02 November 2016

How much do we owe? #nlpoli

CBC Radio Noon had board of trade president Des Whalen in the studio on Monday.  

Board of Trade thinks the debt is about $13 billion today.  Don't talk about Muskrat Falls.  That's in the past.  Yeah, well, when your humble e-scribbler challenged Des on the numbers the best he could come up with was "it's a really big number."

Kid you not.  That was all he had.

For the record, here's a table that shows the provincial government's total liabilities, taken from the annual Auditor General's reports.

If you cannot make out the picture as it is, you can click on it or read on for the high points.

The total of everything you owe, right now,  is about $29 billion. The St. John's Board of Trade says it is only $13 billion.  Yes,  well it hasn't really been that number low 2004.  The Board of Trade's favourite project - Muskrat Falls  - adds another $15 billion onto that $13 billion right there. Whelan got hung up on the idea the other crowd actually reduced debt.  The numbers make it plain that they didn't.  There's $28 billion without batting an eyelid.

Things get worse from here.

In the chart,  blue on the bottom is accumulated borrowing,  reddish brown is unfunded pension liability, light green is group health liability, purple is a grab bag of other obligations, light blue is contractual obligations to Lower Churchill and the bit at the top is other contractual obligations.

This chart doesn't really show all the Muskrat Falls debt as we aren't finished accumulating it all.  Some of it might also be contained within the accumulated borrowings since the government has actually borrowed cash to pass on to Nalcor as "equity".  

Whelan made a comment on Monday about the "normal" capital works spending consisting of upwards of $2.0 billion for capital works.  Yeah,  that's not even close to real.  Before the great Conservative spending binge,  capital works typically ran at less than $500 million annually. Spending $2.0 billion on capital works was great for Des' members but borrowing it just added to the debt burden.  That's one of the things that needs to change.

Just to put it all in terms people can easily understand, just think of the annual cost of paying the interest on these debts.  It's about $1.0 billion annually these days and we will hit $1.5 billion within five years or so. Basically, if pending keeps on the current track, we will be borrowing money every year and spending just about all of it to pay off the interest on all the other debt.  Then we will add another $500 million in new debt.  All of that is money we don't have to spend on health and education and.. well, you get the idea.

And things will keep getting worse as long as people like Whalen run around spreading false information.  General ignorance got us into this mess and we cannot get out of it relying on basically the same thing.  You have to know where we are and how we got here before you can map the course away from financial hell.  

We need to have a very deep conversation about what we need government to do and what we just won't be able to afford anymore. That's the only way we can resolve the current problem and prevent it from happening again.

Good intentions aren't good enough.