Monday, 8 January 2018

MARY SHORTALL’S LA LA LAND

No one will argue that it is the right of every citizen to express an opinion, as Mary Shortall did recently in a letter to the Editor of The Telegram. In it she made a series of claims regarding the fiscal capacity of the government and the financial impact of the Muskrat Falls project; “exaggerated doom and gloom,” she called the comments of naysayers. Her missive contained no factual basis whatsoever.

Presumably knowledgeable readers will conclude that such writers are ill-informed and poorly read. The case of Mary Shortall is bit different, however. She was not sharing her personal views: Shortall signed the letter in her elected capacity, as President of the Newfoundland & Labrador Federation of Labour.  
The Federation, like most labour Unions and professional associations, has for years sought a voice in the formulation of public policy. The President, no differently than her predecessors, is afforded space on the public airwaves and in other media to state labour’s position on a plethora of issues extending well beyond the collective bargaining space. 

NL Federation of Labour President, Mary Shortall
The practice speaks to the right of interest groups in a society to influence both public opinion and public policy. The Federation is a pedestal from which to impact social and economic directions — the purpose of policy. For that reason, the position implicitly carries a weight of responsibility unless, as Shortall’s diatribe suggests, the mission is one of recklessness.

The Federation and other groups are adept at criticizing government when policy changes are not to their liking or when it lacks an evidence-based foundation.  

Is there any reason that the Federation should not be held to the same standard?

Shortall writes: “Once again, we’re hearing the steady drumbeat of fiscal doom… It hasn’t been this loud since 2015 when global oil prices plummeted. Did the sky fall, as predicted? No. Will it fall, as being predicted again? No.”

The idea of an immediate economic implosion from the drop in the price of oil — or for any other reason — is Ms. Shortall’s own invention. She should be reminded that our fiscal nightmare did not begin in 2015 or even in 2014 when the collapse of oil actually had its most dramatic decline.  Budget 2016-17 represented the sixth deficit Budget in a row. Insolvency rarely happens overnight, and is more likely the result of a series of bad decisions or fiscal laxity, which describes the case in NL.

Shortall continued: “The deficit is not crippling. The government is forecasting a balanced budget by 2022, and gross domestic product (GDP) growth sooner. The debt-to-GDP ratio will soon be heading in the right direction, down.”

A failure to curb spending will negate the possibility of budget balance anytime soon, if ever. Then, too, debt is a many-headed monster. The cost of debt-servicing, for example, already exceeds spending on education. It neither stays in the province nor is applied to public services.

The Government worries — or ought to — that a reversal in oil prices (which are showing modest strength), or some unrelated global political event, will cause the Bond Market to tighten again. Fiscal ‘precipice’ is a constant. How is this not “crippling”?

The province’s GDP is in decline with only a very modest turnaround (lower than all other provinces) forecast for the foreseeable future. Debt levels are rising rapidly, due both to persistent deficits on Current Account and the Muskrat Falls project. How does this suggest that the “debt-to-GDP ratio” is headed in the right direction?

Shortall states: “Nor does Muskrat Falls cost overrun mean that the apocalypse is coming. It would result in electricity rates of $0.22 to $0.23 per kilowatt hour, an increase, but not the highest in North America. Rates are going up faster than inflation across Canada; Newfoundland and Labrador is not alone.”

Those comments contain all the wisdom of Kathy Dunderdale declaring that the multi-day power blackout in 2014, known as #darkNL, was “not a crisis”. The Government’s target of 17 cents per kWh — forgetting “rate mitigation” — will constitute a grave injury to most members of the public. It will rob people — including union members — of the basics of life. This is what Ontario Premier Wynne recently discovered, forcing her to offer a mitigation plan too… except Ontario can better afford to pay for it.

A cost of 17 cents per kWh will cause severe demand compression for electricity — forcing a further rise in rates. Reaching 22 to 23 cents per kWh would be calamitous. But as to such consequences, Shortall is dismissive. She refers to unnamed places in North America that are paying higher rates.  Shortall should tell us where, and how those people are faring.

The Federation President continues: “The government is considering electricity ‘rate mitigation,’ reducing rates by putting public dollars into Nalcor. Bringing rates down to $0.17, the target when Muskrat Falls was approved, would cost less than the revenues from the federally-required carbon tax.”

The truth is that we do not yet know the impact of the “carbon tax”. Likely it will be far less than the one associated with 17 cents per kWh power. Whatever the case, “rate mitigation” of half a billion dollars (rising annually due to the financial structure of the project and inflation) will gut social programs of all kinds and cause massive layoffs for public sector workers unless another solution is found. This is not a matter to take lightly, especially when a reduction in program spending must concomitantly be achieved.

The misinformation continues as Shortall asks rhetorically: “What about provincial spending? Is it really ‘out of control’? Sorry, but no.” She suggests: “What the province can afford is indicated by the size of the economy (GDP), not the size of the population. The province’s spending per GDP is second lowest in Atlantic Canada.”

Ms. Shortall fails to acknowledge that the provincial GDP includes the value of NL’s oil exports. Oil has a major distortive effect on GDP because the metric of oil’s value to economic growth is far different than that which applies to any other sector of the economy. (One former Finance official called use of the indicator “laughable”.)  Though the Parliamentary Budget Office uses the same metric — which makes sense in more balanced economies — it is smart enough to provide a numerical representation to the sum of the change in expenditure cuts and/or new revenues necessary to achieve fiscal sustainability. This is a direct quotation from the PBO’s November Report:

“Current fiscal policy in Newfoundland and Labrador is not sustainable over the long term. PBO estimates that permanent tax increases or spending reductions amounting to 6.5 per cent of provincial GDP ($2.0 billion in current dollars) would be required to achieve fiscal sustainability. This is equivalent to a permanent 26 per cent increase in the tax burden (including federal transfers) or a 21 per cent reduction in program spending.”

Shortall nevertheless uses the “debt-to-GDP” metric to draw this conclusion: “None of this fits with the narrative of ‘it’s-a-disaster-we-have-to-cut-cut-cut.’”

It should worry the Federation, and the public, that her facts — and her reasoning — are so demonstrably faulty.

Let’s be clear: Shortall is a poorly informed spokesperson holding an important position. But she does express certain sentiments about which all of us are of one mind. That is the concern over “job cuts” and the assertion that “poverty levels are rising”. Only a fool would be dismissive of this evolving tragedy.

Unfortunately, however, Shortall’s approach is to deny the enormity of the situation. She joins the Ball Government, who can also be euphemistically described as having their heads in the sand. Her narrative is only a tad different than that of the St. John’s Board of Trade. Problem is, it possesses the mindlessness of “La La Land”.

We might bear in mind that the NL Federation of Labour is one of the best-funded organizations in the province, and ought to have undertaken at least rudimentary research and analysis in advance of any public pronunciation.


In their own interest, and that of the public, the Federation might consider a public forum on the state of the province’s finances, possibly even inviting some more open-minded and less ideologically-bent policy wonks to offer analysis and to discuss solutions. The Federation could take the lead where, so far, the Ball Government and public institutions have miserably failed.

The Federation describes its raison d’etre as “advancing the cause of working people and promoting a progressive civil society”. It adds to that roster the goal of “better labour laws and strong, accessible public services”. The NL society with which I am familiar has a strong attachment to the values those aspirations inspire – even if there is disagreement as to how they should be advanced. I suggest, however, any argument that is less than rigorously fact-based only diminishes their import. It undermines our capacity to build the kind of society to which we all strive. 

46 comments:

  1. To make a simple analogy between a household budget and our provincial budget, we can consider oil revenues akin to making some additional wages via overtime---nice to have, but not what provides the majority of funds.

    Mining, not oil, not fishing, not forestry is (and always has been) the main economic driver of our province. Our problem is we became enamored with oil money about 25yrs ago and our politicians began spending as if this "OT bonus from oil revenues" was a permanent part of our revenue. The underlying reasoning for this misspending is simple---preservation of political legacies, common place in our political landscape since before confederation. Our problem is self caused, and it is unfortunate that the current ‘money-makers’ of the workforce know nothing else---we have historically allowed pandering and our prospective governments realize that.

    What I see as the required corrections are:
    1) rationalization in public service (a major reduction in numbers); I am not sure the remuneration package of individual employees needs adjustment as it isn’t great now
    2) a philosophical change and standardization in the way our economy and budgets are set; it does us no good going from Liberal to PC governments and trying to compare party economic statements as their methodology of analysis is fundamentally different
    3) acknowledgement by the populace that we are in for a difficult 20yrs; unless a new revenue windfall comes up
    4) an honest to goodness assessment of revenue vs cost analysis, what can we afford vs what we want and how our government panders tax payer monies.

    To put a few numbers to an example of the population ‘kicking the can down the road’ is seen by looking at the probable increase in power rates due to MF; assuming at $100k household income and current EPP monthly power bill of $350/month, the increase due to a ‘doubling’ of rates equates to about 4% of net income (ie in terms of gross income a typical power bill will consume upwards of 15% of household gross income once MF is online).

    My personal thought is that our economic predicament is much worse than Shortall suggests. I am not sure I (or others that started their career in 1990) will experience true financial wealth in this province; hopefully my kids will...

    PENG2

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    1. You seem to have a very good analysis of the problem in governance in NL. Living in the province in the 70's, I was at odds with the government of the day, thinking that we were all going to be rich from offshore petroleum and mining revenues, while ignoring the potential of renewable resources; Fisheries, Forestry, Agricultural, etc.
      Sustainable Development in NL seems to have lost its importance at Confederation bldg and with Labour. Business as always has had only short term goals.
      I too fear that "true financial wealth" is still generations into the future.

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    2. PENG2 discloses his age, at about 50, a whipper snapper, to say mining HAS ALWAYS been the main economic driver in Nfld. Seems he missed the first 400 plus years of our history and fishery, with the cod fish on our stamps. In 1935 the census for the rural communities near Hr Grace, showed most all as fishermen, with an occasional miner who worked at Bell Island. The fishery is and always was mismanaged yet defined our province, and our survival. It should be a large part, perhaps the largest part of our future.
      Winston Adams

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    3. WA:

      OK my initial wording certainly should have been better—my posting was moreso specific to our time within the Dominion and when the economy turned more ‘global’ and in no way meant to minimize contributions of the fishery past or in the future. You did underestimate my age a bit and for that I will cover your dinner some evening at 99.

      My main point was to demonstrate the mismanagement of our resources as a whole and just what we have contributed to the Dominion. From minerals, to fish, to forestry to oil; no(or very few at most) other area of the country has the resource bases we have at our finger tips. To date, our existence has been primarily relying on equalization or other such social funding programs---we have been sold these resource developments on the promise of short term monies by our politicians and we as a populace have ignorantly accepted their words as gospel in what the best way forward is. We have no sound development plan to ensure long term stability of the resource bases, and I doubt the majority of our politicians can see past day 2000 of their electoral mandate.

      An interesting exercise would be to tally the industrial income from NL(insular and mainland separately) made by the companies to see just how much of our resource monies were given away. I would suggest when completed the amount of cash that has left Labrador would surprise all people, and the monies from insular NL would surprise most people.

      I take strong exception to those in the mainland press that look at NL as being a drain----I would suspect we have contributed more per capita to the national economy than most other areas of the Dominion and the situation we are currently in speaks to our political naivety and ontimes embarrasses me.

      PENG2

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    4. Last time I looked minerals were a non-renewable resource subject to the vagaries of the market place. Not unlike oil.

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  2. UG is being much too kind to Shortall. The claims she made are not misinformed and the result of a lack of knowledge. They are the result of a wilful distortion of the facts to shield her members from the cuts necessary to save the NL economy.

    When Labour is so shortsighted that it tries reactionary steps to avoid dealing with the plight facing working people, they are complicit in the unfolding disaster in NL.

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  3. Mary Shortall isn't the only resident of La La Labour Land.

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  4. The bafflegab coming from Mary Shortall makes her look like a complete idiot and does the Labour movement a great disservice. If she expects anyone with an inkling at all to believe her diatribe, she is a bigger fool than most everyone thinks she is already (and she occupies the position of supposed leadership ?????) God Almighty!Labour has bigger problems than they think they have.
    Je--s Ch--st!! ms Shortall, we're borrowing $2M a day just to pay the current bills which is largely comprised of the salaries and benefits of a grossly bloated public service and you, Debbie Forward, Jerry Earle and Wayne Lucas want MORE????
    The likes of people like you and the pussy foot Government we have now (and prior to)who don't want to deal with the problem we have will forever keep us in dire straits (because that is exactly where we are). I'm on a fixed pension (which I'm lucky to have) which a great number of people in this province don't have and will never have but are expected by the Unions to pay for their neverending demands.
    Tom Osbourne had better not even think of "raises" for the public service BUT Must (with a capital M) demand wage and benefit rollbacks. Rollbacks will not devastate the economy as a mass layoff surely would but instead will cause everyone (including the public service) to do their share in trying to get our fiscal situation on a better footing. We cannot afford to continually put forth deficit budgets with borrowing up to and beyond $2M/day.
    No one in Government seems to care anything but getting re-elected to ensure they get their gold plated pension and the Mary Shortalls of this world are ensuring they will. Gimmee what I want and to hell with the taxpayer who must pay for it! Step back Mary, Debbie, Wayne and Jerry and face reality--WE ARE BROKE!!!

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  5. Some time ago we had Peter rabbit declaring to all ensundary that the sky was not falling in to the enlightenment of some regular joes and Mary's. But Peter did not use any official title in this ackamalacton, he just knew this because he was wiser than all the other rabbits, maybe a self proclaimed stable genius. Now we have Mary rabbit herself proclaming the very same thing, but as UG says without any research to support her position, just her title, which she thinks allows her to make this proculmation, that all is well and thriving in la la land. Not to worry my baby rabbits, momma knows best, I will protect you from those bad nay Sayers. Love those muskrats too, we can afford them, says Mary rabbit. Think I will light up now, all is well........at least for now.....

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  6. The problem is as, Ms. Shortall explains, that working poor are now being asked to pay for the past mistakes of successive governments. These are mistakes such as Muskrat Falls, Sprung, the dependency on construction jobs and other boondoggles. This is all right and fine if you are comfortably tucked away in a retirement pension from a government job but what reductions in labour will bring is mass outward migration with few people left to pay the bills compounding the situation. This leaves only one area with any impact that can be implemented and that is wage, benefit and retirement roll backs including those that are now retired-especially those who retired from the civil services years ago. None of the people who were employed in government public service-union or management should escape these cut backs.

    We should then take all government employees labour agreements and have them settled by out of province appointees without special interest groups such as unions and the employer’s council influencing the final decision who can force a minimum of five years contracts until the deficit problem is solved. Then we need to take all benefits and pensions from both private and government employees and create a single crown corporation to manage all of these with express condition of ensuring continuity. We don't have to go very far to see how mismanaged these funds were with Sears and Wabush mines to mention a few. The private sector as usual is asking government to solve our economic woes not by investing in new industries or new ideas but by slashing government spending. Both labour and businesses need to step aside while outside expertise is brought in to solve our problems.

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  7. "Nor does Muskrat Falls cost overrun mean that the apocalypse is coming. It would result in electricity rates of $0.22 to $0.23 per kilowatt hour, an increase, but not the highest in North America. Rates are going up faster than inflation across Canada; Newfoundland and Labrador is not alone."

    Mary might be right about the prince of electricity being 22-23c kWh in other places in North America but how much energy do they use? NL residents consume 62 GJ of electricity per home or 17222 kWh a year and it is highly unlikely 62GJ of energy is used in homes south of the Canadian boarder.

    +10c kWh is an extra $1722 per home using Nalcor's most flawed assumption that demand won't be effected by price escalation, some in the NL media also think most NLrs can afford such oppressive rate hikes.

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    1. In 2016/17 the average household in the U.S. used approximately 900 kWhs per month. Hawaii lead the U.S. at 29 cents per kWh, followed by Alaska(22 cents), Connecticut(21 cents. New York state and Mass were 19.9 and 19.35 cents, respectively.However, our average usage is significantly higher.

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  8. I read Shortall's letter in the Unifor Times, a publication better known as the Telegram. Anyone who is aware of the "real world" fiscal situation this province is facing had to be left wondering if Shortall, while writing her rant, had been testing the affects of Cannabis before it becomes legal. After reading her letter from cloud nine I felt somewhat more positive about the financial future of this province. I felt that way because our fiscal woes would obviously be far worse if Mary Shortall was in a position of influence with our government. Most importantly, her letter should guarantee that no one in a position of fiscal responsibility will ever heed her opinion or recommendations.

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  9. Is there no depth to the delusions of the NL public-sector labour movement? Or, for that matter, others in the general public who think that spending can continue unabated, taxes and fees never need to go up, and that the province's finances will magically heal themselves?

    Has there been a mass hypnosis?

    What is wrong with people that they cannot see what is obvious to almost anyone who doesn't have crap covering their eyes?

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    1. Either way which we twist it-through layoffs or tax increases-there will be massive economic turmoil to rid ourselves of this beast of a deficit. I don't see this correcting itself in less than 10 years or possibly even 15 to 20 years. There aren’t any rabbits to pull out of the hat anymore since that one left with the oil being drained from Hibernia, Terra Nova, Whiterose and now Hebron. That was short sited to give up so much oil royalties in turn for short term construction jobs. This fiscal mess weakens us in future negotiations on resource revenues and the mining and oil companies know this. There isn't any doubt that the provincial and municipal workforce has to be reduced but it is highly and very unlikely that these jobs will be replaced with anything more than minimum wage jobs. When the cod moratorium was in place, there was a flood of call centre jobs all paying the minimum wage or a little better and all looking for tax and grant incentives to come here. As soon as the economy improved and they had their grants reduced and taxes increased they left in a hurry. I don’t think there is any one person in this province that has a solution to this but it seems there are a lot of people on all sides who think they do so long as it doesn’t affect them. Labour and unions don’t want the job losses and businesses don’t want a decrease in their lucrative contracts but neither seems to have any permanent solutions to this problem. One only has to look to Ontario (as in Newfoundland) to see how far apart these two sides are with the comments from all over the country on the recent minimum wage hikes in Ontario. We will be third world area in one of the richest countries in the world. There is a bit of irony in that.

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    2. It sure as hell isn't going to "correct itself", ever, if the spineless politicians don't grow a pair and start doing something.

      Soon enough, the decisions are going to be taken out of the politicians' hands. Or, at least, out of democratically elected provincial politicians' hands...

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    3. anom@16:52: And your solution is?

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  10. 1. Unfreeze MUN/College tuition starting with the spring/summer intersession and continuing in the fall of 2018. Peg tuition to inflation thereafter.

    2. Eliminate at least 500 public-sector before the end of FY 2018-2019, and ideally even more (750 to 1000).

    3. Abolish Nalcor and revert to that status quo ante Danny's "energy whorehouse" fantasy.

    4. Regionalize municipal government before this term of provincial government is out, reducing the number of municipalities by at least 2/3 and abolishing all those municipal-tax-free enclaves that exist just outside town limits. (No, not resettlement.) Start on the northeast Avalon.

    5. Realize the K-12 savings that have never been realized in the 20 years since denominational education was abolished. There are still too many schools, teachers, and administrators.

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    1. HAhahah!! Brilliant! Danny's "energy whorehouse" indeed... and you're absolutely right. That bloody monstrosity NALCOR is a hideous relic from the Williams era that has long-since outlived its purpose... it should be completely dismantled and sold off lock stock and barrel to the private sector, if they'll even entertain the notion of assuming it. If not, then sell the bloody thing for a dollar and chalk the write-off up to a lesson learned.

      NALCOR = Newfoundland And Labrador's Cost Over-Run

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    2. unincotpotated communities don't get services so they can't be taxed.
      there is an old tired argument about amalgamation or regionalization, but it holds no water.
      before you decry tax free do you know what public expenditures are paid on behalf of unincorporated communities?
      soss that out and then come back


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    3. "unincotpotated communities don't get services so they can't be taxed."

      Precisely.

      "before you decry tax free do you know what public expenditures are paid on behalf of unincorporated communities?
      soss that out and then come back"

      So which little tax-free haven do you live in?


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  11. As a shareholder in nal (low life, nothing) core I would like to know where the profits from oil goes. They report that oil profits doubled in the first quarter of last year from the previous year. How much of that went to the provincial government to pay current account, and how much went to the boondoggle?????? Do we need a middle man, boondoggle to syphion of oil revenues before deciding how much to give back to the people. Now they propose new rates to try and squirrel away money if and when the boondoggle begins to produce power in 2020. Oh yes, and we are going to import cheap power from ns, how much cheaper can it be than what we are giving ns, at 3 cents a kW and the we have paid for and own lock stock and barrel. Not to mention the totally free power that we are giving them for 30 years. As an average Joe, am I as dumb as I look, there must be someone out there that can make more scense out of this than I can, then please explain. But not a low life nal person. Nalcor has to go, that's the first step in trying to bring some logic and understanding from this boondoggle, and that includes not just muskrat but the entire power feiascial. And who is totally responsible for the shaniggans, our elected governments. I have to continue saying it, we as a people are incapable of governing ourselves. You couldn't make this shit up, or it couldn't be just bad luck, it has to be planned by embiciles. Sorry, but guess that's who we are, call a spade a spade. And we have to recognize our problem and accept it before we can commence to even think about making it right. Amen.

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    1. Bad news Anon. Nalcor proudly boasts that the Nalcor profits accrue to NALCOR alone and they can do as they please with the money.

      NALCOR wants to thank you by the way for the 15 billion for Danny's wet dream that is none of your business if you want to know where where the money goes. It is also none of your business that the world experts on quick clay think NALCOR used the wrong stability figures to decide the spur is safe. But don't worry if the spur fails and the 15 billion (and lives) are flushed downstream, NALCOR and the investment are guaranteed by the take or pay contract (the ratepayers are on the hook come hell or high water so to speak).

      One last bit of good news from NALCOR. If the dam does fail and the project is a bust don't worry. You do not need MF power especially after the demand drop after prices double. So you see there is nothing to worry about here just move along and be happy that NALCOR has all the angles covered!

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    2. Smile Bruno, this is the very literal definition of "Trickle Down" economics isn't it? Oil prices go down, wells shut in, revenues dry up. Oil prices go up, NALCOR accrues revenues, blow it away on ex-cable guys' pensions and a few embedded dirt movers and M & E contractors.

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    3. Thanks Bruno, for the explanation. agree nalcor is a problem or as some like to say a challenge. But I contend that we have a bigger challenge as a people, we are incapable of governing ourselves. We proved in through our history, especially in 1932-34, and are nearing the verge of doing it again. Although the Feds through the loan guarantees helped enabled us in achieving near insolvency, I think, they will also prevent us from destroying ourselves once again. I don't think we will loose our status as a province, and revert to a territory of Canada, therefor it is imperative that uncle Ottawa ensure in one way or another that we do not become insolvent. Now back to nalcor, yes we created a Frankenstein, and set it loose and out of control, or as you say, all angles covered. But what the people and government created only they can put assunder, or destroy. That will not solve all our problems or challenges, but a good start. Then we can default on the entire shebang, and let all ensundary come sue us. Will be hung up in courts for years. Let uncle Ottawa take over the loan guarantee as any good guaranterer would, and is required to do, and we get back to a new start with no debt. Debt will be totally wiped out as any person going bunkrupt, and uncle Ottawa will ensure that we remain a solvent province of the federation. Now if anyone has a better plan, put it on the table. Now don't anyone say the bankers will not give us loans anymore, they will with any province or country that has no debt. Sure this plan is as good or better than the current prospectives we are facing down the road. Imagine if the north spur gives way and all washed down stream 15$ billion plus, and lives, who will take responsibility. ???? Think I like my plan better. Shut her down!!

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    4. Thanks Bruno for your explanation. I had responded with a plan of my own, but think UG, in his wisdom did not see fit to publish it, and I respect that. I was thinking way, way, way outside the box, after reading about icelands near insolvency a few years ago. I was thinking that as a Canadian province, we could have our cake and eat it too, but do realize that is all covered under the BNA of 1867. No it was not slander or foul language but too far outside the box, lol.

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  12. We, the dumb taxpayer, know that we cannot continue deficit spending, currently at $2M/day but the dumber Government seems to think it is OK. It looks like they signed off with Nape at no wage increase for 4 years and no layoffs. We can expect similar agreements with CUPE, Nurses and Teachers. Question!!! if we continue with the same staffing levels with the same salaries and benefits, how does the dumber Government expect to address the deficit spending?? Attrition will not come near ro addressing the problem.
    Rollbacks in salaries and benefits has to happen or else we're doomed to insolvency. Our current fiscal situation makes us sitting ducks for any business looking to relocate here. Hence our future in "diversication" is pretty bleak.
    Government has to start somewhere and "stay the course" is not practical. The Unions are laughing.

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  13. About a year ago, I googled data on our GDP, comparing Peurto Rico (essentially bankrupt)and Nova Scotia.
    I was surprised to see our per person GDP (gross domestic product) to be much higher than Nova Scotia, yet we are in dire financial straits, and behind NS in many ways.......how could this be?
    Our GDP includes production of off shore oil, a valuable non renewable resource that benefits mostly areas outside this province, it is exported, but a big part of our GDP. Likewise with Inco mine in Labrador, high value nickel and copper, and the Labrador Iron mines, and I believe the upper Churchill power exports to Quebec, and the paper exports from Corner Brook.

    So, in reality , our non renewable resources continue to be plundered, showing a great GDP but a population to be an a path to poverty. Our power exports to NS getting no revenue should again increase our GDP. And just a few months ago, our government signed rights to a London based company, without a whipper of opposition ( that had a cash balance of 12,000 dollars, to have title to forest products from the entire Great Northern Peninsula, that may or may not see some wood chips exported, rights tied up for 20 years.
    So the disconnect between our GDP and our standard of living,now going back to a have not province, to depend on perpetual hand outs from Ottawa......this is what Mary Shortall is so proud of, and implied we should keep doing more of this......it is good for our GDP.
    Perhaps GDP should represent GOD DAMNED PEOPLE who mislead the public with such BS as cited in her letter, was shot down by Bruno in a comment on this blog, and well exposed more fully here by UG.
    I suppose a piece by Dave Vardy or James Feehan or other economist could add to the distinction of the relationship between GDP and our poor economy. Mary seems to believe in the concept that if you cannot back up your position with evidence based data and analysis, then baffle them with bullshit. Lets put her on the top ten list of bullshitters. And what is her qualification, education, salary and benefits that warrants her top position for the Federation of Labour? We know the most important qualification for a politician is the gift of gab. High school education is not required. Our Nfld dogs and Labrador Retrivers show more intelligence than many of our MHAs. Many of our leaders belong to the bow wow club. Cartons of such dog like leaders were typical in England a century ago. Maybe Mary is just of the Nfld crackie dog variety, ok as a pet, but without the good nose and strong traits of our better breeds? I may be dead wrong of course, and maybe Mary will pen a piece for UG to further educate the masses of he insights in economics and good governance.
    Winston Adams

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    1. A chart of debt to GDP is the usual way economists enlighten the gov. and deal makers of financial well being or converse. It would be useful to the Blog to have this chart reproduced say for past 60yrs.

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    2. UHhh??? Your a bit off the Mark on that comment. It was a Rhodes Scholar who actually got us into this mess.

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  14. Found this;

    http://www.rbc.com/economics/economic-reports/pdf/provincial-forecasts/prov_fiscal.pdf

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  15. What to make of the elfin Dennis Browne on the TV last night being interviewed (if that is what it is called) by D. Cooper?

    What was that all about?
    What is Dennis on about?
    Can the PUB save us?
    Really?

    As for poor Mary, she is blowing smoke for equally un-reasoned purpose, maybe someone put her up to it?
    Maybe ...

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    1. I was pretty disgusted by that as well. As soon as it was over, I asked "I wonder how many times they rehearsed this "interview"?

      The acting was just as bad as the rest of the low budget corny "Canadian Content" that the CBC forces down peoples throats at their own expense. I wonder who put the question list together for Debbie, Browne himself?

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  16. Nearly every person who commented here recognizes the misguided approach that government is taking in dealing with Public Sector unions. By comparison to the size of the civil service in every other province, the NL civil service is grossly oversized and a prime target for cost savings in trying to rein in the provincial deficit. However, there is no real voice for taxpayers in the media to state the case. The unions constantly run advertisements on TV and radio to present their untruthful and distorted message but there is no push-back on the message. Many NLers who may not really appreciate the economic issues only hear one side of things and the unions really take advantage of their monopoly on the airways. It is time that taxpayers banded together and presented a different message based in fact and logic. All of the public sector unions want to hold their membership even if it destroys this province. The bullies who run these unions will use any tactics for the benefit of their unions with no consideration for the province or its people. There needs to be a organized pushback from the taxpayer because the politicians are more concerned with political support from union workers at election time than they are with the financial health of the province.

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  17. There is now a real danger of the Corner Brook Pulp and Paper Mill closing because of countervailing subsidies. Not only will this devastate the economy of the West Coast and throw several hundred out of work it will alo dump another 200 MW's of electricity from the Deer Lake Power Station on the NL grid competing for a very tight market that Muskrat Falls is expected to fill but guess what?
    The price of electricity will still rise defying all logic and market place fundamentals because of a certain premier and his legacy project. I wonder if the same fate awaits the Come by Chance Refinery and Long Harbour processing plant? We could be bankrupt even before Muskrat Falls comes on stream.

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    1. Without the massive subsidies, Newfoundland would have been paper-mill free a decade ago.

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  18. Agree with you totally Amoy 1949, but what is the biggest fincincial problem facing the province today. Maybe it is the unions, or the bulging civil service, or muskrat falls. You decide. Just wanted to remind us, that most or all civil servants just want to earn a decent living, unions have been around for years and will continue to do as much as they can for their members, that's their job, and in 70 years, since confideration the net debt is 15$ billion, plus if course pension liabilities. But that 15$ billion includes all forms of services, from health, to education, to roads to fish plants, you name it. But muskrat has accumulated 15$ billion in the past 5 years or so. So where were the taxpayers voice when muskrat was being planned. And what are the tax payers, and rate payers of electricity saying for the next 50 years. Are these same taxpayers complaining about muskrat cost. You tell me. Just my opinion. The powere companies have lots of ads on tv, radio etc. too, and their message is usually not only distorted but usually downright miss leading lies.

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  19. This piece by Nikiforuk on the Iron Law of Megaproject highlights the optimism bias that dooms megaprojects. It highlights the management "weakness" at MF.

    https://thetyee.ca/Opinion/2018/01/09/Iron-Law-Every-Politician-Should-Know/?utm_source=daily&utm_medium=email&utm_campaign=090118

    "Flyvbjerg also found that megaprojects tend to guarantee “the survival of the unfittest” because the worst projects — like dams — keep getting built.

    Megaprojects also suffer from a profound paradox: while 90 per cent go over budget and rarely deliver any real benefits, governments and corporations keep hailing them as political triumphs and models of success."

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    1. You beat me to it Bruno. Nikiforuk on the mark as usual. Proves the adage; Too big to fail applies to mega projects such as Muskrat and Site C, Manitoba Hydro, etc. It looks very much like the Irving Gov. subsidized ship building program is following the same theme.

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    2. It was not fair Robert. I had a four hour head start:<)

      The 10 reasons megaprojects bring bad results is a good guide to megaproject madness. Number 6 is central to all. "Due to the huge piles of cash involved, proponents underestimate costs and overestimate benefits and embrace “the optimism bias.”

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  20. What news on the Muskrat Inquiry? List of Interviewees? Lists of Public Interest Questions? Public Meetings Schedules? It's 2018 already?

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    1. Robert, in the USA Mueller starts and accumulates evidence from the bottom up, so that finally when they get to question Trump or his son or son in law, they have the evidence nailed down, and the rat cornered when he tries to lie his way out.
      Here, the first thing is to see how the inquiry can provide loopholes for the rats to escape, so no one is really to blame.
      Look at Leblanc and his involvement in the Mount Cashel scandal, the civil trials, and the O'Brien law firm , their history and contacts and defence of pedeaphiles............the writing is on the wall..the fix is in.
      So the questions you ask are appropriate, but with no report until after the next election, why rush anything?
      PF

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  21. The recent offer to pay out civil servants is a good move on behalf of the government. Here's why. If the agreement is retroactive from 2016 then it will expire in March 2020 at which time the provinces finances will be considerably worse with MF finishing up and the offshore oil fields winding down. At that time there will be a need to fire about 7000 to 8000 civil servants and this will be easier without the massive severance payouts that are now in place. This along with retirements will be the final straw for many as they don't see the Public service as such a good option anymore. Most of the money will come from the recent agreement with Husky and its partners on royalties (the provincial government was glee full but silent on this which leads me to believe they were waiting for this before offering the payout to Nape and Cupe). This will possibly mean it will not add anymore to the existing debt and reduce future severance payments. If all these points are true then it is a smart more on the part of the finance minister. Efforts can now be made to use the savings to shore up the pension funds.

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    1. You may have a point with the layoffs. The only problem is that many layoffs are good paying jobs and won't be replaced. If it is those that are in there early career days that are dismissed then they won't be sticking around. Those that are left will be pensioned off but that alone means extra burdens for the younger workforce. Either reductions or spending of public money will have dire consequences for this province. We may have to face higher taxation to solve this problem.

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  22. The acepted stamdard ised by economists when compairing gov spending is tp use per capita NOT spending per GDP. The reason is gov spending is for people so it makes sence to compair per person

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    1. I believe spending per GDP better reflects our ability to pay whereas spending per capita is more of a reflection of the need per person. At least this is the way Wayne Locke saw it when he was playing the lapdog and that is why we are in trouble. We had a high GDP in earlier in this century therefore we should spend it on Muskrat Falls. I guess Muskrat Falls doesn't mix with your phylossophy of reductions in government spending?

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