Finance Minister Charlene Johnson recently concluded the annual series of Pre-Budget
consultations. The meetings, held
regionally, provide an opportunity for town and community leaders to put their
“wish lists” directly before the Minister.
always, the requests involve demands for “more” not “less” money. Rarely are
they about the Government’s poor fiscal management.
consultations are supposed to be an exercise in democratic practice. Yet, I
suppose it is too much to expect a rural Mayor to give the same
government, from whom funding is expected, a piece of his mind. You won’t get that from the Mayor of St.
the public has been relieved of warnings about the high expectations which usually
prefaced the annual Budget.
oil prices began to edge up giving proof that Peckford’s Atlantic Accord had
been worth fighting for.
hit $140/barrel. Soon, provincial coffers
were overwhelmed with revenue and public spending quickly achieved unparalleled
and then Dunderdale, most members of the general public never stopped to ask: can
this new paradigm last forever?
resource boom ever does.
hyperbolic rhetoric of the politicians has all but vanished. The spending of easy money has not. Budget deficits, now at stratospheric levels,
mock any semblance of fiscal prudence.
outcry when they are denied. In place of
managing public expectations, politicians rather than lead prefer to follow.
Keynes, the post WW II economic guru, counselled national leaders to engage in infrastructure
spending as the cure for moribund economies and high unemployment rates. Keynes thesis involved, among others, a
concept built around economic cycles arguing that it made more sense to have
the jobless contribute to economic growth at the bottom of a cycle than to be
given income support and no productivity in return.
provides for a free ride.
discussed aspect of what Keynes advanced is that, when economies re-bound, governments
should re-pay the debt borrowed to fund the uplift.
is politicians seem only to understand the ‘spending’ part of Keynes theory. A
resounding ‘deafness’ greets debt re-payment. Politicians of all political stripes suffer the same malady.
other Provinces and countries, Newfoundland learned quickly, after
Confederation, that it was unable to limit borrowing to “capital projects” like
roads and bridges; soon it was borrowing for current account expenditures such
as education, health and other social services, the day-to-day expenditures of
government…what some call the grocery money.
Governments continued that approach. Though
most were conscious of the debt ceiling, none, for long, were able to contain expenditures
to match revenues. Whether by borrowing from
the market or from the public sector pension plan (usually both), politicians found
a way to elude the trials of
who are gobsmacked by the sheer size of recent budget deficits tend to believe
they are rightfully due much opprobrium.
But, the voters have been negligent, too.
most provinces and countries, do not possess a culture of financial discipline.
do not expect to be scolded and we do not scold them for how they manage public money. When we do, it is not
because we are upset that they have overspent, but, because they have denied us
what we have come to expect, what they have assured us, is rightfully
Danny Williams and raise him to the status of demi-god. Yet, we deny during much of his tenure high
revenues related not to his leadership but to the price of oil.
a lack of knowledge of how Government works and ignorance of how Budgets are
constructed. But, they possess professorial capacities when cutbacks affect
represent an annual debate over choices, over decisions about what must be
given up because a higher priority has been recognized?
be less about how much we can borrow than how much we can safely spend. It ought to relate to a concern about leaving something for a rainy day, something
more than a pile of debt for the next generation.
fond of saying that the Government works for them. If that is true: we ought to take charge.
the Minister of Finance what we want changed.
though, we need to check those expectations.