Monday, 2 September 2013

THE MINISTER OF FINANCE IN HIS OWN WORDS

Telegram Reporter James McLeod conducted an interview with the Finance Minister, in July, which he titled "Jerome Kennedy in his own words".  The transcript is posted on the Telegram’s Web Site, on his “Briefing Notes” Blog.  Mr. McLeod is a keen reporter and this one, like others of his lengthy verbatim transcripts, is a valuable record of the ‘thinking’ of his subject. 

Unfortunately, the only part of the interview which became ‘news’ was the Minister’s views about the Tory Blue Book.  Kennedy eschewed any notion that they constituted promises. “You used the word promise”, Kennedy said to McLeod. “I’m not sure that the Blue Book can be described as a promise. It outlines a platform of initiatives…we strive as best we can to ensure that the commitments made or the components of the platform are complied with.” 

While the Minister’s phrasing failed to meet some expectations and titillated the public, for a few days, the revelation, for my money, was quite secondary to what the McLeod’s interview accomplished.  I am not referring to the Budget “ceiling” either, though it was discussion of that subject, that shed light on a more critical issue.
McLeod wanted to know how the annual Budget of the Province was constructed.  He was interested in whether a proposed “ceiling”, on new government expenditures, really had any relevance to commitments in the Tory Blue Book or to the public consultation process.

McLeod put it to the Minister, this way, in the interview:
McLEOD: “But that promise, the way it’s worded (in the Blue Book), y’know, ‘establish a ceiling for new spending growth and make our choices accordingly,’ it makes it sound like a ceiling for new spending would come first, and then budgetary choices would flow from that and all choices would remain under the ceiling.”
This was the Minister's reply:
KENNEDY: “But see, it’s difficult to do that because we don’t get our projections — our oil projections — from the CNLOPB until January. By January we’re a couple months into the budget process, so it depends on the amount of money that we have available. In terms of a ceiling, it’s simply a target….” (underline added).

Mr. McLeod never quite got an answer to the question he sought, though he made several attempts, as the Minister bobbed and weaved around the issue.

Likely, though, he recognized that what was being said was far more telling than any explanation of how the Minister initiates, annually, the most important function of his Department.

The underlined comments, above, are particularly relevant.  Says the Minister, we can’t set a ceiling first. We have to wait for projections from the C-NLOPB.

To put it a different way, the Ministers, in effect, states: ‘what is the point of a ceiling…all we care about is how much money is available to spend. Of course, we’ll spend it all’.  Actually, as the Minister has demonstrated, he is perfectly prepared to go into deficit and spend even more. Answering one of McLeod’s later questions, Kennedy shares with us another 'A-Ha' moment:

KENNEDY: “Well, we’ve outlined our projections based on  — our projected deficit and then returning to surplus — based on a certain price for a barrel of oil. That’s like looking into a crystal ball. You try to ensure that you have the most accurate information possible, but in a volatile market such as the commodities market, those numbers fluctuate……”

Why this statement did not make the front page of The Telegram is really one of the oddities of modern journalism.

It is one thing for the Minister to say that the Budget ceiling conforms to how much money he can get his hands on, but he goes so far as to acknowledge, that the forecast contains all the accuracy of a Ouija Board. It’s “like looking into a crystal ball”, he declares.

You can forget any notion of a prudent Finance Minister insisting that a discount be placed on the Province’s forecast oil revenues, due to their ‘volatility’.  Such a practice might ensure that the Budget does not always default into deficit when prices or production volumes drop. Don’t even consider the idea of a ‘rainy day’ fund or any measure to tackle the public debt. The interview is evidence that that possibility did not even enter the Minister’s mind. 

Wittingly or otherwise, the Minister confirms his management of the public purse contains all the hallmarks of 'soothsaying'.

The McLeod interview contained another revealing item. The comment was made in response to his question about whether the Government may have to “revise expectations” given “the province’s fiscal situation”.

KENNEDY: “So the minister of finance is simply what I would describe as the quarterback for the budgeting process, and not the decision-maker. The decision-maker is the cabinet in the final result.” (emphasis added)

McLEOD: “Yeah, but you’re the one with your hands on the books. You’re the one who’s managing the Department of Finance…….”

KENNEDY: “Certainly.”

The football metaphor is interesting for the diminished role the Minister assigns himself, in his official capacity. Kennedy might have acknowledged that, historically, Ministers of Finance have played, not the role of quarterback, but, that of coach or better.  The quarterback merely receives the play; the coach is the one who makes the call. That is surely too high an expectation. Kennedy seems not to understand what he is supposed to be about. He essentially says to McLeod:  What’s your point? 

Perhaps, here, too, the Minister was just being honest. Perhaps, he was simply telling McLeod: “Leadership is for leaders; I’m not one of those”.

It was a damn fine interview, Mr. McLeod; all of it page one material.

Perhaps, readers should be given fair warning.  Just like gold, sometimes they have to dig a little for the best nuggets.

2 comments:

  1. This is a sorry commentary on the inept and incompetent politicians we have controlling our financial destiny. That they are completely clueless...... or completely self-serving, in their desire to get re-elected by buying our votes, is both frustrating and sad. Unfortunately, the people were hoodwinked by Danny Williams and his clones think they can do the same.

    They missed the single best opportunity any administration ever had to put money into a "rainy day" fund, by spending their way to popularity. That, plus Danny's destruction of all political opposition, led to the kind of dictatorial situation we have now.

    To compound our future misery, not only did they spend unwisely, they are going to inject untold difficulty into our fiscal future by blindly going ahead with Muskrat Falls. It is myopic beyond reason and we will pay dearly for their wanton disregard for the well-being of the people of this province.

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  2. You quote Kennedy as saying "that's like looking into a crystal ball" referring to oil prices and revenue. During the sanctioning of Muskrat Falls Kennedy, in the House, was saying that the electricity demand will be there, and he used the same reasoning "Just look into the crystal ball" So to hell with best practises for forecasting, to hell with new efficient heating technology, to hell with new building codes that will slash energy use.....as Kennedy's crystal ball doesn't show any of that. Crystal Ball Kennedy sees what he wants to see. And Nalcor follows the piper. Hard to believe we would use crystal balls to justify a 10 billion project with little opportunity for energy sales. And no one in the House(not even MR Ball) found fault with Kennedy's crystal ball method of forecasting our power need. A present load growth of 1/2 of 1 percent per year, needs a 10 billion solution? Tom Orsborne is the new Liberal critic for conservation and efficiency. Lets hope he uses best methods for forecasting instead of a crystal ball. Winston Adams

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