Provincial revenue from oil will be $791 million less than forecast in the spring budget, according to the provincial budget update.
A few other expenses are less than forecast and some revenues are up. All told, the provincial deficit is now forecast to be almost $1.0 billion. That compares to the $572 million shortfall predicted last April.
The provincial government’s financial problems aren’t caused by falling oil prices.
They are caused by the government’s decision to spend more than the provincial government could afford, despite knowing that oil production was in decline, and the price of oil could vary wildly. On top of that, the provincial government didn’t put any money aside at all for a rainy day.
Lousy financial management caused the problem.
It’s that simple.
Finance minister Ross Wiseman is using the stock excuse that they didn’t have to borrow in order to build roads, schools and all sorts of other public works. Well, that’s completely meaningless if the debt is growing like it is, the government revenue is falling like it is, and the government has no choice but borrow upwards of $1.0 billion to make ends meet.
What actually happened is that Ross and his friends merely deferred the huge price tag for their fiscal mismanagement earlier: we didn’t borrow then, but we have to borrow now. That’s hardly a good thing, let alone a smart thing.
As it looks right now, 2014 is going to be bad enough. We have to be more concerned about next, though. And just to help put that into perspective for you, consider two things.
First, the financial update didn’t list the forecast for capital works. A couple of years ago, the provincial governed cancelled half of its forecast capital works and produced a miracle budget. That was a bit of a scam, though, since they still planned to overspend. That’s exactly the kind of fraud to watch out for this spring in advance of an election.
Second, watch out for that deceit, though, because the financial problem is really that bad. That $791 million drop in oil is only for part of the year. Imagine how much lower it will be for the whole of next year, compared to 2014.