Premier Kathy Dunderdale decided to talk about reality on Monday.
A reality check she called it:
“Everybody sees what’s happening with the price of oil, and I see every day what that’s doing to our budget,” the premier said. [CBC online story]
Dunderdale warned that the provincial government’s deficit this year might reach $700 million. her forecast in the spring was $250 million. Next year it could be a billion, she ventured.
Now that is on an accrual basis, of course. On a cash basis, the current provincial government will face a deficit of more than $1.06 billion if oil actually manages to average US$124 a barrel.
Since Dunderdale’s comments on Monday are based on the likelihood oil will fall far short of that, you can expect that the cash deficit will even larger. How much larger? Well, if the accrual deficit winds up almost three times higher than it was forecast to be in the spring, well, you can use your imagination.
Some bright reporter asked the Premier about the $2.0 billion in cash reserves the province still has from oil windfalls a couple of years ago. Premier Dunderdale was pretty quick to confirm what SRBP has been saying all along: that money is spoken for already. Dunderdale said it was money they were using to cover their planned budget deficits and cover any other spending where they’d usually borrow cash.
In case you’ve missed the significance of all this, you can forget talking about anything called “net debt”. The provincial Conservatives love to tell you that they have reduced the public debt by four billion dollars or some such. Yes, sez, you. Wonderful achievement.
<Loud Annoying Buzzing Noise>
Not a word of truth in any of it, as your humble e-scribbler has told you many times the past couple of years. Kathy Dunderdale confirmed it in her scrum on Monday. What’s more, as the provincial Conservatives spend the cash reserves over the next year or so, you will see the record debt they’ve accumulated and done nothing about. If the Tories carry on with Muskrat Falls, then the debt will only get bigger.
And in case anyone has been thinking that likely-future-Liberal-leader Dean MacDonald has the right idea – we gotta get rid of these Tories - just remember that he thinks the province needs another few thousand years of Danny Williams’ strategic financial management. That record debt load, continued overspending and the like? Danny did it all. The current crowd are just carrying on with the same plan they’ve all been planning. If you wanted to change things by getting rid of Kathy Dunderdale and going to someone like Dean MacDonald…well…draw the logical conclusion.
Anyway, with oil dropping and likely to stay lower than the provincial Conservatives forecast, Kathy Dunderdale talks about reality. She talks about letting some jobs go unfilled and cutting out discretionary travel. She did something like this earlier in the year.
Talked about laying people off.
And then cut more jobs than they talked about before.
Talked about cuts.
Still, when push came to shove, Kathy and her colleagues just couldn’t change their pattern of what she and her predecessor have admitted was unsustainable spending over several years. They just couldn’t stop their continuing fiscal mismanagement.
So now the provincial government is facing some pretty dire straits if current trends continue. Turns out we really don’t live in a bubble, as your humble e-scribbler said four years ago, and as the Premier finally admitted on Monday.
For all that, Kathy Dunderdale and her colleagues really don’t seem to have a clear idea of what they need to do. A couple of billion dollars short this year and next year and the best Kathy can do is tell deputy ministers to deny some clerks a chance to travel on the public dime. Meanwhile, she’ll just keep an eye on things and see how it goes.
Evidently there is reality.
And then there is the place where Kathy Dunderdale lives..