04 May 2016

Choices and values #nlpoli

Gerry Rogers, a New Democrat member of the House of Assembly, got a bit enthusiastic on Twitter the other night about "building [a] budget fr[om] set of values/priorities," as if that wasn't what every budget is.

David Easton, the American political scientist, described politics as "the authoritative allocation of values."  A budget is the way the government puts its financial resources to work to accomplish its goals.  The budget is a visible symbol of the political system at work.  it shows you what the politicians think is most important. The budget shows you what the politicians value.

In their hour-long show on CBC Monday night,  Premier Dwight Ball and finance minister Cathy Bennett talked about their values a lot.  You might have had to listen to find them buried under a bit of bureaucratic jargon but they are there.  You'll also have to look past false choices, as in Bennett's claim on Monday that the only alternative to the levy was "some type of [additional] cuts, and that wasn't something at this particular point that we thought made sense."

The same plan as before

The CBC editor stuck the word "additional"  in that quote in square brackets but that actually alters the meaning of what Bennett  said.  There's no reason to believe she meant to say "additional" so the only impact of adding that word in there is to give people a false sense of what Bennett meant.

Indeed, what Dwight Ball said in answer to Peter Cowan's very first question - about the unpopular levy - was not to talk about cuts at all.  Ball specifically cited the plan to remove wasteful spending. Tax hikes were the first choice, in order to increase revenue.  Removing "waste" is the second step and only much later may we see something like cuts to the public service.  "May" see them as in, if they are necessary.  All of that is precisely what the Liberals said they would do all last year. They have not varied their plan one jot or tittle.

Dwight Ball mentioned on Monday night what the other parties said last fall.  Everyone used the same figures.  No one said boo about it.  Well, not exactly.  Your humble e-scribbler pointed out the problems with what the parties were up to but that doesn't really matter. Most people don't know what you know merely by reading these scribbles.

When the banks are your biggest source of income

A good example of this is the part from Monday's show when Cathy Bennett mentioned that the second largest expense we have, well back from health care mind you, is paying the interest on our debt.  That is a sign of bad things.  But what Cathy did not say and what Cathy will not say is for the second year in a row,  the single largest source of money we have to spend comes from borrowing.   In fact,  we will borrow $3.0 billion  this year which is more than the first three sources of income combined.  We will borrow more than twice as much as income tax will bring in and that is with all those hated increases. That is a sign of far worse things.

Bennett was right, though.  Paying out so much merely in interest is a big problem.  Last spring, SRBP warned that if we kept on the path set already by the Conservatives "what is $600 million and eight percent of spending today could become $1.0 billion and 12 or 15% of spending quite easily."  We hit that target this year.

Cathy Bennett and Dwight Ball are not stupid. They must have seen this in last year's budget. When Dwight Ball points out the fact that the three parties said the same misleading things, he tries to excuse himself and his party.  The truth is that they chose to agree with the other parties in order to get elected.  Everyone knows that and there is no reason now to condemn one for what all three did.  Dwight is right on this, but he is also wrong because it makes no difference.


Watch the Monday night show again.  Notice the number of times that Dwight and Cathy said the word "trust" either implicitly or explicitly.  Trust me, Dwight said,  I come from humble beginnings, I know what it is like to struggle to make ends meet. Trust me, we do not like the way things are. Trust me, we do not like making these decisions. Trust me, this levy you hate will be gone soon enough.

As SRBP pointed out last year, voters were looking for someone to trust.  This is last November, mind you:  "People think everything is wonderful.  They are looking for someone they can trust to keep everything wonderful.  Not surprisingly, the Conservatives’ pollster was in the field within minutes of the debate sign off on Monday night.  One of the questions specifically asked about trust.  Trust and the economy,  which everyone thinks is wonderful."

That was about two weeks before we found out how bad things were. Dwight Ball's first instinct was to stick stubbornly to what the Liberals had always said he would do.  He kept at it.  He reversed the hike in sales tax.  Now Dwight says he chose not to be stubborn and put the tax back "for the good of the province."  That's at around the 50:00 minute mark of the CBC broadcast incidentally.  Everything was so much worse in February than it was in November he claims.  That's why he switched his position.  It is a ridiculous story now just as it has always been ridiculous.  Obviously ridiculous.

But even being obviously ridiculous is not as bad for Dwight Ball as the horrid mess he delivered in the budget.  People elected the Liberals because they trusted them to keep everyone and everything just as it was. Amazing as it seems, Dwight and the Liberals were blindsided by the savage reaction of the public to their budget.  Well, Dwight clearly did not deliver.  Had he slashed the public service, voters would have cheered because Dwight had kept them safe from harm. Instead, Dwight chose to protect his friends in the public service and slice it to everyone else with bread knife.  That's the way voters look at things even if it is not what was actually in Dwight and Cathy's mind.  But all the same, clearly, given the popular reaction to the budget,  Dwight and the Liberals did not understand the choice voters made last fall and why they made it. *

You can ask people to trust you once, but once they think you frigged them over, it is hard to get them to trust you again. Frig them over really badly, like say by sticking them with massive tax increases and a levy, and it is all the worse. That sort of anger does not go away easily.

The smallest cuts hurt the most

And when some of the slices are very petty,  the trust is that much harder to regain. Talking about how hard you have it signing off on 9,500 mortgages worth $200,000 each  or whatever God-forsaken way Cathy used to try and make the borrowing understandable to people doesn't come close to the more tangible problems the Liberals have.  

Dwight and the Liberals closed 50-odd libraries in small communities across the province. People are very angry because it is, to a great many minds, a symbol of the pettiness of the decisions the Liberals made.  The Liberals said they wanted a new model where everyone was 30 minutes drive from a library. So they closed libraries on islands where the ferry does not come once every 30 minutes. They did it all to save $1.0 million.  In addition, the Liberals will add tax to books for another $1.0 million or so.

Perhaps Cathy could have explained why it was important to give public servants a raise this year at a cost of 34 years worth of library service.  Or 34 years worth of tax-less book purchases.  In Nova Scotia, the government is in a lot less rough a spot than we are over here and yet public servants there have had their wages frozen and the step-increases halted for a year or more.

The reason Cathy and Dwight are killing libraries, incidentally, is that the economy is heavily dependent on government spending. $34 million to public servants is more important to the economy than books. That money is really important when you consider the thousands who will be out of work due to all the megaprojects that are shutting down. And since the Liberals have no economic development plans at all, they are even more desperate to spend as much as the banks will fund than the Conservatives ever were.

Cathy could have explained why, when she was signing all those loan papers to cover the 3,000 million in borrowing she will do, that somehow, they couldn't managed to find 3,000 and one million so that some little seven year old could get a book out of the library in her town.  3000 and two and she wouldn't have to pay tax if she bought the book at a store with her lemonade money. That should have been an easy choice to make but Cathy and Dwight flatly refused to make it. Such an easy decision would have taken away much of the anger people feel toward them right now. People do not understand why Cathy and Dwight make the choices they make.  They cannot understand because Dwight and Cathy chose to tell fairy tales instead of the truth.

The truth is that Cathy and Dwight are getting skewered for austerity when they are doing anything but being austere. They are paying the price for not telling the truth, which is the worst sort of communications jam to be in.  It destroys credibility. Credibility is the fancy word for trust and trust is what people no longer have in the Liberals.

Politicians do not regain public trust by talking about how hard it was to make a decision that causes very little real pain for ordinary folks. Dwight's story about his HST flip-flop is boring. No one cares for Dwight's angst where their pain is real and personal.  Trust is earned at the level people understand.  It is made in their own households.  Right now,  the Liberals have taken up residence in the kitchen with their muddy boots on.  And, in their refusal to consider even the tiniest of changes in their plans what Dwight and Cathy said on Monday  - in effect - was that they would not take their boots off but they could use a cup of tea, all the same as they settled in for a stay.

A temporary stay.

No one believes any of this is temporary, not now that the Liberals have lost public trust. It will take more than browbeating Lorraine Michael for not saying "temporary" to make people believe the levy is only here for a short while. People will not trust these taxes are temporary any more than they will trust that government is listening just because Dwight said so, right after saying his mind is made up on the current budget. You cannot pull people together when people perceive government is favouring some over others. It is like saying everything is on the table when - by every action - you prove most things that matter are off the table.


The thing is, there are other paths the Liberals chose not to take.  Take the junk food tax. The idea came up in the consultation. Finance minister Cathy Bennett dismissed it as beyond our meagre provincial resources, likely base don a paper prepared by bureaucrats who didn't want to be bothered with trying.  In case the finance minister's staff missed it, something like the sugar levy is already applied to beverages. It's the recycling levy on bottled and canned drinks.  In 2014-15,  the beverage levy brought in $25 million.  Somewhere along the line someone figured out how to do it. Surely that same ingenuity could find a way to collect a new levy on sales of candy bars, soft drinks, potato chips, french fries, pizza, hamburgers and so on.


You know:  think outside the box.

Large sport utility vehicles are gas guzzlers. The folks who own them make a lot of money.  People told the consultation they wanted to see people at the top end of the income scale pay a bit more. So put a $250 environmental levy on every new truck sold.  Make it payable at the time of registration and you will also pick up used vehicle sales.  With 23,000 new trucks sold in the province in 2015,  a $250 flat charge would bring in $5.75 million. The numbers won't skew the market because they are just too small to bother someone dropping more than $25,000 for a new truck.   

In addition, the government could lower the gasoline tax to a smaller amount  - like say five cents a litre - that wouldn't disappear. It would be far easier to administer than the massive jump they came up with and we wouldn't be faced with the constant question of when it might disappear.  What the government did isn't what someone suggested in the consultation, anyway.  The idea there was to fix a price for gasoline, with government collecting the difference between the market price and the fixed price.  

Deficit Action NL

One of the more interesting but unexplored ideas came last February from economist Jim Feehan. He suggested a new tax to help pay for Muskrat Falls that would be applied to every electricity ratepayer.  A simple twist on that idea would be to add a tax to electricity production in the province. At one cent per kilowatt hour,  you could bring in up to $172 100 million** from businesses and residents in the province.  When someone floated the idea 30 years ago,  the cost of electricity was such that a one cent increase was huge.  These days it is nothing on a 10 cent per kilowatt hour rate. The amount is so small, most people would hardly notice at all. 

Government could go a step further and introduce a new pricing scheme that gave people a discount for electricity used during the night and increase the charge for electricity at peaks times. That's demand management and the folks at Nalcor have ignored the idea just like they ignored maintenance in the obsession to build Muskrat Falls.

There are plenty of good ideas.  You just have to want to pursue them.  The ones suggested here add up to quite a bit.

Deficit Action NL
100, 000, 000
5, 750, 000
Wage Freeze
34, 000, 000
Healthy Choices
25, 000, 000
164, 750, 000

Budgets are always about choices and values.

They show what the government values, but the budget also gives voters a choice as well. Politicians would be well advised to remember that.


*        Added sentence for clarity.
**      As a knowledgeable reader noted in an email, you cannot do a straight linear calculation to convert installed generating capacity to kilowatt hours.  1966 MW works out to roughly 10 terawatt hours which, at one penny per kwh would give you $100 million.