Finance minister Tom Marshall will present his mid-year financial update on Monday. It is supposed to be a way of bringing everyone up to date on how the annual budget is going. It’s an accountability thing.
Since the government’s fiscal year starts in April, the middle of the year was September. So December is well past the mid-year. As we all know, December is the last month of the calendar year so this mid-year report is a bit late there, too. The only calendar that puts December in the middle of some year or other seems to be the provincial Conservative one.
The whole idea of a mid-year financial up-date winds up being a bit of a farce, then. It’s much like having a consultation about what to put in the budget after the cabinet has already decided on the budget in secret beforehand.
Farce is not a word you associate with good government. It’s more the type of word you’ll find to describe something like the annual Mummer’s Parade. For those who don’t know, mummering is a bit of Christmas entertainment when people pretend to be something they are not. Mummering is foolishness in a good sense of the word. In politics these days, as with the Mummers’ Parade, it seems that foolish is the new normal.
And that is not good.
Whatever the budget update is, it really is “hard to put in words what people experience at this event.” Accountability certainly isn;t it. We’ve had too many years like the last one when the update left out more important information that it included.
Not to be left out of the fun, the Telegram joined in on Saturday. The province’s largest circulation daily had a banner headline that read “‘Province’s deficit not as daunting.” They even brought in a consultant to help.
The Telegram is all excited that the provincial government will have an extra $50 to $70 million all due to changes in oil revenue.
One half of one percent less daunting
That’s really small potatoes on the cash side considering that the forecast cash deficit was about $1.0 billion. $50 million would be a change of less than one half of one percent from the deficit forecast.
The Telegram story uses the accrual deficit forecast of $564 million and even that means that the extra money coming will only be about an eight percent difference.
The Can Opener as Hobby Horse
For an added touch, the Telegram decided to solicit the opinion of an economist whose ties to the provincial Conservatives over the past decade makes him only slightly less biased than Tom Marshall.
But only slightly.
Wade Locke agreed with the Telegram’s estimate of the extra oil revenue. What’s more, said Locke, all that extra oil out there means that the provincial government has “some more flexibility now in terms of planning. It doesn’t have to be such a high priority now.” The “it” to which Locke referred was the provincial government’s chronic overspending and the debt and deficit problems the province faces as a result.
Locke’s optimism is as hard to fathom as the enthusiasm of having an extra $50 million in cash to go against a $1,000 million cash deficit. Locke’s whole plan for the provincial Conservatives hinged on a return to oil-driven surpluses within a couple of years, based on rising oil prices. The change in this year’s numbers are piddling, at best. The longer term forecast for oil prices is for lower prices than we have today or on par. That’s not good enough for Locke’s plan to work.
The other big part of the oil revenue equation – oil production – isn’t going to skyrocket either. The new oil find the Telegram referred to is one that is more than a decade away from production even by the optimistic assessments. What’s more, by the time it comes on stream, what these new fields in the Flemish Pass will do is slow the decline in total production. They likely won’t produce what Locke described as a “second peak” in oil production. As for the oil in the Jeanne d’Arc basin, the story is pretty much the same. When it comes on stream, it won’t produce doodles of high-priced oil. It will just slow the decline of production from the local offshore.
Locke’s comments seem to be the case of a guy interpreting events to fit his own predictions, not assessing things objectively. His policy from last spring was basically a case of damn the finances, full spend ahead. Now he seems to be saying that he was right on track even when – as it seems to day – he remains as he has been about things like Muskrat Falls: pretty much wrong.
That lack of objectivity is the real problem in using Locke to comment on his own work. He had the same difficulty being objective – let alone thorough – when the Harris Centre asked him to assess the Muskrat Falls project, something he’d worked on directly or indirectly as a consultant. That’s the same problem you have with this Telegram piece. Rather than producing an objective commentary, they’ve gone to someone who – on the face of it – is obviously not objective. They’ve asked him to comment on his own work and both Locke and the Telegram knew about that conflict of interest all along.
The thing is, while it is funny to compare the annual government budget update to the Mummers’ Parade there is no magic when so many people come together dressed in ridiculous disguises. What the government is doing with public money is no subject for the sort of foolishness we keep getting in these “mid-year” updates.