Thursday, 26 November 2015

DAVIS, BALL AND McCURDY: PRISONERS OF THEIR OWN DECEPTION

Premier Davis has belatedly taken aim at Liberal Leader Dwight Ball suggesting his spending plans, and his approach to finding savings, are a fantasy. 

This kind of speak is tantamount to one drunken sailor accusing another drunken sailor of not being drunk enough.

Davis doesn't credit Dwight Ball with having adopted the “Wiseman Plan”.

That’s the approach to Budget making devised by his Tory Finance Minister Ross Wiseman. It is based less upon economic fundamentals than upon “hope”.

Hope is important to be sure, but it does not influence the direction of oil prices. Nor is hope something against which we can underwrite health care services or education. Hope is not a “bankable” commodity. It would be like applying Tina Olivero’s approach to the Budget: it’s mostly attitude. The rest is in the water.

Think about it. We have doubled the provincial debt in just a few years. This year’s Budget contained the fourth consecutive deficit. The “Wiseman Plan” contained a Budget based upon:

-          $1.1 billion deficit on current account (government operations and programs).
-          Another $1.144 billion for capital account- including infrastructure, fire trucks, and   $760 million for Nalcor, “…primarily for the Muskrat Falls Project”.

That’s $2.24 billion to which must be added the second demand of $800 million for 
Muskrat Falls, made by Nalcor in June.

The Government is adding around $3 billion to the public debt, this year alone. Yet, that fact gets honorable mention not by one of the political leaders.

Wiseman predicts five more years of deficit spending after this Budget, following which he says, oil prices will rebound.

The problem is Wiseman has not a clue about next month’s revenues, let alone Budgets five years’ out!

-          In place of $USD $62/barrel, oil prices (Brent) are now scratching $US 40/barrel.
-          Oil production is lower than forecast.
-          Mineral royalties are lower, too.  

The $1.1 current account deficit forecast this year is actually far higher than forecast.  

No Fall Budget Update has been issued by the Davis Government.

Anyone can figure out, given Davis’ desperate Polls, if Wiseman had good news, he would be shouting it from the roof tops.

Instead, all three leaders are making promises; Ball is just making more than the others.
Davis is not credible. But he is not credible, either.

Ball proposes a deficit $270 million higher than this year’s. He doesn’t even know what the deficit will be! He is foregoing $175 million by cancelling the HST increase.  $380 million is sought from cutting government waste but without causing lay-offs. 

It is the folly of the willfully blind. 

Salary and benefits for public employees reached 47% of total government expenses in 2013 (this and other stats were skillfully described in JM’s Budget Colloquy posted on this Blog).The figure is proof there are no savings without  job cuts, though that fact should not halt any leader providing essential financial leadership.

To that point, we have also come through the entire election campaign without a serious acknowledgement Muskrat Falls has placed the province in a dreadful financial state. 

In time, we will wonder how it happened that all three parties could all be simultaneously sleep-walking.  

But, others facts are equally compelling:

•          For every one NEW dollar spent on infrastructure, three NEW dollars have been spent on public sector salaries and benefits.

•          Per capita expenses in Newfoundland and Labrador are approximately 45% higher than the average of all other provinces and are the highest of all the provinces in Canada.

•          The Auditor-General reports the cumulative value of surpluses recorded by the Province from 2004-05 to 2013-14, of $4.6 billion, was almost entirely the result of payments received under the Atlantic Accord arrangements....so much for diversification!  

•          The demographic bomb is real. By 2026 33% of the population will be 60 years of age or older, while 15% of the population will be under 15 years of age.

These are but a few of the scary statistics that profoundly threaten this small, increasingly revenue starved, and profligate province.

The simple fact is the “Wiseman Plan” is not sustainable. Dwight Ball's adoption of the Plan makes it no more acceptable than Davis' own endorsement..

Davis charges Ball with engaging in fantasy. The truth is, having abandoned Tina Olivero only recently, he had long ago embraced "Alice in Wonderland".. 

A more astute Premier Davis would have exposed the profligacy of Danny, Dunderdale, and Marshall.  

Having done so, Davis might have been able to credibly explain why Ball is being foolish.

Indeed, as the incoming Premier, Ball should be able to have an honest conversation with the very public to whom he has promised transparency and accountability.

But even he could not risk it.

Likely, such frankness would cause too many questions; inspire too much doubt. The public might demand the clarity he does not possess. It might alter the false economic narrative on which his campaign is based.

The tragedy of our politics is that all three political leaders are prisoners of a deception. It is one each of them has helped create.

But, there is hope, after all; not Tina Olivero’s brand of hope, not Alice in Wonderland’s or even the false hope on which the “Wiseman Plan” is based.

On Monday, the public will vote.

In four years, they will vote again.

Ball needs to remember the voters won’t be happy if he leads them down a rabbit hole.

Don't take that to the bank, either!

1 comment:

  1. Excellent post Des. Our revenue problem is scary, it's like we are maxing out the Visa after we just got fired.

    ReplyDelete