In her first speech to the House of Assembly as Premier – which she and her staff erroneously and arrogantly like to call her inaugural speech – Kathy Dunderdale claimed that, since 2003, she and her party had “demonstrated an unwavering commitment to fiscal responsibility”.
The words turned up again in the Speech from the Throne and found their way into the finance minister’s budget speech for 2011.
There was nothing surprising about this.
The claim of fiscal responsibility, of having transformed the province’s finances from catastrophe to prosperity is the one thing that the provincial Conservatives claim as their singular achievement since taking power.
Last week the people of Newfoundland and Labrador learned that - in the words of a famous politician – nothing could be further from the truth.
Through the 1980s and early 1990s successive Liberal and Conservative administrations managed to steer the provincial government successfully through treacherous financial times. They laid firm foundations for future prosperity based on a diversified economy. Included in that diversified economy was supposed to be an oil and gas industry that included local companies capitalising on local knowledge and experience to compete globally.
“One day the sun will shine,” Conservative Brian Peckford said, “and have not will be no more.”
“I can’t wait for the day”, said Liberal Clyde Wells less than a decade later, ”when we don’t get a penny” in federal hand-outs.
Last week, Memorial University economist Wade Locke described a future for Newfoundland and Labrador that is far bleaker than anything that either Wells or Peckford faced. As the Telegram reported:
Unless something changes, Locke said the government’s debt could be up to $10 billion within the next 10 years. By 2020, he said the government could run a $1.6 billion deficit on the provincial budget.
“If we don’t start dealing with it, it will become quickly unmanageable,” he told reporters after the event.
The situation is far bleaker because the government is in this state despite having unprecedented income. It is far bleaker because the problem comes not as the result of global economic circumstances or forces beyond anyone’s control. The financial mess is directly the result of actions taken by the provincial government since 2003.
Regular readers will know the story all too well. Your humble e-scribbler first raised concerns in 2006 and each year after that as concerns grew. Telegram editor Russell Wangersky’s column this weekend reminded everyone of his own comments over the years. As Wangersky notes, the province’s auditor general has also warned about the current administration’s spending. So too did former cabinet minister Paul Oram and at least one of the provincial government’s bond rating agencies.
With their one claim to fame now shown to be a complete fraud, the provincial Conservatives have even more problems to worry about as they head toward this fall’s general election. The truth about their record of financial irresponsibility only compounds their dwindling public support. Inevitably it will only add to public unease at the Conservative plan to increase the public debt beyond what Locke has forecast and at the same time saddle domestic electricity consumers with ever-increasing electricity prices while selling cheap power outside the province.
Even if the Conservatives could admit the province faces a financial mess of their making, they would be hard-pressed to do anything about it. Election years are never good years for an incumbent government to face problems. What’s more, Kathy Dunderdale remains a place-holder leader put in place via a backroom deal to avoid a possibly contentious leadership contest during an election year. If voters re-elect the Conservatives under Dunderdale, they can bet on a new Premier within four years.
For their part, the New Democrats won’t be promising to do anything to clean up the mess. Federation of labour president Lana Payne already dismissed Locke’s analysis out of hand. With the province’s labour unions taking a reactionary position, New Democratic Party leader Lorraine Michael will follow suit, first rejecting Locke’s assessment and most likely proposing policies that will make the bad situation that much worse.
While the Liberals under Yvonne Jones were quick to endorse Locke’s idea of a task force to study appropriate financial policies, it still isn’t clear what sorts of policy ideas the Liberal party will offer heading into the fall election. They will likely be tempted to follow along with the others and offer ideas that look like what everyone else is talking about.
It wouldn’t be the first time. Political parties in Newfoundland and Labrador seldom offer bold and innovative thinking. They tend to rely on the hackneyed - blaming Ottawa in one way or another is a popular distraction – or the grandiosely ridiculous like Danny Williams 2003 obsession with an economically foolish stunnel to the mainland.
This post is the start of a series on some options for the future of Newfoundland and Labrador. The next post will set the table, as it were, by describing the domestic, national and international environment in which the province must operate. Some of that will be a quick summary of other posts. Some of that will be new.
After that, successive posts will explore a series of ideas for change. They cover the economy, government and society. They are offered to stimulate further discussion.
Some of you may notice that the series goes back to one started in 2008. While the series never got beyond the first post, the ideas didn’t die. Now that more people are seeing the situation as it is, perhaps this is a better time to talk about options and ideas.
The future is not bleak.
The future is ripe with opportunity.
We just have to be open to taking the first step toward a future that works.
- srbp -
