14 July 2011


From the e-mail inbox this week came a gentle reminder from Kevin Kelly, editor at the Herald:

Just wanted to point out that in last week's Newfoundland Herald, (the one with Kiss on the cover), I did a story entitled "Headed for Disaster" discussing the province's spending habits, including how much money the government was spending on itself, as well as comparing govt. spending from 2004 to now. I also brought up the Muskrat Falls costs and comments from both sides of the issue.

Kevin didn’t like the reference in another post that only the Telegram was getting the message that provincial government deficits and Muskrat Falls debt weren’t a good mix.

Fair ‘nuff, Kevin. 

Just to make it clear though, your humble e-scribbler divides the local media scene into two piles.  The daily electronic and print gang go in one pile.  These are the gang who make up the press gallery in the House of Assembly and who have reporters covering the provincial political scene. They tend to break or report on hard political and economic news day-in and day-out.

The weeklies, monthlies and bi-weekly print outlets go in another pile, for a bunch of reasons.  This doesn’t mean they are less important, less influential or anything less in any way.  They just have a different focus.  It could be the local community, as in the Transcon weeklies.  It could be the local arts and entertainment scene.

Rather than skimp, here’s an extract from what the Herald ran in a piece titled “Headed for disaster?”

But here’s the thing. The provincial government is showing no signs of cutting its spending, even on itself.

The Tories have come under fire in recent budgets that included enormous revenues from the oil industry, but were matched by increases in spending and less worry on debt reduction.

Even with the looming financial crisis that could happen, the provincial government increased spending this year by 5 per cent, a trend that has continued over the past number of years.

“We have responded since being elected to office with expenditure levels that support a high level of programs and services, and we stimulated the economy during the recession,” stated Finance Minister Tom Marshall during his recent budget.

“Always, however, we were committed to spending within our means. During my consultations with the people of the province prior to this Budget, I was clear that, while strong expenditure growth was necessary during the catch-up and stimulus periods, more moderate expenditures are required in the future. Our net program expenses will grow by less than 5% in 2011-12, with much of this growth relating to wage increases previously negotiated.”

But there is still no arguing that it [Muskrat Falls] will cost a lot of money to get the project underway, and does the benefit outweigh the cost?

It’s one of many questions ahead for government as it deals with what could be a looming financial deficit.

Economist Wade Locke says the government has to make some tough decisions in the years ahead to deal with the upcoming debt crisis.

“There are three options you can do: you can borrow, you can raise taxes or you can cut expenditure,” he said. “All three have negative consequences for you, so what you need to think about is which of these options are the most effective way of dealing with your issues.”

It might need to start thinking way ahead, and perhaps cutting where it hurts most, itself.”

- srbp -