Monday, 26 October 2020


Chair of the “Premier’s Economic Recovery Team”, Moya Greene, is the last person I would have expected to be duped by the politicos on the 8th Floor. Yet, for all her experience, she managed to be taken in, placing at risk an urgent requirement to deal with our large and immediate fiscal crisis.

No one can argue that the Team is composed of talented and successful people. Among the group is David Vardy who has been a frequent – and valuable - contributor on this Blog. That said, the expertise appointed for the purpose is terribly lopsided, especially considering the expertise required to examine a Government “broke” - unless the exclusively financial people  on the Team are weighed.

The Premier’s mandate letter requires the team to create a “comprehensive plan to address [the province’s] ballooning debt, deficit, and expenditures”. It ought to have been the sole requirement.

Greene and her team have been put to work looking for solutions “to revitalize the economy”. If the exercise of manufacturing miracles could be managed merely by assembling a group of intelligent and successful people, why wouldn’t we be supportive of the whole exercise — over and over again? But nothing is so simple. 

Every Premier, except the few charged with keeping the First Minister’s seat warm in a transitional period, has engaged in the same task. The latest, ostensibly building on the Liberal Party’s guidebook “The Way Forward”, was Dwight Ball’s employment of McKinsey Consultants, who delivered an “Economic Growth Strategy for Newfoundland and Labrador” just last year.

Specific issues with the offshore oil industry notwithstanding, is there a need for a new economic manifesto so soon? Premier Furey has never said why Dwight Ball’s way was not “forward” enough.

Dame Moya Greene

Of course, there is a multitude of reasons why those “Recovery Commissions” prove to be useless. The chief ones, I suggest, include the fact that they rarely tackle “core” issues, all of which contain adverse political implications.

Competition for capital is global, and investments in a place like Newfoundland are exponentially more challenging due to our remoteness, sparse and aging population, cost of labour, poor productivity, high taxation and undisciplined government.

Our “franchise” based economy affords a pass-through for corporate earnings, no differently than for union dues sent to Toronto or Pittsburg, or some other City; decision-making in each case, including collective agreements, are unsympathetic to the fostering of organic economic growth.

Equally as destructive, any sensible thinking around “strategic advantages” for investors and industry, generally, is considered a left-wing idea deserving of a stillbirth. Like issues of productivity, attracting business with a low marginal rate of tax or other generic incentives constitutes heresy. 

When a sector goes awry, like oil, only the big “hand-out” is sought by local ‘shills’ - reflecting, no doubt, their own history. No thought is given to how the Companies' financial ability to sustain themselves over the long haul, what they have done for local economic infrastructure, or to the 'creativity' generated by corporate intelligence when the chips are down - the merger of Husky Energy and Cenovus Energy, announced yesterday, a case in point. 

As before, superficial rather than "core" issues will be addressed by this “economic recovery” commission. They will not consider the real reasons that the rusting hulk of the Terra Nova FPSO is adorning Bell Island. 

One need only look at Premier Furey’s mandate letter which seeks a suite of “options… for the next three years”. In year four, shall we expect another “economic recovery team” to be constituted?

It is not hard to see the silliness in which Moya Greene has become ensnared, while the Bond Market is breathing down our collective necks. 

The “Total Public Debt” of the province is at least $33.6 billion (including P3 financings) with the (real) “Net Debt” within a whisker of the same number. Only a giddy accountant will argue that the Muskrat Falls debt is still “self-supporting”, amidst a common plea for “rate-mitigation”. A massive deficit has been our doing every year since 2013.

You need combine only three categories of expense — Education, Health Services, and Financing costs — to exceed 100% of government revenues; every cent of expenditure for the remaining services and for infrastructure is borrowed, along with the value of any Bonds coming due.  

Yet Greene’s “Team” has a single member — David Vardy — who is intimately familiar with the operations of the Provincial Government. That very condition makes the Premier’s requirement of a “comprehensive plan to address its ballooning debt, deficit, and expenditures” ring very hollow.

The Team is comprised of no expert members who can share any competency in the two largest areas of expenditure — health care and education — on which the axe must fall. The omission is simply inexplicable. Mary Shortall is unlikely to overwhelm the group with cost-saving measures. Those, like her, who have argued that we can spend our way into prosperity have been answered. 

I had expected that Moya Greene’s job was to sober up the “drunken sailors” and to put them on a strict financial diet. Instead, she finds herself not on “Team Fiscal Crisis” but on “Team Furey”.

Greene is not the new “Lord Amulree”.  The Premier’s declaration that “the responsibility for the final report and its content will be that of the Chairperson” is a sop to one who let her guard down in a political cesspool. Now, she will have to figure out how to compensate for the mismatch of resources on which she has agreed to rely.

While we wish Moya Greene and her Team good luck, the “Dame” does not inspire us to relegate the “Lord” to the shadows just yet.