14 September 2016

The cost of silence #nlpoli

The St. John's Board of Trade and the provincial Employers' Council aren't happy that the government has shelved its plans for a mini-budget in the fall.

The appropriately-acronymed BOT even held an emergency meeting of some of its members, after which BOT president said his members were in a "sombre mood."  Employers' Council executive director Richard Alexander said the changes to the budget plan were "quite scary."

Now flip back a few weeks.  Word that bankruptcies in the province were up led a bunch of people to blame last spring's budget.  Richard Alexander is in that Telegram story telling folks the government should have slashed spending instead of hiking fees and taxes. There's another comment in there from a local bankruptcy trustee who essentially pulls an "I told ya so".  Back in the spring, the same guy warned that the budget would drive up the number of bankruptcies in the province.

That's all nonsense, of course.
Bankruptcies are up in the province because people are over-extended financially and have run into some problems because of the huge downturn in the economy.  Check into those bankruptcies and you will see what the Telegram reported in July.  The "change in insolvencies is being attributed to the crash in oil prices and contraction in the oil and gas sector."

Not the budget.

Remember back in the spring when Dwight Ball kept going on and on about how the provincial sales tax was a job killer?  Well, that's pretty much another version of what Richard Alexander said early in August about the way all those nasty government fees and taxes were harming local businesses.

Statistics Canada's job numbers in August showed that the provincial economy actually added jobs in August.  Year-over-year,  there was no net gain. But the provincial economy actually added jobs.  If you listen to Alexander or the Premier, we'd be shedding jobs because of all those nasty taxes.

What you are getting in each of these cases is less a matter of rounded analysis as some sorted of self-interested position or half-assed opinion based on more assumption than fact. The bankruptcy trustee is probably the most obviously ludicrous of the bunch.  He, more than any of the others, should know that people who declare bankruptcy are financially over-extended - by definition.  If they are so precarious that relatively modest increases in government taxation swamps their financial boat,  then it was only a matter of time before something else got them.

Like say a massive downturn in the oil economy.

Heck, the down-turn in the economy isn't what really caused the government's problem either.  The government is in the current predicament because of chronic overspending coupled with the ridiculous Muskrat Falls projects. The board of trade is on record supporting both.  It's pretty hypocritical of them now to be screaming at government for not cutting.  It's like the employers' council on the one hand decrying all those job killing taxes but not noticing the impact massive cuts will have on the economy.

The Right Thing to Do

Make no mistake about it:  the government needs to cut spending by about $2.0 billion.  It needed to do other things, like raise taxes. The government needs to do those things to stave off bankruptcy. The government is an extremely precarious financial position thanks to a decade of gross mismanagement. But,  we have to cut spending and raise taxes in order to put the government back on a sound financial footing.

We have to cut spending and raise taxes knowing full-well that, in the short- to medium-term,  the economy is going to slow down.  What's happened over the past decade or so is that too many parts of the province have grown heavily dependent on government spending at the expense of  or in place of the private sector.  Too many politicians made too many decisions that were short-sighted because they were the easiest ones to make.

The current crowd seem to be taking pretty much the same approach.  They likely wouldn't see it that way.  But if you look at the size of the government problem and look at what the current crowd have done, you'd rate their actions as the bare minimum. People are really upset largely because the government crowd haven't done a very good job of explaining the scope of the financial mess we are facing.

That's why you can get somebody on Twitter or Facebook screaming about the 16 cents a litre extra they are paying for gas but not realizing they'd have to pay $4,000 for every man woman and child in their house to help balance the budget.  A couple of adults with two children?  $16,000 dollars a year on top of whatever they are paying now. That does not include Muskrat Falls.  To cover that little present from the Old Man,  that same family can expect their electricity bill to double each month.

Anyway,  the government crowd have shelved their plan, if it ever was their plan, for a mini-budget and they have gone back to an older idea.  They are going to sit with the public sector unions and try to negotiate something other.  Since the Premier long-ago committed to absolutely no layoffs at all,  it is hard to know what he thinks he will get out of the talks.  But that's really beside the point.

What you really need to consider is that all of this minimal activity just lets the government crowd avoid making any decision. They don't take any action.  They will just let things mosey along. Events will unfold.  It's one way to go, but it isn't likely to be a pretty solution to a whole host of problems.

If you want to see what this course could look like, just think about the changes in the fishery over the last decade.  They flopped out as they did because the crowd that used to run this place could never come to an agreement about what to do.  They frigged around a lot, stumbling upon an unprecedented agreement within the industry on the needs for change. Then the government abandoned its own baby in the middle of the street.   In the meantime, they just kept spending more money we didn't have to try and placate people or fool them into thinking everything was okay.

Now think about the whole province operating like that on every level.  What the government crowd would do, in that case, is just keep going on the same path we have been on since 2007 or so.  We might get through the problems but we won't have fixed any of the underlying causes of them.  That means the problems will come back.  It's just a question of how fast they'll recur and how severe the consequences will be.

We've already started to see some changes in the province.  The largest private broadcaster has shut down some of its smaller radio stations.  They'll run the whole thing now out of St. John's.  The Nova Scotia company that bought out the locally-own Brookfield dairy in the late 1980s has now decided to shut down its local ice cream operation. All the little newspapers across the province as well as the two dailies are slowly disappearing into a regional vortex.  And a war is about to break out in the fishery as cleavages in the FFAW have broken out into the open.

That picture of haphazard change isn't an excuse for government to rush in and prop up this business or that one.  Rather it is a warning about a missed opportunity.  The Danny Williams crowd spent all their time fighting about the past.  We haven't had politicians in the province for a long time who have been interested in talking about the future of our province and its people.  Neither of the three parties are talking about our future.  Their leaders are too busy talking about their own future - in the case of Paul Davis and Dwight Ball - while the NDP's Earle McCurdy is wandering around the past.As we have seen, when you leave the interest groups to their own devices, the result is twisted, distorted, and often contradictory.

We are missing politicians who are trying to develop that consensus on the future.  The silence could wind up costing us all very dearly.