Another big deficit Budget and a Total Public Debt of $29 billion means simply that a grim reality show, "Death By A Thousand Cuts", has been given a new chapter; this one is written by Finance Minister, Siobhan Coady. Like her predecessors, she does not understand the concept of "can't afford". We are, therefore, brought a step closer to the opening act of a "Play" that will open soon in every neighborhood in this province.
The essence of the annual Budget ritual is captured in
Statement I of the 2020-21 Estimates. The Government is spending $7.65
billion against only $5.43 billion revenue.
The math confirms a cash deficit of $2.2 billion
(which includes $332 million of capital works).
Forecast revenue is down by approximately $0.5 billion, reflecting 44.6% lower oil royalties than received last year, exposing a severely impacted domestic oil industry.
Because scheduled debt retirement ($776.6 million) and Sinking Funds ($42.1 million) are borrowed, too, the total cash requirement of the Government for fiscal 2020-21 is $3.0 billion.
The Budget reports almost no corporate or personal increases/decreases in taxes or program changes, except the additional cost of $25.00 daycare and laptops for all - which, by the way, are needed, just not affordable. Why? The deficit has not been tackled and those new expenditures have not been weighed against the service/program cuts that are coming - or about to be enforced.
"Fiscal crisis" has again come under the pen of the PR staff; this time a solution is depicted as a need merely to "reimagine" the operations of government.
Of course, this is not about giving the province rescue; this is all about political self-interest. It follows that most everything else contained in the Budget Address is political “spin”, too.
The public, however, need not wallow in the same codswallop as
the Finance Minister.
The “big picture” items worthy of mention include those that place the provincial “Direct” Debt at $15.7 billion; the
“Tax-Supported” Debt at $14.8 billion, and the “Total” Public Sector Debt as $24.2 billion.
Those are not figures to be happy about, except that the biggest one is actually larger.
Note (i) of Appendix III of the Budget Estimates states
that “The total public sector debt does not include … unfunded liabilities
related to pensions, severance or post-retirement benefits.” That figure is on
the higher end of $4.0 to 5.0 billion.
In summary, the “real” Total Public Debt is around $29.0 billion.
The figure would be higher still but for the $2.5
billion 2019 Atlantic Accord agreement, completed with the Feds last year.
Finance Minister Tom Osborne, using accounting sleight of hand, brought the
entire sum of fixed cash instalments into a single budgetary year rather than incrementally
accounting for the stream of payments that will run to 2056.
One other caveat: considering the extent of the
P3s (Public, Private Partnerships) in progress for senior care homes, the Corner Brook Hospital, the Waterford
Hospital replacement and the HMS Penitentiary, a responsible Finance Minister would
have included in the Budget a statement of the financial impact on the
Current Account, in relation to their completion date. Having signed the contracts, the Government has all the necessary
financial information, including the incremental operating and staffing
costs. This is another "can" being kicked down the road. Tom Osborne was another Finance Minister who didn't understand "can't afford".
The Government chose not to recognize the pending budgetary impact of those costs in the way they would have had the expenditures been financed
under the Capital Account. This is bad business when a new Administration feels comfortable in the game of deception so early.
Indeed, no one should look kindly on the Minister’s decision (perhaps it was
Premier Furey’s?) to offer no forecast of revenues and expenditure, at
all.
It is necessary to acknowledge the effect of COVID-19
on our economy. However, let’s be realistic. COVID is providing cover for what
is essentially Premier Ball’s Budget. Whether under Siobhan, Tom or Dwight, it
was never intended that the political leadership might address our state of insolvency.
The Finance Minister referenced the appointment of
Moya Greene, and her team, who “will review expenditures across government,
analyze our fiscal capacity and reimagine government service delivery.” Greene
is not likely to “reimagine” anything for this Minister.
Dame Greene can only be expected to tell her what
the province can afford, how much she will need to cut from expenditures to
achieve fiscal balance, and the likely places to find the savings. It is
entirely a political decision how her “Plan” manifests. The Minister of Finance
and the Premier had better start “reimagining” their own leadership capacities
and government’s relationship with Newfoundland and Labrador society, too.
The Premier’s own failure to set out any markers for his new
Administration – financial or otherwise - has not gone unnoticed.
It is well to remember that the Finance Minister
was, until a few weeks ago, the Natural Resources Minister. She engaged with
Premier Ball in a lengthy charade about a negotiation with the Government of
Canada over “rate-mitigation”. Now, the charade is being repeated, not under a
technocrat skilled in such matters, but by one of the ‘good ‘ol boys’. This
outcome ought to leave a bitter taste in the mouths of many; it is a portent of
things to come.
Indeed, whether on “mitigation” or the accounting of a light-weight over Federal assistance for the oil industry, you had better hope that Premier Furey is a better friend to PM Trudeau than Shamus has proven himself to be. That may be the reason that Uncle Gnarley has a preference for self-reliance in such matters.
COVID-19 may have called a temporary halt to our
arts and entertainment industry; but have no fear. “Death-By-A-Thousand-Cuts”
is due to open soon in every town across the Province. Not one person will be left
off-stage.
In the meantime, I hope that the public understands two General Elections are due, and that they appreciate a Federal “Majority”
will only hasten the Opening Act.