THE MINISTER OF FINANCE IN HIS OWN WORDS

Telegram Reporter James McLeod conducted an
interview with the Finance Minister, in July, which he titled “Jerome Kennedy in his own words”.  The transcript is
posted on the Telegram’s Web Site, on his “Briefing Notes” Blog.  Mr. McLeod is a keen reporter and this one,
like others of his lengthy verbatim transcripts, is a valuable record of the
‘thinking’ of his subject. 

Unfortunately, the only part of the interview
which became ‘news’ was the Minister’s views about the Tory Blue
Book.  Kennedy eschewed any notion that
they constituted promises.
“You used the word promise”, Kennedy
said to McLeod. “I’m not sure that the Blue Book can be described as a promise.
It outlines a platform of initiatives…we strive as best we can to ensure that
the commitments made or the components of the platform are complied with.” 

While the Minister’s phrasing failed to meet
some expectations and titillated the public, for a few days, the revelation,
for my money, was quite secondary to what the McLeod’s interview accomplished.  I am not referring to the Budget “ceiling”
either, though it was discussion of that subject, that shed light on a more critical
issue.

McLeod wanted to know how the annual Budget
of the Province was constructed.  He was
interested in whether a proposed “ceiling”, on new government expenditures, really
had any relevance to commitments in the Tory Blue Book or to the public
consultation process.

McLeod put it to the Minister, this way, in
the interview:
McLEOD: “But that promise, the way it’s worded (in the Blue Book),
y’know, ‘establish a ceiling for new spending growth and make our choices
accordingly,’ it makes it sound like a ceiling for new spending would come
first, and then budgetary choices would flow from that and all choices would
remain under the ceiling.”
This was the Minister’s reply:

KENNEDY: “But see, it’s difficult to do
that because we don’t get our projections — our oil projections — from the
CNLOPB until January. By January we’re a couple months into the budget process,
so it depends on the amount of money that we have available
. In terms of a
ceiling, it’s simply a target….” (underline added).

Mr. McLeod never quite got an answer to the
question he sought, though he made several attempts, as the Minister bobbed and
weaved around the issue.

Likely, though, he recognized that what was
being said was far more telling than any explanation of how the Minister
initiates, annually, the most important function of his Department.

The underlined comments, above, are
particularly relevant.  Says the Minister,
we can’t set a ceiling first. We have to wait for projections from the C-NLOPB.

To put it a different way, the Ministers, in effect, states: ‘what is the point of a ceiling…all we care about is how much
money is available to spend. Of course, we’ll spend it all’.  Actually, as the Minister has demonstrated,
he is perfectly prepared to go into deficit and spend even more. Answering one
of McLeod’s later questions, Kennedy shares with us another ‘A-Ha’ moment:

KENNEDY: “Well, we’ve outlined our
projections based on  — our projected
deficit and then returning to surplus — based on a certain price for a barrel
of oil. That’s like looking into a crystal ball. You try to ensure that you
have the most accurate information possible, but in a volatile market such as
the commodities market, those numbers fluctuate……”

Why this statement did not make the front
page of The Telegram is really one of the oddities of modern journalism.

It is one thing for the Minister to say that
the Budget ceiling conforms to how much money he can get his hands on, but he
goes so far as to acknowledge, that the forecast contains all the accuracy of a Ouija
Board. It’s “like looking into a crystal ball”, he declares.

You can forget any notion of a prudent Finance
Minister insisting that a discount be placed on the Province’s forecast oil revenues, due to
their ‘volatility’.  Such a practice might
ensure that the Budget does not always default into deficit when prices or production
volumes drop. Don’t even consider the idea of a ‘rainy day’ fund or any measure to
tackle the public debt. The interview is evidence that that possibility did not even
enter the Minister’s mind. 

Wittingly or otherwise, the Minister confirms
his management of the public purse contains all the hallmarks of ‘soothsaying’.

The McLeod interview contained another
revealing item. The comment was made in response to his question about whether
the Government may have to “revise expectations” given “the province’s fiscal
situation”.

KENNEDY: “So the minister of finance is
simply what I would describe as the quarterback
for the budgeting process, and not the decision-maker
. The decision-maker
is the cabinet in the final result.” (emphasis added)

McLEOD: “Yeah, but you’re the one with your
hands on the books. You’re the one who’s managing the Department of Finance…….”

KENNEDY: “Certainly.”

The football metaphor is interesting for the
diminished role the Minister assigns himself, in his official capacity. Kennedy might have acknowledged that, historically,
Ministers of Finance have played, not the role of quarterback, but, that
of coach or better.  The quarterback merely receives the play; the
coach is the one who makes the call. That is surely too high an expectation. Kennedy seems not to understand what he is supposed to be about. He essentially says to McLeod: 
What’s your point? 

Perhaps, here, too, the Minister was just
being honest. Perhaps, he was simply telling McLeod: “Leadership is for
leaders; I’m not one of those”.

It was a damn fine interview, Mr. McLeod; all
of it page one material.

Perhaps, readers should be given fair
warning.  Just like gold, sometimes they
have to dig a little for the best nuggets.
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.

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2 COMMENTS

  1. This is a sorry commentary on the inept and incompetent politicians we have controlling our financial destiny. That they are completely clueless…… or completely self-serving, in their desire to get re-elected by buying our votes, is both frustrating and sad. Unfortunately, the people were hoodwinked by Danny Williams and his clones think they can do the same.

    They missed the single best opportunity any administration ever had to put money into a "rainy day" fund, by spending their way to popularity. That, plus Danny's destruction of all political opposition, led to the kind of dictatorial situation we have now.

    To compound our future misery, not only did they spend unwisely, they are going to inject untold difficulty into our fiscal future by blindly going ahead with Muskrat Falls. It is myopic beyond reason and we will pay dearly for their wanton disregard for the well-being of the people of this province.

  2. You quote Kennedy as saying "that's like looking into a crystal ball" referring to oil prices and revenue. During the sanctioning of Muskrat Falls Kennedy, in the House, was saying that the electricity demand will be there, and he used the same reasoning "Just look into the crystal ball" So to hell with best practises for forecasting, to hell with new efficient heating technology, to hell with new building codes that will slash energy use…..as Kennedy's crystal ball doesn't show any of that. Crystal Ball Kennedy sees what he wants to see. And Nalcor follows the piper. Hard to believe we would use crystal balls to justify a 10 billion project with little opportunity for energy sales. And no one in the House(not even MR Ball) found fault with Kennedy's crystal ball method of forecasting our power need. A present load growth of 1/2 of 1 percent per year, needs a 10 billion solution? Tom Orsborne is the new Liberal critic for conservation and efficiency. Lets hope he uses best methods for forecasting instead of a crystal ball. Winston Adams