Thursday, 28 February 2013

BUDGET DEFICITS AND COMMON SENSE

“May you have sensible leadership”, is a mantra that ought to replace our copious use of the Chinese proverb, “May you live in interesting times”.  Most of us don’t recognize good leadership until it disappears; appreciating it only in the context of more recent comparisons or with the hindsight of history.  Naturally, we always hope for the energetic and visionary type, though its arrival is as fleeting as an apparition in a warm mist. I’ll take the sensible kind any day.  That will keep us on course in case the visionaries never arrive or we are unlucky enough to be visited by the quixotic and absolutely reckless.  Regrettably, the latter group recently got elected.  “What is in their wine?” seems a suitable, if somewhat immodest, question.

A recent MQO Poll plotted the Dunderdale Government’s popularity in free fall, since the last election.  A 19 point difference separates the MQO numbers and the popular vote of the 2011.  The figure offers proof, not only of how strongly the Premier basked in the afterglow of the Williams firmament, but how irresponsibly she squandered the goodwill of election night. 
Was Muskrat Falls the price of Kathy Dunderdale becoming Premier?  Has she imposed on the Province, her Administration and herself, a burden that is as improvident as it is perilous?  We are left to wonder if we are witnesses to a classic Faustian drama in which the Premier has sold her soul, for the temporary honor of employing overbearing hubris. 

Last year was the Premier’s “annus horribilis”. Likely, this year, a break from the ruckus would be a welcome. 
Alas, reality brings even the most star struck back to earth.  A new Budget beckons along with labour confrontation and, with retrenchment, cranky voters, many of whom have succumbed to the notion that everyone lives on “Easy Street”.  Bad news breaks hard.

Budget consultations have begun; the wish lists keep coming, eventhough the cupboard is bare.  It is a golden opportunity for sensible people to give the Minister a good verbal thrashing and, simultaneously, send a clear message to the Premier and the Government, that their kind of leadership is just not acceptable. 
On Wednesday, Feb 13th, the Finance Minister announced a $1.6 billion deficit in the next fiscal year and the one that follows; a $4 billion deficit over three years. A day later, the Premier told the Telegram, “that’s not going to happen; whatever the deficit is this Spring, it won’t be $1.6 billion”.

The conflict seems strange, especially given her additional comment that she had just completed “two days of cabinet meetings” on budget matters.  Shouldn’t a maximum deficit target have been determined then and the two reached agreement, at least, on that much? 
Added the Premier, “We’ve got to ratchet back our spending so that when things do get better, we’re at a place where our spending is sustainable.”

While the objective sounds sensible, on the surface, the Premier needs reminding that things have gotten much better; Government revenues have dramatically increased but it is Government spending that has outstripped long awaited progress.  An increase of 82% over the 2005 Budget figure surely suggests, spending ‘like drunken sailors’, is not an unreasonable characterization.   
The cost to rectify poor roads and bridges (the infrastructural deficit) does not explain the increase in the size of the public service, either. In the period 2006-2010 alone, the number of public servants increased by 2400 or 26%, (that figure does not include new hires by Government Agencies, MUN, Health Care Corp., etc.), when, in the same period, our population increased by 2491 or a mere 1.43%. 

The Finance Minister can point to the end of ‘offset payments’ under the Atlantic Accord, and over $500 million transfers, but the date of its termination has been known for a long time, suggesting the issue is really about planning and decision-making, not falling revenues.
Sensible people prepare for the “known knowns” and maintain a reserve for the “known unknowns” to paraphrase a wily, though usually blunt, former U.S.  Defense Secretary.  Dunderdale and Co. have done none of that; indeed, she seems perplexed as to why her Administration is even in this spot.

While the Williams’ Government began the unwarranted and steady increase in public spending, the proposed deficit spending of this Government finds no parallel in the budget deficit practices of any government since Confederation, even on a relative basis.
Remember too, if the forecast $1.6 billion deficit is trimmed, it will likely still not reflect the impact of forecast additional decline in the price of oil, an aging population, a less busy mega project environment post-2017 or the inevitable cost overruns at Muskrat Falls.

The public sector union leadership may legitimately believe their membership is due for a wage increase; but, while they cheerlead for more public spending, an over- sized public service and Muskrat Falls, they deny concern over the ballooning public service pension deficit or the possibility of some nasty surprises causing more grief in our placid domain.  One is truly forced to wonder if they, too, are drinking Dunderdale’s wine.  Public Servants, both former and current, with whom I speak, are not!
If the Minister of Finance makes even one sensible decision he would advance any call regarding lay-offs.  The lives of thousands of public servants should not be held in abeyance until late March or until the Premier finds the right words to hide an embarrassment of leadership.

There may have been a time when we thought we could have it all. But, Danny is gone now. Let us hope that his deplorable legacy of big dreams and big risks, with the public treasury, find a grounding in the here and now.  Unfortunately, it eludes this Government.   

2 comments:

  1. Muskrat Falls over-runs are inevitable? Valid question. However, if the project was sanctioned in April 2012 (which it would have been if the PUB rubberstamped the project)then it would already be 2 Billion overbudget. But over budget don't matter as this goverment will gouge their citizens for every required nickle to pay for the project. I only hope that this 1.6 Billion deficit will evoke some level of fiscal responsibility in this government. We need a dose of reality.

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  2. Muskrat Falls may indeed be the price of Dunderdale becoming Premier, but it may well be more than hubris. Danny indeed was reckless and selfish, and she fell for it. Meanwhile, has ther ever been an instance in the last half fo the 20th century, or outside of banana republic, where a leader blew so much political capital? Danny could have done a lot. However, he was just to damn selfish.

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