Not.
From nottawa, the first perspective on the provincial budget which is scheduled to to be presented on Thursday.
Take a look at the chart of capital and current account spending.
Since when is increasing spending by 18% in a recession “sound fiscal management”?
Well, it isn’t.
The only people who would use those terms to describe the provincial government spending habits over the past four years are people who have never actually looked at what is going on.
Either that or they are sitting on the government benches or work for people sitting on the government benches.
-srbp-
Related:
“We live in a fiscal house of cards” (March 2008)
“What goes up must come down” (March 2008)
Before you click to another page because this is all old hat, consider that in 2003, oil was around US$25 per barrel. The only people who predicted that within five years oil would hit US$100 a barrel within five years were either in an insane asylum, considered candidates for a straightjacket or part of a very small group of oil pundits who had been faithfully predicting hundred dollar a barrel since the 1970s. Eventually they had to be right, just like a psychic.
Ask around today and you'd have a hard time finding anyone who will tell you that we will see oil below US$50 a barrel in the near future either.
Odds are better, though, that oil will drop to US$50 and lower within the next decade.
Okay so it happened a little sooner than predicted.
9 comments:
What of the fact that "Since his first budget in 2004, Mr. Williams has managed to shave nearly $3-billion off the provincial debt"? (http://tinyurl.com/coy2hu).
Read the post, I actually mentioned that. But you can't attribute that to sound fiscal management.
You could attribute it to the price of oil, the revenues from projects that started before Williams entered politics, and most of all, to an overly generous Prime Minister of the day... but you can't attribute it to fiscal prudence.
Here's a challenge - name one are where this government has reduced spending?
The net debt (assets versus liabilities) has gone down largely as a result of the points Mark noted.
If you look at debt as accumulated borrowings, then the debt is actually higher today than it was in october 2003.
I did the same comparision in New Brunswick recently, but I had two differences:
a) adjustments for inflation
and b) comparision to revenues.
Spending on it's own is missing half the story. It's whether revenue keeps pace that makes the difference.
Link to NB Revenue v. Spending comparision:
http://albert-county.blogspot.com/2009/03/fun-with-graphs.html
The chart in my post from last March was crude and really didn't do the correct comparison. if you look at expenditure versus revenues for the period after 2003, what you see is the hyper escalation of expenditures (14% last year and this year 18%) year over year based entirely on the gigantic oil windfalls.
The decrease in the net debt (an assets and liabilities calculation) had some reality to it and much more appearance. If you look on an annual basis though, you'll see that every year since 2005 (if memory serves) the government has still had to borrow cash to make ends meet.
The curve on the grpah looks like Mount Everest.
After tomorrow's budget we'll add another bar to the graph, and adjust for inflation. Stay tuned.
HI Ed,
I had expected that you would have posted about yesterday's budget by now. What gives?
I was hoping to be able to defend at least some of the budget, particularly the moves for the students including the continuing tuition freeze, keeping it second only to Quebec and the fact that it is now the only province offering interest free loans, further reducing the barriers to education for all.
Big document, I need to get into the details on this one and I have been up to my eyeballs and will be into next week.
Big quickie observation: I forecast a cash shortfall of something on the order of 1.2 to 1.5 billion. The budget number is 1.3 billion.
Next biggest quickie observation: We weren't off Equalization in November when we were told so and the government knew it at the time.
In November and again in January and again yesterday, they used the issue purely for the media play and the political game of it.
The references to the shortfall being due in part to 414 million not received from the G of C is really more like not getting money they thought was coming as opposed to the drop in revenues of about $1.3 billion.
Related to that - the amount of sheer bullshit in the front end of the budget speech was overwhelming. One example: a surplus of $2.4 billion includes all the Accord '05 cash which exists only on paper.
Next next biggest quickie observation: the forecasts for the next two years are rubbish.
If they keep spending in the realm of $7.0 billion they are looking at big deficits for a long time.
If they think spending will drop in '11 (it's an election year if nothing else) then they are dreaming in technicolour.
BTW, government switched to accrual accounting under grimes which Beth Marshall had agitated for since it better reflects the financial position of the government.
In 2007, government switched back to presenting the estimates on a modified cash basis. They don't release the accrual info until almost a year later and by then it is stale. Curious that the switch (which affects reporting of debt/deficit) came the year of the massive super-splendiferous surpluses.
Next next next biggest quickie observation: The assumed price of crude is pretty much where it will be as opposed to past years where they habitually low-balled things.
Next next next next biggest quickie observation: They lowballed oil production slightly. It will be higher than 98 million bbls.
Thing to watch for: the net debt at the end of the '09 fiscal year. The figure they gave was the one at the middle of next week. What's it going to be next year? Not $7.9 billion.
Post a Comment