“PERFECT STORM” NOT SOLVED BY INDECISION

There’s no
joy to be found in poking fun at the new Liberal Government’s dithering over
the province’s fiscal crisis. See Budget Consultations: Wait for the Colouring Books.

There is
only worry that they are not up to the challenge, or don’t fully understand it.

That we are
in the midst of an ill-timed and poorly conceived public relations/consultation
campaign is particularly troubling, and not just because weighty decisions are delayed.

The idea of
asking people to participate in an exercise, in the first place, without
offering them the tools (and I don’t mean colouring books) perquisite to a meaningful
discussion of ideas to deal with the problem, is inconsistent with a legitimate
claim to and desire for public engagement.

The perilous
state of our finances should have been met with a Stage I, the “no brainer” list of decisions;
crisis needs an immediate response.


A full analysis
ought to have accompanied a consultation process later, one held when the
government had its footing. It ought to have included an enumeration of some of
the options reflecting government’s own thinking.

The short financial
preface to the three questions put to the public, on the government’s web site,
is at best simplistic and incomplete. The questions are not accompanied by
either a full or accurate appraisal of our financial position. They lack proper
context, and besides, early indecision robs the issue of urgency.

In addition
to a Stage I and Stage II approach, a discussion of the Muskrat Falls project, in
a crisis “context”, is essential.

And, no one
should think that Municipal Budgets are disconnected from the crisis, though not
a view shared by the leadership of the City of St. John’s.

These are
issues which will preoccupy this Blog in the coming days.

My intention,
however, is not to re-analyse how we have arrived at this grim state (JM has
done some excellent work on this subject and on the broader financial issues, too). I want
to focus on the immediate crisis and on a process for dealing with it.



Beyond the discussion around how the measures are best taken, a larger conversation is warranted, one that reflects the huge demographic problems we face and with sparce populations and more remote communities in the province. But when public engagement is little more than a dart game as a means of finding solutions, there is a greater likelihood that fundamental change will be imposed from “outside” rather than arrived at by intelligent discussion conducted in our own bailiwick.  

An important
concern is that, like the new Ball Administration, the public does not understand
the full measure of the fiscal crisis. People seem to be aware the government
has a big financial problem; but, perhaps like Ball and co., they are unclear about
the magnitude.

The eras of
Brian Peckford, Clyde Wells, Brian Tobin, and the early years of Danny Williams
recorded tough budgetary times. They revolved around economic slowdowns and, in
the case of Wells, the cod moratorium.

The low end
of an economic cycle is notorious for industrial decline and lower government revenues.
Public sector lay-offs, programs cuts, and increased taxation, are the common
response. When the economy picks up, the fiscal brakes are removed, spending is
increased, programs are expanded, and new ones proposed; the public service is
allowed to swell, again.

Those earlier
times in NL surely represented challenges, especially for the people affected by retrenchment. Except for the cod moratorium, which justified
and was met with a significant response from the Government of Canada, the others weren’t crises. They could be dealt with by belt-tightening.

Concern over
the Province’s fiscal future dissipated in 2007, as oil prices shot up and Brian
Peckford’s Atlantic Accord showered on the public treasury a gush of offshore
royalties.
Notions of
wealth, bolstered by politically driven hyperbole, prohibited any consideration
that so recent a past could ever be revisited.

The risk,
therefore, is that now, people see only a “problem”, as in earlier times, and
not a full blown “crises”.

And, why
would they think otherwise?

Only in the
past few days has the Finance Minister reluctantly acknowledged that
“everything is on the table”, that Departments have been asked to consider cuts,
over three years, amounting to 30% of their budgets.

So, why
would people not see our circumstance as requiring anything more than a
few nips and tucks?

But a far
greater concern is that the Ball Government, naïve and trying to hold on to ill-considered campaign promises, will use any
opportunity, like the fifteen month public engagement process, to ‘kicked the
can down the road’. The fear is they will hold onto indecision, and wait for a
lucky horseshoe (as Dr. Wade Locke counsels) in the hope critical decisions will become unnecessary.

$2 billion
deficit on Current Account, $1.4 billion more budgeted for the Capital
(infrastructure) Account, undetermined cost overruns on the Muskrat Falls
project, combined with declining revenues, and declining prospects for major
new projects, all suggest a situation with gravitas.

The “perfect
storm” threatens the solvency of the Province. It threatens our very viability
as a society.

Yes, people
will get hurt as government eventually attempts to resolve this nightmare; many
more will be harmed the longer the Ball Administration delays.

But crisis isn’t
resolved by indecision.
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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1 COMMENT

  1. Laying off middle-class families, who will then move out of province will further erode our tax base and make our province even older. We are already the oldest province in Canada and health care costs are higher as a result. Out migration due to massive layoffs would be very bad.