27 January 2009

De-spinning the New Family Feud newser

Q:  When did Premier Danny Williams announce that Newfoundland and Labrador was a have province and  - by definition – wouldn’t be receiving Equalization any more?

03 November 2008.  Bond Papers de-spun the scrum two days later.

Q: When did the provincial government decide to opt for the O’Brien formula and start receiving Equalization again?

Well, that isn’t clear, but on November 3 the Premier told reporters that the provincial government was looking hard at it.  He said a decision didn’t have to be made until March 2009.  The Premier confirmed in his Tuesday night scrum that the province had already decided to opt to start receiving Equalization again this fiscal year, something that hadn’t been reported publicly thus far.

Q:  When did the provincial government learn that the feds were planning to cap growth in the Equalization program to keep the costs under control?

03 November 2008, if not earlier:

In today's meeting, Flaherty will reveal the Conservatives' plan to place a limit on what Ottawa sends to poorer provinces under one of its key revenue-sharing measures, the $13.6 billion equalization program.

Q:  Which provinces are affected by the cap?

Any that receive Equalization.  Ontario will be capped just the same as all the rest, including Newfoundland and Labrador, if Newfoundland and Labrador opts to start receiving Equalization again. That’s the money the Premier mentioned in his scrum. Quebec will reportedly lose approximately the same amount.

Q.  What does the Equalization formula now provide as reported by VOCM legislative reporter Cheryl Gullage?

100% exclusion of non-renewable resources from Equalization calculations.

Q.  What was the ABC campaign – better known as the Family Feud  - all about?

The federal Conservatives promised to exclude 100% of non-renewable resource revenues from Equalization calculations but they didn’t put that in place initially.  Williams went on the war path over the issue promising to work for Stephen Harper’s defeat.

Q.  How big will the provincial government’s deficit be next year?

Even before now, it was pretty clear the provincial government would be short upwards of $1.5 billion in cash based on reduced commodity prices if spending remained where it was in 2008. A cash surplus this year  - of maybe 500 to 700 million - may have helped defray that somewhat but a deficit of $500 million on a cash basis – the largest in the province’s history – was a likely figure given some spending cuts and some borrowing.

Q.  So what’s the fuss?

The Pattern of blaming someone else. It’s a stock provincial government approach.

In this case, the provincial government is in a financial bind largely due to its overspending of the past two or three years based on unreliable income.  They were warned repeatedly by the province’s auditor general. The government made spending commitments – including 20% wage increases for public sector workers  - that it may not be able to afford.

Spending cuts will have to come to keep the deficit from ballooning to unmanageable proportions.

Far better politically to blame that on someone else for provincial government problems. The facts of the situation likely won’t matter since they likely won’t be reported in the conventional media, at least if the past is any guide.

Beyond that, five years of conditioning the public might pay off.  Some initial comments – like from provincial labour leader Lana  Payne – would suggest that some knees are already jerking across the province even before the full story showed up anywhere.

Speedy Gonzales Update:  The Premier turned up on CTV apparently to make sure everyone got the story the Feud was back on:

Williams made the comments on CTV Newsnet Tuesday evening. He says the federal budget will cost his province $1.5 billion in equalization over three years because of changes in the formula used to make the payments.

"In an economy the size of Newfoundland and Labrador, at a time when they are spending a lot of money on stimulus, it seems like an attempt to basically cripple this province," Williams said. "In a time of economic downturn, I'm at a loss at why (Harper) would do it.

Words matter.

The economy of Newfoundland and Labrador is running at something on the order of $25 billion annually.  The $1.5 billion noted here – over three years – is a drop in the bucket compared to the $75 billion the provincial economy would produce in the same time frame.

A change to Equalization doesn’t cut anything from the economy per se;  it just affects provincial government spending. 

And a half billion dollars is a lot of money to a government staring at a record deficit even assuming they had somehow completely forgotten they were told about the cap last November.


The Pattern repeats.

The Morning After Update:  Just how confusing could the Premier’s middle-of-the-night rant be?  Read CBC’s version which is short on details but long on the nasty, vindictive – and inexplicably angry  - language the Premier apparently used.

The iPod People update:  Listen to the really short clip on the CBC website. It includes the Premier’s comment that the Equalization changes will affect Newfoundland and Labrador.  Apparently, they’ll have a “pretty crippling effect in the sense we’ll survive it.”

“Pretty crippling effect in the sense we’ll survive it.”

That’s exactly what he said.

Go figure.




Peter said...

$1.5 billion loss to provincial coffers should not be compared to $75 billion economy. It's misleading. $1.5 bill could have a huge impact on government services and wages.

Winston Smith said...

As you point out, the words themselves border on the bizarre, but the images are just as surreal. Today we're treated, again, to the Telegram lavishing a huge front-page photo of His Glorious Self with the insipid headline "Williams Drops the Gloves," with a generous heap of direct quotations from Himself, straight to the end of the article.

Aside from the annoying habit of using sports analogies (boxing this time, rather than Wagernsky's hockey phenom), the coverage is as devoid of contextual analysis as it is replete with faux psychodrama. It's all about His feelings, the fact that He missed His hockey game, the fact that now He is forced to do battle again with the great satan.

What we're left with is the sort of ad hominem human interest piece that would do Entertainment Tonight proud. While everyone seems to be bemoaning the decline of newspapers, which are supposedly the bastion of hard investigative journalism, the real analysis is left to the non-polemical blogosphere.

As for the bully politics of shifting blame, He may have overplayed his hand this time. It's hard to imagine Iggy voting against Harpo on the budget, so there won't be any more ABC election games for a while. In the meantime, at some point, surely, the melodromatic ranting, macho photo-ops, vapid sports metaphors, and indulgent collective psychosis will no longer be sufficient to cover up the fiscal ponzi scheme that your blog has exposed.

Edward G. Hollett said...

Your are right, Peter. It is misleading.

But it is the comparison attributed to the Premier last night by some media. I simply put the comment attributed to him in a wider context.

It is also misleading - and that was another point I tried to make - for politicians and other opinion leaders to engage in this sort of political rhetoric when the provincial government's revenues are already going to drop by somewhere on the order of $1.0 to $1.5 billion in the coming fiscal year due to the drop in commodity prices, lower oil production and so forth. That's one year.

If we looked at a similar extension over the next three years for provincial revenues, the drop would be significantly greater than the drop from a revenue source we were supposed to celebrate this coming March.

The drop in the provincial government revenues - entirely separate from this much smaller Equalization issue - is an issue that simply has not been discussed whatsoever by the conventional media or any local politicians of any political stripe at all.

That's where the problem comes, that's where it has been coming from and where - to this point - no one has discussed at all.

Edward G. Hollett said...

Winston, take another look at the photo full size.

See if you notice anything else.

I'll bloggerate it later.

WJM said...

Aside from the annoying habit of using sports analogies (boxing this time, rather than Wagernsky's hockey phenom)

It's a hockey one, too.

Mitigating factor: It's not a nature allegory.

WJM said...

The drop in the provincial government revenues - entirely separate from this much smaller Equalization issue - is an issue that simply has not been discussed whatsoever by the conventional media or any local politicians of any political stripe at all.

The revenue drop is on the radar, barely.

The provincial expenditure ramp-up, however, is not.

Winston Smith said...

Well, aside from the pretentious Savile-row style, cufflinked Dude-suit, which is always worth a chuckle, the Red Liberal Red Tie might be a clue. And thanks, WJM, for pointing out the consistency in the sports metaphors. I just don't give those newspeople enough credit. Idiocy is one thing; consistent idiocy is quite another.

Anonymous said...

Is that a halo or is it a set of golden thorns perched on the almighty's head?

hmmm.... I think we have the start of a photo shop contest?

WJM said...

The shadow of His Right(eous) Wrist almost looks like a copper bracelet.

Winston Smith said...

I hope I. P. Freely is up for the photo shop challenge.

And speaking of challenges, is there a precedent for a provincial premier physically threatening a sitting prime minister? "I wish I had him on the ice, I tell you," said Williams. Was Williams willing to issue the same challenge to Roger Grimes?