” Friesen said.
The province needs to borrow to operate and it will take at least eight years to balance the budget, he said.
“It acts as a form of accountability to the government. It also provides better transparency for legislators.
He noted that authorized borrowing amounts set aside for contingencies would be held centrally and allocated as needed.
“Current conditions, inflation, geopolitical risk, other factors, these are all things governments need to plan for, but sometimes planning isn’t enough and you need to have that hedge,” Friesen said.
“If something unexpected happened, you would always have the option to go back and say, ‘We think more is needed’, but it creates an open process whereby the legislature would then become responsible for hearing that argument. for more, considerate discuss it and make a decision,” he said.
The province’s current debt is approaching $30 billion while Manitoba Hydro has a debt of $23.5 billion.
The minister said the borrowing limit will not affect Manitoba Hydro’s normal operations or put pressure on the utility to raise rates. The company’s senior management participated in a consultation on borrowing limits, he added.
The bill would require the restoration of detailed budget information, which the Tories were accused of withholding last year.
The legislation would require the government to annually disclose details of each ministry’s spending, including staffing levels, with comparable figures for the previous year. It would also require departments to publish their objectives for the fiscal year and how they will be achieved.
These details are contained in documents called Supplementary Estimates.
New Democrats complained last year when those estimates contained fewer estimates than usual.
“Last year, the Conservatives broke the rules and hid their cuts from Manitobans, but the NDP fought back,” finance critic Mark Wasyliw said in a statement Tuesday.
“Despite this new bill, we know Premier Stefanson and the Conservatives will continue to make secret cuts that hurt families, but you can count on Wab Kinew and the NDP to demand better.”
The province said the federal government and other provinces have also replaced annual loan law appropriations with borrowing authority limits.
— with files from The Canadian Press