05 November 2008

The Premier's scrum, de-spun

Following are some observations on comments made during the Premier's scrum on Monday.

1. Two sets of books? In the Monday scrum, the Premier clearly indicates the provincial finance department prepared Equalization estimates of as much as $18 million.   The Estimates for Fiscal Year 2008, the projection for Equalization payments are $2.7 million.  This is the second year in a row where numbers contained in the spring budget varied wildly from numbers released mid way through the fiscal year.

For example, last year's fiscal update claimed that oil royalties would be $562 million more than projected and would  hit $1.6 billion.  The budget estimate was for $966.5 million, a difference of $633.5 million.

The fiscal update claimed mineral royalties would be $120 million above estimate to reach a total of $347 million.  In fact, the budget estimates held mineral royalties at $270 million.

It is extremely difficult to keep an accurate picture of provincial finances when these sorts of discrepancies occur.  This isn't a matter of comparing accrual versus modified cash accounting.  This is a case of ministers giving different sets of numbers at different times.

2.  "fund up pensions".  The Premier listed funding public sector pensions as one thing he was surprised at being able to do.  His comments suggested the unfunded pension liability has been dealt with.  According to Dominion Bond Rating Service, there is still about $2.0 billion in unfunded pension liabilities.  Here's how DBRS put it:

(3) Unfunded pension liabilities remain sizeable, projected at just over $2 billion in 2007-08. The Province has made considerable efforts to reduce these liabilities, largely as a result of the 2005 Atlantic Accord and other special contributions to help improve the funding position of both the teachers’ and public servants’ pension plans. However, declining interest rates and the recent deterioration in equity markets are likely to further add to unfunded liabilities. [Emphasis added]

3.  Danny's Accord dies exactly as he knew it would.  A reporter asked about the renewal of the Atlantic Accord.  Williams answered that the Accord was a separate payment made under a different department than finance and that it would continue.

Either he was confused in the rush or he didn't want to admit the truth, but the Accord the reporter meant was Williams' Accord signed in 2005.  His question didn't deal with the obvious point, namely that under the provisions of the deal, being off Equalization in 2009 means the deal dies.


Meanwhile, the real Atlantic Accord's (1985) offset provisions continue until 2011/2012.

The difference between the two is even more stark.  The 1985 deal puts real cash into the treasury every year.  The 2005 thing hasn't produced a penny of real cash since the fat advance payment cheque in 2005.

4.  "money back into the pot".  At one point the Premier refers to the province putting money back into the pot, as in the Equalization pot. 

Not exactly.

Equalization comes from the federal government's general revenues, that is from things like taxes.  No provincial government pays into a pot and in fact there is no pot in the first place.

5. "Don't quote me on that."  labradore picked up on a curious little portion of the scrum where the Premier says:

we’re just very proud and honoured and very pleased that in fact, right now, we can go it alone, and mumble mumble — excuse me, don’t quote me on that, we can go it on our own, from that perspective.

The "mumble mumble" from the labradore transcript is very plain in the video at CBC.  The Premier says "Don't quote me on that" meaning don't quote that I said "we can go it alone." 

The Premier's been backing off, or appearing to back off, his usual pseudo-separatist rhetoric lately.  There's plenty of phrases about the great country in the NewSpeak these days, for example.  Even his old habitual verbal tick of calling the country "the federation"  - as if to emphasize it is not a country but a loose association of quasi-independent fiefdoms - has all but vanished. 

The timing in rhetorical shift is coincidental with the end of the last federal election and the global financial crisis.  It's also a rather curious shift in language since there doesn't appear to be any obvious reason for it.  Maybe there is polling showing the separatist schtick doesn't play well.  

Whatever the cause it is yet another example of the contradictory public policies and public statements.  We've seen the same thing recently on the economy and government finance.  One minute things are fine, the next minute there's going to be stringency. Some times there are two contradictory messages within the same scrum or interview.

After hammering away at Confederation since 2001,Williams' sudden praise for the country seems about as consistent as Ryan Cleary trying to portray himself during the last days of the federal election campaign as the potential saviour of Confederation.

6.  The O'Brien Option.  A reporter asked whether the provincial government decided whether to stay with the old  Equalization or picked the O'Brien formula with a cap.  The Premier said no decision had been made and one did not need to be made until next March.  He mentioned last year when the finance minister announced an election decision - which he said wasn't actually a final decision - only to switch to another option later on.

If the provincial government doesn't qualify for Equalization in the current fiscal year, what difference does it make which option it picks?