Finance minister Tom Marshall delivered his fall financial update on Wednesday. Thankfully they no longer wind up being called mid-year updates since they appear long after the middle part of the fiscal year.
Having successfully lowballed some of their numbers from the spring budget, Tom’s officials have produced a surplus – on an accrual basis – of what they figure will be more than $750 million.
The extra cash is due to higher than forecast oil prices coupled with higher than forecast offshore oil production.
“This surplus will be applied directly to debt, decreasing the province’s net debt to approximately $7.7 billion, which is a significant achievement,” said Minister Marshall. “There has never been a better time to live in Newfoundland and Labrador. A robust economy is producing record employment, income levels and consumer confidence. Having said that, we must remain prudent in our fiscal management as there are challenges on the horizon that we must face.”
In a media interview, Liberal finance critic Dwight Ball clapped the minister on the back for paying down debt and gave him a bollocking for not being able to forecast things more accurately.
New Democratic party leader Lorraine Michael gave Marshall a dressing down for not spending all the extra cash. it was so predictable a statement one wonders why Lorraine is still hogging the spokesperson job.
One statement.
Three stories.
Wonderful stuff, of course, except that everyone seems to have missed the one gigantic fib in the whole thing.
No one is reducing any public debt whatsoever.
Tom Marshall claims he will do it. he claims in the media release that he and his friends have been doing it all along.
But it is complete nonsense.
You can tell it’s nonsense because both the news release and the financial update itself refer to net debt.
And as regular readers of this corner know, net debt is nothing more than an accountants statement of all that you owe less anything you have on hand you could sell off to pay the debts.
This extra bit of cash that’s just turned up won’t actually be used to reduce any debt at all. Most likely it will be set aside to pay for – Lorraine will love this – to cover off an increase in spending next year or to help pay for some massive cost over-runs on this, that or another infrastructure project. SRBP went through the whole thing back in May when Marshall forecast that he would have a healthy surplus. As it turned out, his forecast of a bigger surplus than originally forecast still lowballed the final result.
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