When Finance Minister Siobhan Coady rises in the House on May 31 to deliver the Furey Government’s first Budget, it will be a test not of her resolve, but of the Premier’s determination to give NL the financial leadership that recent Premiers — from Williams to Ball — refused, or were incapable of providing.
This is Premier Furey’s day. The big question is: in place of
leadership will we hear only echoes of NL history’s famed bad boy, Sir Richard
Squires, whose Administration in the 1930s offered to sell Labrador for $110
million?1
Hopefully, the Premier will be remembered for more noble
reasons. Except, Furey has not yet made a
single decision about anything important, so we will have to reserve judgment on
this, and on his courage, too.
Moya Greene, notwithstanding the deficiencies of the PERT Report, essentially told the Premier that we have arrived at, in the vernacular, a ‘come to Jesus’ moment.
She omitted saying that we may have left it too late. She
would know, however, that not even (real) economists assess their discipline in
isolation from politics. Therein lies the part, called “hope”, on which NL
clings.
Still, on a practical level, if another year passes without a
solid start to fiscal repair, the Budget won’t justify your time anyway.
That is why I am proposing a 30-second plan, one designed for
you to avoid the PR “spin” that the folks in Executive Council will happily write
up, in an effort to delay their own “write down”.
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| Sir Richard Squires (photo credit: Dictionary of Canadian Biography) |
The mechanics are simple enough.
In place of listening to the Finance Minister, you can go to “Statement I” of the Budget Estimates (see last year's below), located almost at the beginning of the document.
This is an exhibit containing a summary of the Government’s cash requirements for the 2020-21 fiscal year. Look for “Estimated Revenues” — how much money the Government receives — as well as the “Total Net Current and Capital expenditures” — how much it plans to spend on programs, services and infrastructure.
On the same page, further down, the difference between revenue
and expenditures is recorded as the “Total Cash Requirement - Budgetary”. This is a euphemism for "borrowing". The previous year’s
numbers are there too.
If you see little difference between this and last year’s numbers, you will know that the Government has made no attempt to exorcise the ghost of Sir Richard’s time.
This is where the public sector debt is ostensibly described.
Look for “Total Provincial Direct Debt”, “Total Tax-Supported Debt” and “Total
Public Sector Debt” (as if there is any real distinction).
Fair warning: Unless the Department of Finance was embarrassed
enough to have corrected several large omissions, considering Moya Greene’s
disclosure of what she called “The True Debt”, none of the figures will be correct.
The exhibit is a “lie sheet” for politicians, a falsification that
permitted them to report the “Total Public Sector Debt”, last fiscal year, as
$24.16 billion when Moya Greene tallies up $47.3 billion.
My advice: Believe the Dame!
Just as you cannot manage what you cannot measure, neither can
you objectively assess the Province’s fiscal circumstance based upon contrived Budget
Estimates. They only prevent you from ever knowing if the public debt is
increasing or declining.
There are two other things you need to look for.
The PERT Report includes a table (below) containing a “Summary
of Proposed Fiscal Changes”, beginning in the current fiscal year (2021-22). It
states $1.369 billion as the starting point for fiscal repair, which Moya calls
“Deficit without the plan”. After cuts and proposed tax increases are applied,
the deficit in Year One is calculated as $1.134 billion.
The starting figure when the estimates are produced on Monday are unlikely to be this low. The cash deficit in the
2020-21 was $2.219 billion (refer to Statement I above). How
could Greene have missed something this basic?
Don’t count on Siobhan Coady to explain Greene’s omission or
even to have noticed. Perhaps an astute reporter will put the question to
officials during the Budget “lock-up”.
The second issue is the ghost of “Sir Richard”.
If not Coady, perhaps the Premier can advise if the packaging
of the Churchill River assets, as the PERT Report proposes, now constitutes a
policy decision of his Administration.
He will need to inform us, too, if it is a replacement for the
“rate mitigation” plan he and Dwight Ball assured the public would be
forthcoming from their friend, PM Trudeau, and the Government of Canada?
Possibly the “best-before date” of that assertion expired with
the General Election.
I am not fond of anyone selling off parts of the ‘ship of
state’ as ass-covering for someone else — Trudeau or Danny Williams.
Any eighth-grader can figure out that PM Harper got snookered
by Nova Scotia MP and Deputy PM, Peter McKay; the result was the most
incompetent due diligence process ever undertaken for any Federal Loan Guarantee.
Indeed, any self-respecting union or business group might have
already informed the Premier to begin spoiling for a fight over who pays for
Muskrat Falls except that, these days, self-respect seems to be
indistinguishable from self-interest.
Finally, it may be unreasonable to expect the Premier to fully
quantify the PERT proposals so soon. But we ought to see proof that some
evolution in the Government’s thinking has begun. The Budget Address needs to
share those ideas.
Otherwise, having given the Budget Estimates your 30-second glance, hopefully you will not have wasted your time.
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1 “The territory was offered for $110 million. Squires, who distanced himself from the idea, did
not take part in the discussions. Canada, also trying to cope with the
depression, rejected the deal.” Dictionary of Canadian Biography Vol 16, 2013. “Squires, Sir Richard Anderson”, by
James K. Hiller found under http://www.biographi.ca/en/bio/squires_richard_anderson_16E.html