Premier Andrew Furey’s appointment of Moya Greene to Chair the Economy Recovery Team is a sound choice; it may even signal that he possesses a mind-set that extends beyond the comfort zone that his predecessors found in political friends, compliant bureaucrats and paid consultants.
This province has a huge economic and fiscal
problem. It is so large, in fact, that words like “insolvency” and “bankruptcy”
not only give it ascription, they have entered common usage. Those who
understand phrases like “fiscal capacity” – the revenue generating capability
of the province to fund services and pay the public debt – know that,
realistically, successive undisciplined governments - from Williams to Ball –
have pushed the province into a financial abyss.
The sheer dimension of the problem underscores the necessity to have a proven professional examine and advise as to a realistic cure. Make no mistake: Moya Greene is not Dr. Doug House, Premier Wells’ economic czar; she is the new Lord Amulree - his echo, anyway - Britain’s response to Newfoundland’s plea for financial assistance in the 1930s. She sports a Royal title, too.
Moya Greene’s career has origins at the senior
level of the Federal Public Service, especially in the over-haul of CN Rail,
which for years was a dog of a company kept alive by the Canadian taxpayer. Greene
worked alongside Brian Mulroney’s former Privy Council Office Clerk, Paul
Tellier, beating it into profitability; they even helped make the trains arrive
on time.
Bombardier needed similar laser focus which led to
a senior appointment with that government-dependency, subsequent roles at CIBC
and TD Securities and later, as CEO of another money loser, Canada Post. The rest,
as they say, is history. The Royal Mail appointment followed; Directorships included
the Board of international mining giant Rio Tinto. Shrinking violets do not
become “Financial Times Person of the Year”, Greene having been selected in 2014.
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| Dame Moya Greene |
Of course, any “Team”, including Greene’s, can
only devise a “plan” of cure. It is the implementation that is critical.
Confirmation awaits an Andrew Furey Government that it is orders of magnitude more courageous
than that of Tom Marshall, Paul Davis, or Dwight Ball, each one renowned for
their fecklessness.
Furey has not released a “Terms of Reference” for the
group, which is unfortunate. He should. The titular reference to an “Economic Recovery
Team” suggests an excessively broad mandate. Yet, it is hard to imagine that
Dame Greene will be diverted from issues that weigh on NOIA when the province’s
fiscal predicament is absolutely dire.
Purveyors of trinkets and oil services look to the
offshore drilling programs underway at Cappahayden and Cambriol, as license to
continue Government's overspending. However, only the flawlessly euphoric would deny the
long odds on any such ‘quick fix’. Premier Furey hasn’t caught the ‘euphoria’
virus yet, though he might - at the first sign of trouble. As Brian Tobin was fond of saying:
“All in good time.”
Greene has an enormous job. She will have to put programs and services against indicated levels of public revenue (in a post-COVID economic environment) and consider the result. As if the Current Account deficit wasn't steep enough, she will have to consider how Premier Ball's spending spree via the P3 route can be accommodated.
Not “if” but “when” she discovers the sheer dimension of the imbalance,
“tax room” – our ability to convert more of our income to taxes - will
constitute her next area of scrutiny.
Next comes the realization that “Net Debt” and “Total Debt” are the same, except that $4 billion of unfunded public sector liabilities need to be added to both categories.
At lightning speed, public sector wages, benefits,
and public sector employment will quickly figure into the impossible arithmetic.
If Ottawa fails to offer an early and adequate
solution to the Muskrat Falls debacle, Greene’s trips up-along may become a single-handed cause of Air Canada’s revival.
For all those reasons, the invocation of Amulree(1) is not an unwarranted reminder of an earlier dismal time. That is, of course, unless
you still think that the great industrialist, Danny Williams, has the answer. (“I
would invest my own money in Muskrat Falls” – yes, that Danny).
The Amulree Commission concluded
that our “extreme financial difficulties…are due primarily to persistent
extravagance and neglect of proper financial principles on the part of
successive Governments…”
Most know how that story ended.
The worry, now, is that Greene will find the
finances of a post-COVID Canada are a lot like those of Lord Amulree’s post-War Britain: ‘all-shelled-out’.
Whatever the case, no one should think that a ‘pro-bono’ appointment for Greene will mean a free-ride for us.
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(1) Editor's Note: In 1932, Lord Amulree was appointed by the British Government to head a Royal Commission to assess Newfoundland’s economic prospects, following advice from Prime Minister Alderdice that there would be partial default on the public debt payments. Following his Report, and in return for assistance from the British and Canadian Governments to avoid such default, Newfoundland suspended Responsible Government allowing Britain to administer the Country, which status was never regained. Newfoundland became a Province of Canada in 1949.