last Saturday’s Telegram containing the James McLeod story “Ball falls, gets
back up” you might be left with the impression we shouldn’t worry about the
province’s fiscal problems. How Ball actually “gets back up” is unclear. But equally doubtful is Ball’s description of how he plans to get the budget back to balance: The Telegram paraphrases the Premier:
taxes basically as high as possible in the spring budget, so over the coming
years it will need to cut roughly $100 million per year to get back to balance
The budget update confirmed a deficit this year of $1.58 billion. That is just the
deficit on current account – or as some refer to it the grocery money.
Even Jethro Bodine – the dimwitted nephew of Jed Clampett’s
1960s ‘The Beverly Hillbillies’ TV series – wouldn’t need help with this problem. It is obvious that at
the rate of a $100 million annually it will take “roughly” 16 years, possibly out to 2033, to “get back to budget balance” and then only with respect to the current
while a relaxed and unconcerned Premier is engaged in high level financial repartee with an ink
slinger, the Auditor General (A-G) is on the rubber chicken circuit calling attention
to our unsustainable fiscal problems.
debt” and “net debt” when – even if limited by the arcane rules of the Financial Administration Act and his profession – he should be shouting that there is little bloody difference. You won’t find the bond markets make such a fine point!
of boring you with lengthy definitions, it might suffice to know what “net
debt” does not include. For example, “net debt” does not include capital expenditures
raised for crown corporations, agencies, and municipalities.
Those numbers confirm we are a long way from budget balance.
one thing for Premier Ball to play Jethro and to get his “gazintas” wrong, but he also forgets that the interest on the “total debt” threatens to outstrip his proposed savings.
Ball’s approach is a treadmill – which will leave the province in a far worse position than he suggests..
different way – if “investments” like roads, bridges, schools, etc. do not generate revenues, from what
source is the capital and the interest thereon to be paid?
no handle on our fiscal nightmare – neither capital account, current account, nor that of crown agencies, like Nalcor.
Note “Debt Expenses” (mostly interest costs) continue to climb each year to 2023 – though the government claims it is in control.
The “Net Debt” continues to rise until 2022 when Ball claims the achievement of budget balance.
The Fall Supplemental Budget (noted below) is forgotten in the wake of Ball’s declining popularity.
The next three Exhibits demnstrate how difficult it will be to achieve budget balance – as proposed – given the forecast financial climate. When the government makes an inadequate beginning – not having had the courage to wield the fiscal ax – the challenge just get larger every year. Declines in capital investment, employment, including the job engine – housing starts – will impact government revenues as the next three exhibits demonstrate.
It is not clear if Ball’s immigration target are reflected in forecast population decline.
Then there is the problem of an aging demographic which speaks to a multitude of issues especially healthcare costs – which need to come down, not go up.
Based on evidence represened in the next Exhibit, health care costs are far more likely to climb.
This is the record of a Premier luring the province into a false sense of security. He not only gives the impression he is on top of the deficit, he would have the public think that our enormous debt problem can be resolved without massive cuts and a restructuring of government.