You’ve gone through the media reports and heard the interviews and comments from pundits and politicos alike. Now you want a better idea of what is going on and what isn’t happening.
Well, right off the bat, anyone who reported about an austerity budget or that forecast any significant change to provincial government practice was completely and utterly full of crap. CBC kept pushing that theme even though they’d been told that all talk of cuts and restraint were no longer operative.
No decision too serious to avoid
What you’ve basically got here is a budget that pushes off any decisions about anything until some undefined point in the future.
The “program review” that will last a decade has no real goals and thus has nothing to deliver. It will deliver exactly that. The people who created the provincial government’s unsustainable spending aren’t going to change it. They can’t.
That isn’t a political surprise. At the very best, Kathy Dunderdale is an interim leader. She can’t commit the Tories to a serious fiscal reform when she’ll be retiring soon. fair enough. If that’s the case, someone else can make some serious financial reforms in a couple of years time.
At the very worst, Kathy Dunderdale she is a leader who can’t get her own agenda through cabinet. This would be an enormous problem. After all, Dunderdale admitted she’s got a financial mess on her hands. People remember her board of trade speech. Announcing a crisis and then doing nothing looks dumb.
And speaking of dumb…
Threatening layoffs is one thing. Not delivering any at all is pure political stupidity. People remember this shit. And they’ll really remember if the financial mess the Tories are trying to avoid turns out to be real.
Pull the other one
The budget contains no amounts for wage increases. Any talk of forcing departments to come up with increases out of existing budgets is..well..talk. That’s all Tom Marshall does. The Tories left out the amounts because they don’t know how much they’ll be forced to pay yet.
Watch for it.
What government cannot deliver capital works?
To get a good sense of how the current crowd run things you need to look at last year. You need to look at the budget and the figures they project and then you have to look at what actually happens.
In this case, you will find the budget forecast in the 2011 Estimates and the actual spending in the 2012 Estimates. We’ll be looking specifically at Statement I, the summary of cash, as well as the revenue forecasts in Statement II.
Note that the Estimates are presented on a cash basis. The budget speech is delivered on an different accounting basis so the numbers don’t match up. There is a table in the budget speech that reconciles the two.
The provincial government 2011 budget forecast a deficit of roughly $769 million. They produced a cash surplus of $411 million. That’s a variance of 14.75 percent ($1.18 billion on an $8.0 billion budget)
Bear that in mind when you hear anyone from government talk down the prospect of any spending they don’t want to do, like say municipal infrastructure spending. They say the same thing every year: we don’t have any money. And then they turn out a giant surplus.
Here’s Hisself from 2008:
“People need to understand government cannot write a cheque for everything,” said Williams. “We can’t be all things to all people.”
“On the other hand, even in poor times, we have tried to do the best we could for people who were, for lack of a better term, in poorer positions.”
Back to the miraculous turn-around last year: you probably think it all came from oil. Well, you are partially right, but a few other things helped turn around the 2011 result from the forecast.
| ( in 000s) | Forecast | Actual | Difference |
| Personal Income Tax | 862,300 | 939,453 | + 77,153 |
| Payroll Tax | 121,498 | 168,472 | + 46, 974 |
| Oil Royalties | 2,269,400 | 2,800,772 | + 531,372 |
| Total Own Source Revenue | 5,351,309 | 5,903,224 | + 551,919 |
The total isn’t higher because they over-estimated some revenues. The net difference was about $551,919,000.
Still a long way from the total variance, though of more than $1.1 billion.
The net current account spending was almost dead on the forecast. They budgeted to spend $6.080 billion and they came in at the end of the year having spent $6.086 billion.
The other chunk of cash came from capital spending. The 2011 budget had net capital account spending of $1.271 billion. Instead, they spent about half that - $677 million - a difference of $594 million.
That’s been the pattern for pretty much the whole Tory tenure. They budget for capital works but just can’t deliver. In fact, the last time they did more than planned was 2004. They came close in 2005 – $199 million against $204 million budgeted – but in every year since, they couldn’t spend what they budgeted.
In 2010, they had budgeted to spend about $1.064 billion and spent about $741 million. But the next year they budgeted more – $1.2 billion – and spent less ($677 million) than the year before.
That doesn’t sound anything like exemplary financial management. It’s more like managerial ineffectiveness.
And for the municipal leaders like Danny Breen of St. John’s, it should be the information they need to wring a few bucks from the tight provincial government fists that have the cash by the bucket load but – quite obviously – can’t deliver their capital works. After all if Tom and Kathy can’t use the money, it’s just as well to give it to people who can.
- srbp -