We’ve got a provincial government in Newfoundland and Labrador that has been budgeting for years to spend more than it brought in.
Way back in the beginning, way before the oil money cut in suddenly and largely unexpectedly, Loyola Sullivan said that people should expect the Conservatives to run deficits annually of half a billion dollars or more. The logical implication of what he’d said in 2005 was that it might have been 2014 until the Conservatives balanced the budget.
Now to be fair, Sullivan was speaking about the magnitude of the provincial government;s financial problem as he and his colleagues found it in 2004. But at the same time, by 2005, we were also talking about how the Conservatives intended to run things themselves.
They were clearly not as concerned about public debt as they had been in 2003. Part of that might have had something to do with this idea they had of making a killing selling cheap electricity into the United States, but frankly, Sullivan’s forecast of a debt of about $17 billion – which the Conservatives delivered on – suggests they really had something else in mind.
Your humble er-scribbler would suggest that by 2005, the Conservatives had abandoned the restraint message from 2004 that had proven so politically disastrous for them. Sullivan himself stayed around for another 18 months and then left suddenly so this suggests that even he had abandoned his earlier ideas. Sullivan was a bit more of a voice of financial restraint so this debt talk was significant at the time. After he was gone, the team of Danny Williams and Tom Marshall – driving the annual budgets themselves – that opened the taps and just spent and spent.
The never did reduce the debt as they promised originally. Instead, the Conservatives met Sullivan’s debt forecast. If you add in the debt for Muskrat Falls, as you should, the current total public debt is actually higher than the figure Sullivan allowed it might hit by 2014. The Conservatives also failed to balance the books, and to really drive the point home, they have no reliable idea when they might actually manage to get the cash coming in and the cash going out to match up, let alone produce a surplus.
The government made up of politicians who plan to continue overspending are low in the polls and headed for an election. All of that would be enough to guarantee a budget coming in the spring that will call for even more spending than the revenues will support.
But if that was enough, we’ve got a rather gloomy forecast for the provincial economy. No, we aren’t talking about the great article by Adam Walsh over at CBC online. Memorial University’s economics research collaborative is forecasting negative growth in the provincial economy next year. The drop isn’t just oil prices. The labour market is set to shrink by a little over two percent. Housing sales are forecast to drop by more than 21%
Don’t expect any politicians to address the provincial government’s financial problems any time soon. Well, at least not to try and lessen them.