The Jerry Earles of the world seem to be applauding their good fortune that the Ball Administration wimped out on the task of resolving our fiscal mess. Such prescience aligns completely with the agenda of the Tories and NDP. It remains a real and present danger to the province’s ability to manage ourselves as a society.
three fundamental problems with Cathy Bennett’s second Budget.
The first is
that she has failed to tackle what she has described as a “culture of
spending” which took root under the Tories.
the Minister has aligned herself with the Great and Exalted Ditherer, the
Premier, having used an all too tenuous increase in the price of oil to paper
over a serious deficit and
fast rising public debt.
Third, having sidestepped any plan to rectify
public sector mismanagement and bloat, the
Minister reinforces a public view that the fiscal crisis is really not a
problem – that the Tories were bad, but not all that bad. That is a dangerous proposition when the truth is otherwise.
irony of it all is that the Ball government has used the Atlantic Accord – the most hard won victory this province has achieved since Confederation – to cower
under their most elemental responsibility, which is to safeguard the integrity of the
is that another culture – one of deceit – continues to spread throughout the
processes of government making it difficult for the public to distinguish between what is a fabrication and what is real. The Jerry Earles see no problem as long as their interests are served.
ability of the government to operate hinges strictly on the price of oil. Anyone
who keeps track of the machinations of the oil industry – from OPEC’s attempts to
curb production, to the vast ramp up in the number of drill rigs which threaten to bring on additional supply, along with the success with which shale producers have
lowered production costs and increased productivity – should see that oil is no
longer a commodity on which a poorly diversified economy can depend for long term prosperity. The ability to
forecast prices is now measured in weeks. Yet, Bennett has
structured around an inherently unstable oil market the prospect of budget
balance five years from now – without a plan to trim expenditures in the meantime should the bet she has placed turn out to be silly.
comfortable with falsity – or who are in denial – have the temerity to engage in such a
2016-17 Budget, the Minister forecast a current deficit of $1.83B which was
revised to $1.1 billion. But only $81 million of the reduction is due to lower expenses. Again using the cover of forecast oil prices – not any plan it has executed – the government projects a deficit of
$778 million for 2017-18. She barely mentions the Capital Account which is funded 100% by borrowing – reflecting rising total debt levels.
the past year from $14.5B to $17.5B The government has announced its intention to spend $3 billion for capital purposes (infrastructure) over the next five years – $573 million this year.
dumped into the Capital Account. Government uses no depreciation schedule for physical
assets. The bonds raised for this purpose – as in the past – are certain never to be re-paid. They are rolled over and over. The bond market does not distinguish the source of the debt anyway.
And by the way, one of the great difficulties with public accounting methods is that total debt is by no means “total”.
In NL’s case you still have to add over $4 billion – the shortfall in various pensions plans. The practice serves the government’s purpose well. But failing to note the figure is to suggest it doesn’t exist.
The Jerry Earles of the world would never warn their membership of the perils facing those pension plans if the government’s gamble with oil is wrong.
In case you doubt that the Total Public Sector Debt is actually $21.5B – and going far higher as continued planned borrowing including for Muskrat Falls persists – you might want to read the caveat (highlighted in yellow below) found on page A-3 of the Budget Estimates.
claims success on the deficit, but the budget forecast confirms it has
no intention of reining in spending –
notwithstanding the bloat throughout the government. The Exhibit below needs no additional comment.