“People need to understand government cannot write a cheque for everything,” said Williams. “We can’t be all things to all people.”
“On the other hand, even in poor times, we have tried to do the best we could for people who were, for lack of a better term, in poorer positions.”
Those were some comments made by the Premier to news media in Corner Brook after a two day cabinet retreat.
The first reaction would be to wonder when, over the past four years, has the provincial government actually experienced "poor times".
Almost two decades ago, the province did experience poor times. All three major economic engines were tanking simultaneously. The economic output and the government debt, on an accrual basis, were virtually the same number. The western world faced the worst recession since the Great Depression and the federal government, long the saviour of provinces in hard times, had to tackle its own debt and revenue problems.
Since 2003, however, the province has experienced unprecedented levels of economic growth and provincial coffers have consistently swelled. This has been due entirely to policies established before 2003 and, in the case of oil, to the benefit of development deals for offshore oil and gas which the premier derided as 'give-aways' in his election campaign. He has tried repeatedly to claim credit for the current economic success and a great many have fallen for the misrepresentation.
At the same time, however, the provincial government has tried, since 2003, to poor-mouth its own finances whenever the public started to get wind of the windfalls in the treasury.
The truth has been different for the "we so po" mantra.
Government net spending in the past four years has grown by 35%. The provincial government outspends every other province, save Alberta, on a per capita basis. The direct and Crown debt has grown as well, by some $500 million. Newfoundland and Labrador will become a "have" province this year, meaning that for the first time since Confederation, the provincial government will have enough money coming from its own revenue sources to meet its needs without Equalization hand-outs.
This next fiscal year will likely be no different. Finance minister Tom Marshall told reporters at the same news conference mentioned above that spending on social programs - health, education and social services - will top 70% of government outlays in FY 2008. That's a 5% increase from the 2007 budget.
At the same time, the provincial government has not reduced the debt load borne by its residents. With a record surplus of nearly $900 million in FY 2007, the finance minister does not plan to retire much of the debt. He will pay cash for $345 million in capital spending rather than borrow the money as originally planned.
And overall, the developments Danny Williams derided as "give-aways" will drop into the treasury in just one year alone as much cash or more than his single hand-out from Ottawa in 2005. Voisey's Bay, Hibernia, Terra Nova and White Rose: $2.0 billion in taxes and royalties in 2007.
Marshall does talk of producing a net debt of $10.8 billion at the end of the fiscal year, but one must read carefully to see what exactly he means by that term "net debt". What Marshall refers to is the difference between the total liabilities of the provincial government and all its assets. It is not a reference to money owed to banks and so forth since this is only part of what the government's liabilities are. Most of us understand the idea of debt and borrowing, but this phrase "net debt" is a little different.
Here's how Marshall described it last fall:
Once we account for the change in capital assets, the balance will reduce the province’s net debt.
The total liabilities will stay the same, at around $13 billion. Right now, the total assets of the province offset that to produce a net debt (i.e. assets less liabilities) of around $11.6 billion.
Marshall will spend about $150 million on White Rose shares. Those assets plus any other assets associated with them - like say the oil itself - will be added to the province's asset pile. Marshall puts a value on that of roughly $800 million. That's how he will reduce the net debt to $10.8 billion.
Get it?
The liabilities don't change. The actual amounts owing in borrowings won't change much either. They just add a few more assets to the equation, ones that in truth will vary in value over time.
On paper, the debt goes down. However, the only way the provincial government would truly attack the annual cost of servicing the debt would be to pay off the loans.
Instead of concrete action, we have this sort of lip service:
“We are hearing people say they want us to take a balanced approach,” said Marshall. “I’ve been asking people to take a look at how much debt we have and how it affects us ... The auditor general has commented on that. He put out a report which talked about the fiscal position of the province and talked about this $733 million (interest paid annually by the province on its debt) as an ‘interest bite’ — it’s the people’s money being spent on interest and I think all of us would rather see that go into health and education and other public services.”
Lip servicing doesn't pay the debts.
Rather, the whole "we so po'" schtick is just a smokescreen behind which the current administration follows a familiar pattern of spending. They trot out the debt when they want to discourage people from seeing more money spent on things they might want so that the cabinet can spend public money on things that it wants.
Some of those things, like say the gigantic money pit in western Labrador are the sort of partisan political waste we haven't seen in this province in decades. Others, like the energy corporation are notions that have never been fully thought through let alone explained to the public or anyone else. Still others are dubious investments of public cash like the fibreoptic deal.
Somewhere in there, good things do get done. Good things get done in every administration either by design or by accident.
But for the most part the provincial government remains dedicated to obfuscation instead of transparency and of passing the buck instead of accountability and responsibility.
Only a government bent on hiding the reality and of denying proper public input into spending decisions would even consider using the word "poor" to describe the provincial government's piggy bank over the past four years.
-srbp-