Guest Post by Ron Penney
Under
section 3.1 of the House of Assembly Act, an election is required to be held
within 12 months of the swearing in of a new Premier, which occurred on August
19, 2020. So an election is required by August of next year.
It is
obviously tempting for the new Premier, operating in a minority situation, and
having a recent further reduction in his caucus, to call the election sooner
rather than later. This is particularly
the case because Dame Moya Greene will provide her interim report on February
28, 2021 and final report on April 30, 2021, focusing in large part on our
fiscal crisis and how we should respond.
In
addition, we have so far had a good public health response to the pandemic and
federal programs have alleviated to a large degree the economic impact on most
families. Given the imminent rollout of the vaccine, and should the caseload
remain low, it will be to the political advantage of the government to go to
the polls sooner rather than later.
And
finally, the governing party is riding high in the polls
The
Government should resist that temptation.
I see
the next election as the most important one in our post-Confederation history.
It is
an election which should be focused on what actions our political parties are
prepared to take to respond to our fiscal situation and in order to do that we
need to have Dame Green’s report. And we must have a budget which sets out the
government’s response to her report and what the financial projections will be
for the next few years before an election is called.
And we
also need to know what the plans are for rate mitigation. The continuing delays
in the competition of the project due to a variety of issues has allowed the
government to put that issue to the back burner.
We
must have the full picture of what rate mitigation steps are being taken by
both the Government of Newfoundland and Labrador and the Government of Canada
prior to an election being called. And the longer the project is delayed the
more it will cost because of increased interest charges. So the latest estimate
of $13.1 billion will certainly rise and so will the amounts needed for rate
mitigation.
Buried
in the terms of reference for the “Economic Recovery Team “ is the following:
“The team members will provide input into those reports but the responsibility
for the final report will be that of the Chairperson.”
So
this is really a one person team with the other members providing input. This
is an unusual approach and places a huge responsibility on one person, a very
able person, no doubt, with an impressive resume, and deep family connections
to the province. I think we should have
had a much smaller committee but it is what it is. I don’t envy her, as she
deals with such a large group of people and such a difficult situation and we
must remember that she is a volunteer. I wish her the very best and thank her
for taking this job on.
It
would have been far better if we could have had an all party committee on our
fiscal situation and have tried to take the politics out of the crisis but that
unfortunately never happened.
I am,
of course, pleased that one of the team members is my fellow nay-sayer, Dave
Vardy, one of the giants of our public service. He brings tremendous experience
and expertise to this exercise and will provide sage advice to Dame Greene.
She is
charged with two jobs. For me the most important is an examination of our
fiscal situation and, more importantly, what we need to do to meet that very
difficult challenge both in the short term and the long term.
The
terms of reference note that the province “is currently facing an unprecedented
fiscal situation. The Budget deficit forecast for 2020/2021 will exceed $1.8
billion. Furthermore the province has added $6.8 billion to its net debt in the
past 6 years. This is unsustainable.”
The
terms of reference point out that we have the highest per capita revenue of any
province but we also have the highest per capita expenditures. “A plan is
needed that will realign our expenses closer to our revenue base.”
The
Parliamentary Budget Officer has also been commenting on the fiscal
sustainability of the provinces for the past number of years and it won’t
surprise anyone that our fiscal gap is among the highest of the provinces,
second only to Manitoba.
She is
also charged with developing an economic recovery plan but if I were her, I
wouldn’t spend a lot of time on that.
My
book shelves are filled with a host of such efforts, all gathering dust, with
absolutely no impact on our economy. Despite all evidence to the contrary, Newfoundland
and Labrador governments continue to believe that yet another report on
“economic recovery” will be the panacea for all our ills.
Trust
me, it won’t.
So
better to concentrate on what we can control, which is our level of expenditures
and how we can manage them in the future so we don’t hit a fiscal wall, with no
ability to borrow, and our affairs controlled by some nameless federal official
in the bowels of the Confederation Building.
I have
a few ideas, starting with the most important one.
Our
government and our opposition parties need to show that they understand the
need for fiscal restraint. Instead what we are seeing from the new Premier is
an endless stream of new programs, grants, and donations which have the effect
of denying our true situation. We need to be properly prepared for what is to
come. Instead we are living in a fool’s paradise. And other institutions, like
Memorial, are pursuing very expensive new initiatives, like a law school. Trust
me, as a lawyer, the last thing we need is a hundred more lawyers annually
leashed on us and Canada.
Here
are a few easy ones:
We are
out advertising for a new CEO of Nalcor. We don’t need Nalcor. We already have
Newfoundland and Labrador Hydro, which is quite capable of running Muskrat
Falls once it is completed. Stan Marshall says to eliminate Nalcor would be a
“Newfie joke”. Nalcor is the real Newfie
joke.
We
should get out of the oil and gas business and sell off our interests
strategically. Out take should come from royalties and we should concentrate on
providing public services not engaging in a very risky business. If West White
Rose doesn’t go ahead our investment in that project will be lost. And what are
we doing putting additional money into the project and not even being given
additional equity in it?
Handling
our fiscal crisis will be extraordinarily tough. We have very powerful public
sector unions who are indifferent to our fiscal situation. And we have a
demographic challenge with a rapidly aging population, with all that entails
for health care costs.
And,
most importantly, our public sector is such a large part of our economy in all
areas of the province, so that any expenditure reductions will be met with
strong resistance and the resulting political peril for the party in power.
So I
understand the temptation to call an early election but it must be resisted. A
successful democracy needs a fully informed electorate and we won’t have that
of the election is called before the full extent of our financial situation is
known and we have the response of the political parties to what is proposed.