The new
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.
John’s either.
For a decade
the public has been relieved of warnings about the high expectations which usually
prefaced the annual Budget. 

Around 1997
oil prices began to edge up giving proof that Peckford’s Atlantic Accord had
been worth fighting for. 

By 2007 oil
hit $140/barrel.  Soon, provincial coffers
were overwhelmed with revenue and public spending quickly achieved unparalleled
Like Williams
and then Dunderdale, most members of the general public never stopped to ask: can
this new paradigm last forever?
Of course, no
resource boom ever does. 
Today, the
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.   
The public offers
outcry when they are denied.  In place of
managing public expectations, politicians rather than lead prefer to follow.
John Maynard
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.     
No economic concept
provides for a free ride.  
The seldom
discussed aspect of what Keynes advanced is that, when economies re-bound, governments
should re-pay the debt borrowed to fund the uplift.
The problem
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.
Like most
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
Even when the revenue capacity had finally been achieved to deal with the debt, the allure of avoiding voter rebuke became just too attractive. Of course, the demands of unions, churches and plethora of organizations  handily provided cover.
Those of us
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.
We, like
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
We praise a
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.   
People feign
a lack of knowledge of how Government works and ignorance of how Budgets are
constructed. But, they possess professorial capacities when cutbacks affect
Shouldn’t Budgets
represent an annual debate over choices, over decisions about what must be
given up because a higher priority has been recognized? 
The debate should
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.
People are
fond of saying that the Government works for them.  If that is true: we ought to take charge.  
We should tell
the Minister of Finance what we want changed.
though, we need to check those expectations.

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.


If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!


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.


  1. The low price of borrowing money has kept the economy afloat (nationally) over the past decade. But cheap money leads to poor decisions. People building too large of a home, or purchasing too big of a vehicle, are results on a domestic scale. On a government basis there is really no major deterent to balancing budgets.

    This government have been addicted to high oil revenues, and low borrowing costs to enable their vision of leverage. They have spent money on massive projects. These projects may be required, but they are not wise.

    The result is that Newfoundland and Labrador is in a very precarious position. Prolonged low iron prices, and downward pressure on the price of oil will expose the poor fundamentals of our economy.

  2. Des: your article is of course 100 percent accurate. The challenge exists as we have trained our population over the last five decades that there is such a thing as a free lunch. Politicians have always found it easy to buy the electorate with their own money while taking credit for the excess. Now how to pull the Province back from the brink ….a daunting task for someone….Bill Barry