In “What The Premier Must Do. A Budget Primer (Part I)“, I suggested a process in which the
Premier should become engaged, in order to put her Administration on a sound
policy track and give focus to one of the most important jobs of any
Administration; the task of crafting  a Budget.  I proposed that the Premier go outside
Government and assemble a group of trusted advisors.  While, on the surface, the advice may seem
contrary, her Cabinet Ministers are not up to the job of helping her, and, the
most senior bureaucrats do not have the Premier’s ear.

A Budget
should not be merely a collection of line items detailing revenues and
expenditures.   It should reflect a philosophy of governance;
of political management.  A thoughtful
Budget ought to be accompanied by a statement of fundamental principles that guide
the limits to be imposed on any deficit, debt, pension plan shortfall and other
critical financial decisions with long term implications.  Other Governments do not follow this practice
either, though they ought to begin. 

Except for
the current and completely unnecessary Budget crunch, if you relied on
statements from Government, you would know little about the issues of social
and economic change challenging our Province. 
Must Governments only discuss these matters when the fiscal pot has gone
dry?  It did propose to study the
population issue, recently. That is a singular, albeit important, matter
deserving of separate comment.

A Budget will
note current opportunities as well as risks and a plan to mitigate them. 

For example,
it might note the challenges to Government posed by population decimated communities,
like St. Brendan’s, Little Bay Islands and others, where the cost of
maintenance have outstripped any semblance of either economics or common sense.

The social
sector, especially education and health, represents 57.7% of budgeted
expenditures and the annual rate of increase has outstripped inflation, for the
past several years.  This is
unsustainable. Does the Administration have a wiser strategy for dealing with escalating
costs than merely one based upon offering up more and more money, if people
will stop complaining?

The Budget should
not contain a ‘plug’, this time, as the Minister of Finance insisted, one year
ago.  That decision allowed the price of
oil and thus forecast revenues to be set far above what was realistic.  I noted that some, in the media, were sympathetic
to the Government because the oil forecast had been generated from an
independent source.  This was an incorrect

Just because
a corporate forecaster, however qualified or experienced, has estimated the
average price of barrel of oil at $124, is not a sufficient basis upon which to
compose the fiscal estimates of an entire Province.  The words ‘forecast’ and ‘guarantee’ are not
interchangeable.  A forecast is just
that: a prediction, an estimate, an educated guess.  Therefore, the Government, using the most
basic of budgeting skills, ought to have properly discounted the forecast.    

In addition,
the process of government is not so rigid that adjustments cannot be made
mid-year, as befits changed circumstances. 
The Government had ample warning, early in this fiscal year, that its revenues
were in trouble.  It did nothing to deal
with the problem, except offer the laziest of responses: announce the larger

Likely, the
Minister of Finance has no intention of eviscerating a bloated public service;
nor should he; though he must set a target that reflects, not just the
Government’s ability to pay, but also the size of our population.  He might note that we have experienced no
growth in years.  The new benchmark, for
the size of the public service, can be met over, say a five year period, first,
through attrition, then by scrapping the least important programs and, of
course, by assessing need and performance based upon its Plan.    

The Public
Service Pension Plan must be dealt with, in several ways.  Change is needed because the Pension Plan has
a huge and growing deficit.  Employees’
contributions do not reflect its ‘defined benefit’ status.  Virtually all Corporations have abandoned them
as unaffordable, as have, at least in part, many governments.  Fixing the Pension Plan will cause sacrifice,
but not nearly so much if the matter if deferred, endlessly. It needs to be fully
funded and independently managed, (the CPP Investment Board might welcome such
an opportunity to enhance its own management efficiencies; possibly, public
sector unions would not object).

acceded to Nalcor’s artificial deadline for Muskrat Falls and Jerome Kennedy’s
threat of blackouts, the Government can now allow the capital works program to
be slowed.

Government has resisted dealing with the spiraling costs of health care. The
public has not a clue that the perception of health care as ”FREE” will destroy
a noble, but impossibly inefficient system.  That NL is distinguished as spending the
highest amount per capita, on health care, in Canada, is noteworthy but not to
our credit. 

no one will endorse health care cuts but, three things are clear:

First, the
current head of Eastern Health has to be given a mandate to find efficiencies
in that system and Government has to be prepared to support her, and her Board,
or risk unpleasant decisions, later. 

The current
model of health services is, thankfully, not the only option; one that gets more
patients cared for by professionals, using the logistical talents employed by
the construction industry, would be a good place to start. 

The myth
that every health care provider is overworked needs to be busted. (I knew a
woman, with eleven kids, widowed and ran a small business outside the home…now,
she was overworked!).

A health
care model is needed in which health care providers are compensated, based upon
productivity; it might contain, for example, an incentive that gets richer with
the well-being of the patients under their care.  In addition, it ought to contain a component
of individual patient responsibility. Perhaps, the new Corner Brook Hospital
can be a place in which to better define and test such a new model; one that
accommodates public input. So far, we know only how to spend more and more
money as results continue to elude. Applying this strategy to obtain a
different result from your computer would be termed madness; likely, the
affliction has a more general application.

Corner Brook may as well gird for a lot less than a $¾ billion facility (it
needs an industry worse than it needs a hospital and that is not to diminish
such a facility’s importance as much as to suggest that Corner Brook should not
get hung up on “big”; it should insist on efficient and affordable health care).

Thirdly, streamlining
of health care services must come to central and rural NL, too; though politics
will continue to get in the way; and

Fourthly, as
much as the new buzz is about full-day kindergarten, Government needs to answer
whether the education system also suffers from bureaucratic bloat. Lots of
things make sense; the idea of affordability pesters. Oh!  If only we could be a nation of

All that
said, the Minister of Finance can take all the advice he pleases.  But, defining the parameters as well as the
foundations of its decisions will outstrip any individual or group of them.  When the public understands Government’s
mind, its policies, and the financial parameters that will guide those policies,
Budget Day will become exciting for its innovations, its commitment to fiscal
discipline and to a vision that sees beyond the next election.  The hyperbole of the spender doth wear thin.

The real
fun, though, will be determining whether those parameters are matched by a
political leadership that gives them definition.
Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?