Remember I mentioned that big jump in the provincial direct debt yesterday?
Well Loyola did throw out something on it yesterday in the House of Assembly that explains at least part of it, although not that well. A phone call and some e-mails to one of the people who understand these things put me on the trail of the cash.
Following is what Loyola said - word for word. I am going to cut the man some slack since he was turning beet-red yesterday dealing with Opposition questions. If the strategy works, Roger, keep piling on the pressure and see if you can cause a stroke. But man, it is a hard way to do politics.
Also, I am going to check on this in greater detail since Loyola's explanation is just nutty. If I read Loyola correctly, we were supposed to be given Equalization at a steady rate and to do that we get a loan of almost $400 million that we have to pay back. Equalization comes with no strings attached. This shows up on our books as a debt, even if it is interest-free.
More to the point though, this whole line of questioning was about whether or not the government "cash" deficit was real or not. Mr. Sullivan appears to be saying that we don't have to borrow to make up a shortfall. What colour is the sky in your world, Loyola? Now if that $14 million shortfall this year is coming from that loan, we still wound up borrowing it - from the Government of Canada!
He also said there is only one deficit. Then he proceeds to talk about a "cash" deficit and how government will balance the books on a "cash" basis. But Loyola, if that was true, then your budget speech wouldn't have made a distinction between the "cash" deficit and the accrual deficit. That last one is one you talk up whenever you want to throw around a frightening number. Get your story straight, Loyola.
"Loyola Sullivan: When money collapses as a surplus it goes to our debt, that is automatic; besides, we are not in the position where we are going to have to borrow. In fact, we just received a cheque from the federal government for $378 million, a ten-year interest free loan, because prior to the Budget 2004, the Minister of Finance for the Government of Canada indicated that no province would get less than the four year average for equalization. So, if we got a loan - we have a cash flow now that would necessitate borrowing for that. He should understand - if he asked these questions, Mr. Speaker, I will explain them to him. We are not in a position where we are going to borrow that. He should understand that. He was Premier of this Province for two-and-a-half years."
Stay tuned for more. I don't think I am going to be eating any crow on this one.
