On Tuesday, Finance Minister Tom Osborne delivered the Province’s seventh deficit Budget in a row. Only the Atlantic Accord arrangement, amounting to $2.5 billion, salvaged any pretense of the Government’s ability to manage the public accounts.
To hear the Finance Minister, you might have thought the Liberals had spent the last three years as a deficit slayer. In fact, all that has changed is a reduction in the capital funding for the Muskrat Falls project.
The Government’s first Budget in 2016 levied a bevy of taxes and fees on the public. They had no heart to right-size programs and operations. As it stands Current and Capital Account Expenditures have risen to $8.6 billion (Statement III). In contrast Revenues are only $6.2 billion (Statement II). The real deficit, in contrast to the numbers used by the Government ($575 million without the Atlantic Accord transfer) is actually $1.4 billion. Budgetary cash requirements exceed revenues by $1.86B.
In addition, Debt charges and financial expenses are nearly $1.4 billion, second only to the amount budgeted for Health Care. Where is the evidence that the deficit is under control?
Those figures alone suggest that we are ignoring the consequences of a debt ceiling and that the ‘drunken sailor’ within still has control of our spending habits. But there is more. When the ‘real’ rate mitigation plan arrives this Budget will be judged a travesty.
A $796 million (current account only) deficit is projected for 2020-21 and — get this — a surplus of $23 million surplus is forecast for 2022-23. That happens to be when the incumbent government will be heading back to the Polls.
When neither the Tories nor the Liberals have made a serious attempt to reduce spending over the past seven years, who really thinks that the next Administration is going to eviscerate government programs to the tune of $819 million — in just two years — when re-election is a more self-serving option?
It won’t surprise anyone that the direct debt is $14.5 billion, even having booked the full $2.5 Atlantic Accord settlement. The Total Public Sector Debt is nearly $23 billion.
It may surprise you — though it shouldn’t — that, immediately after the Premier released his “Rate Mitigation” Plan, the larger $23 billion figure became the real “Direct Debt”. Ball’s Plan (which, by the way, is just as fake as Ches Crosbie’s “CHEAP” Plan) assumes very little revenue from the sale of Muskrat power — implicitly awarding the whole Muskrat Falls “investment” the status of “sunk cost”.
Otherwise, for the past two weeks the skies over the Province have been abuzz with Scud missiles raining gifts down on a public not quite ready to engage about their fiscal future. Taxi drivers, lawyers and artists alike filled the air with a sense of unwarranted expectation, all in a tizzy over the dreadful prospect that the goodies had run out before the Budget was even read. The Finance Minister did not let them down.
Elections licence fiscal insanity in politicians inured to virtues of responsibility and common sense. Neither rain nor snow — nor an empty Treasury — could silence the removal of the 15% sales tax on automobile insurance or the end of the deficit reduction levy. From no one could he heard the words: ‘we can’t afford that’. As desirable as those measures might seem, doesn’t the prospect of hitting your head against a debt wall warrant something more than “aw shucks”?
Why does the seventh deficit Budget (effectively) in a row not scare us? Have repetitive deficits dulled us into benign anticipation of the event? Is there no point where, collectively, we become wary of our own complicity with reckless leadership? When do we abandon the pretense that this can end well?
Let’s be clear.
There is nothing new in people fooling themselves. It’s just that many forget that not everyone will be harmed by a failed Treasury.
The well-to-do and the entitled will do just fine, thank you very much. For everyone else the Government has an effective PR machine, but only until the money (borrowing, that is) runs out. Accordingly, why would a new penitentiary be any less ideal for re-announcement than, say, the Corner Brook Hospital? What better substitute for aggressive and decisive fiscal measures to deal with the deficit than to downplay the enormity of the problem? Doesn’t the announcement of hundreds of millions in capital projects belie the fact that a debt problem even exists?
Failing rescue with the price of oil, haven’t we just left the problem to be fixed, not by political leadership, but by happenstance?
For that reason, doesn’t serendipity now qualify as a legitimate ballot box substitute?
Who, Liberal or Tory, doesn’t get this?
As to the NDP, what can be said except that they either don’t understand that a hand-up for the socially and financially needy is threatened by the gross mismanagement of plentiful resources, or else that they are afraid to articulate the fact?
The real tragedy of Newfoundland and Labrador’s democracy is that it enjoys neither good government, good opposition nor a public prepared to put themselves out in pursuit of either. The public’s complicity with governmental dither only advances the edict of the bondholders. There being no evidence of change and the bill for this collective collusion not having arrived, it seems people just hope against hope that, when it does, their own interests will not be submerged to the public interest. I guess there isn’t much chance of seeing protesters collide on the parkway demanding a few cuts.
For all those reasons, as we head into the Province’s 21st General Election, Tuesday’s Budget is less a forecast of revenues and expenditures for the current fiscal year than it is a financial metaphor for a society that actually may be far less in denial than has been suggested. More likely, we just want to have it both ways.