A FINANCE MINISTER WHO BELIEVES IN SANTA CLAUS

The Government’s Fiscal Update released last Wednesday by Finance Minister, Tom Osborne, depicts a government continuing to lead the public over a steep fiscal cliff.

The decline in revenue of $393 million, which the Minister announced, is not in dispute. But his press statement to the effect that the Budget surplus for 2019-20 has been reduced by $368.7 million is transparently not true. The Government is running a seriously large deficit - not a surplus.

Osborned is engaged in a process that is worse than double counting.

MOODY'S AND FINANCE: WAITING FOR A MIRACLE

First, let’s clear up any confusion. The downgrade in the Province’s credit rating by Moody’s, a credit rating agency, resulted not from a “highly ambitious” deficit plan, as the Agency suggested, but because the Finance Minister’s ambitions about Budget balance in 2022-23 were supported only by talk. Moody's as much as said, “talk is cheap.”

Underlying the issue is a $14.5 billion “Direct” Debt compounded by $9.4 billion of utility debt referred to by the Budget Estimates as “self-financing” — which, of course, it isn't. “Rate mitigation” — required to prevent power costs reaching 23 cents/kWh — means that the Province's $4 billion equity contribution to the project is “sunk cost”. Implicitly, that’s Moody's view, too.