17 February 2016

If we dither, we die. #nlpoli

by Chuck Furey

"Indecision becomes decision with time" someone once said.

The current fiscal nightmare in Newfoundland and Labrador is real.

One only need compare the amount of borrowing in 1933 (34%} to the borrowing today (30%) as a share of spending. The similarity is stark and raw and scary.

Sadness and desperation come to mind as the ghosts of history now stare down the new Ball government. They certainly didn't make this mess but they are now summoned to clean it up.

We have arrived at an extremely dangerous crossroads.  One road is painted yellow and sprinkled with stardust.  The other road screeches out the brutal truth.

This is incredible stuff.  This is disturbing stuff.

To govern is to make tough, often unpopular decisions as both Clyde Wells and Brian Tobin did).  This new government must move quickly to lay out a clear cost-cutting plan that includes tax increases to immediately trim the runaway deficit. It is imperative they stick to the plan or die dithering as the lending agencies become the de facto government.

The people of Newfoundland and Labrador are ready and expect tough medicine in the coming years. Politicians are never successful leading the parade from the rear.

It's now time to stand up and do the right thing.

Will we see courage from our new Premier or will he tremble and cower into the shadows hoping for a miracle?

Will he rise up and lead or like Paul Martin accept willingly the label Mr. Dithers as he fades into history as a mere footnote to what could have been?

Thousands of pensioners and doctors, teachers, nurses, janitors, clerks, lawyers,  and many others who provide services to the people of Newfoundland and Labrador silently watch with bated breath. With each passing day and with no plan or clear communication given to the province we run the risk of sliding toward the quicksand of bankruptcy.

Will Premier Ball be forced to table a motion in the House of Assembly removing democracy from the province and pass it to a Commission to govern our way out of this mess? It truly sounds far fetched and beyond belief but it sounded that way to the last Prime Minister of Newfoundland in 1934 as well.  Prime Minister Alderdice must be turning uncomfortably in his grave.

There are only so many ways to tame this extraordinary deficit. We do know for certain that it will absolutely require three things:
  • Tax increases
  • Program cuts
  • Lay-offs
A quick restructuring plan could include:
  • Program cuts across all departments: $250 million
  • Three year wage and benefit freeze across all departments, agencies and Crown corporations
  • One-time gas tax increase which can be absorbed while prices are lower at the pump: $350 million
  • Lay off 2,000 public servants at roughly $50,000 per job for a saving of $100 million. The civil service has grown some 33% over the past ten years. Do we really need this many people to service such a small province?
  • Reverse HST cut : $200 million
That's $900 million.*

We still need to find  a lot more to get to balance but at least the marketplace will know we are deadly serious.*

None of this speaks to the foolhardy project called Muskrat Falls.

That monumental mess is for another time. Simply pause and consider this one frightening note from JM via Uncle Gnarley:
Initial export sales of 2,000 GWhr (40% of MF output) will generate about $80 million annual revenue, based upon current market pricing.  To put that figure into perspective, interest on the ~$8 billion (the final figure may be much higher) which will have to be borrowed for this project will cost about $320 million a year.  Muskrat Falls will not be a significant revenue generator for the province until it is paid off in 2067.  

$8 billion is fantasy. The true cost will be well into the double digit billions.

Without some imminent plan for the marketplace there will be no one lending to Newfoundland and Labrador at reasonable rates as we saw first hand in 1989. The Wells government planned back then and executed the plan putting Newfoundland and Labrador back into balance in three years.
It is time to fold up the mirrors and blow away the smoke.

We don't have 15 months to dither.

It is time to be adults and to be honest with each other.

The next 60 days are critical as we all stand at the cliff's edge.

Do we "do" or do we "die"?

Over to you Premier.


A graduate of St. Francis Xavier University, Chuck Furey was a high school teacher before his election to the House of Assembly for St. Barbe in 1985.  He served in the cabinets of Clyde Wells and Brian Tobin between 1989 and 2000, holding at various times the portfolios of mines and energy, industry, trade, and technology,  development and tourism, and tourism, culture and recreation.

Furey was chief electoral officer of Newfoundland and Labrador from February 2006 to May 2007.

He is currently associate director of admissions for Ross University School of Medicine.

*  Corrected math error and adjusted text accordingly.