10 August 2010

Williams-era capital spending pales in historical terms

Danny Williams is proud of how much money his administration spends, like, for instance, the amount spent on roads, bridges, schools and other public works.

In the run-up to the 2007 general election, Williams told the St. John’s Board of Trade that his administration “invested like never before in neglected and crumbling infrastructure, and creating significant employment.”

Here’s what he told a small audience in Ottawa in early June:

We [weathered the recession better than anybody] by taking our already aggressive infrastructure strategy from four years earlier and expanding it. "Stimulus spending" was well underway in our province long before it became the trend of 2009.

A five billion dollar infrastructure plan in a province of our size is substantial to say the least, and has not only helped to create jobs and boost consumer confidence; it is also rebuilding communities so that we have the economic foundations necessary to succeed.

He just “expanded” an “already aggressive” infrastructure strategy. That’s the same line he used on Calgarians in 2009.

But figures available from the provincial government show that Williams’ claims don’t match reality. There was no shortage of capital spending nor could Williams’ approach be characterised accurately as aggressive let alone unprecedented.

Between 1991 and 1995, for example, public sector capital spending in the province ranged between 25.4% and 30.4% of the total CAPEX spending in the province.  From a low of 9.4% in 2004, Williams has doubled the share of CAPEX spending but the highest year is still only 18.4%.

But the real tale comes when one looks at the actual amounts adjusted for inflation. In 1991, for example, while the province experienced the worst economic downturn since the Great Depression, public sector capital spending was $548.8 million in 1991 dollars.  It peaked at $898 in 1994.  During that time the entire provincial current account budget was less than $3.5 billion.

Adjusted for inflation (to 2009), though, capital spending in that same period ranged from $853.62 million to $1.284 billion.  The best the province has seen since 2007, by contrast is 2010, where public sector capital spending is expected to hit $1.127 billion.

The figures are available at the provincial finance department’s website.

This comparison does not take into account the project delays and massive cost over-runs experienced during the Williams period to date.  Almost half the capital works projects announced in 2009 as “stimulus” were either begun or announced previously. At least one dated back before 2003.

- srbp -