23 November 2016

Population density and just dense #nlpoli

The Government of Newfoundland and Labrador is in financial trouble.

It will spend this year about $3.0 billion more than it will take in.  In fact,  this year, as last year,  banks and other sources of borrowing will be the largest single source of income for the provincial government.

Newfoundland and Labrador is not a poor place, not by any stretch of anyone's imagination.  In absolute terms, the government will bring in more than twice as much than it did 25 years ago.  Inflation has not doubled in that same period.

Leave out the borrowing for a second. On a per person basis, the provincial government will bring in more revenue this than any other province in the country, bar none.

The problem we have is that government will spend so much more than it brings in.  That's what a deficit is:  spend more than you make.    Simple idea.

And yet so many people just keep trying to blame our problems on the federal government for not giving us handouts.

The Premier likes to talk that way.

The finance minister - of all people - complains that Quebec gets handouts from Ottawa and posts a surplus while her provincial government is in the hole.

The Auditor General, both when he was deputy finance minister, and in his current job talks about how handouts from Ottawa would solve our problem.

The opposition party,  the crowd who put their deputy finance minister  to watch over the public accounts as Auditor General,  wonder why the government has not gone to war with Ottawa over Equalization.

On Tuesday, not one but two letters turned up in the local daily newspaper complaining that the provincial government was in the hole solely because the federal government didn't give the province enough handouts.

Just so that everyone is clear:  the provincial government is in a mess because it spends way more than it takes in.  There's no mystery to it.  As far as Equalization goes, that program gives money to provincial governments that don't make enough on their own to come up to a national average income for provincial governments.  Newfoundland and Labrador doesn't get Equalization because it makes way out beyond the per person average.

People who think the government deserves Equalization are basically saying people who are Danny-Williams-rich should get welfare because they can't make ends meet.  To put it in an American context,  if you think Donald Trump deserves food stamps, then you are entitled to that belief.  But the rest of are entitled to know and to say that you are absolutely out of you mind.

If you want to understand why the government spends more than it can afford, you can look at another study by the Atlantic Institute for Market Studies.  Government here has more people on the payroll proportionately than all but two other provinces, namely Saskatchewan and Manitoba.

The federation of labour tweeted out a chart Tuesday that showed the population density for the provinces.  Perhaps that has something to do with government costs here, said the federation.  People don't live spread out equally across every square kilometre of course, so you wouldn't logically expect that there is any direct relationship between population density and provincial government spending.

Check a chart of per capita program expenses for each provincial government and you get that confirmed.  No relationship.  Tiny prince Edward Island outspends British Columbia and other provinces with a relatively lower population density.

The explanation for government overspending is probably closer to what federation of labour boss Mary Shortall tweeted herself a few weeks ago.  Government here is the major economic driver.  That comment matches up with the AIMS study perfectly.  Not about providing services to people as cost-effectively as possible.  No.  Government here is about funneling cash into people's pockets much like you would see in Greece, for example.

On that basis,  you can see pretty easily that if the government had a couple of billion dollars in Equalization, they still wouldn't be able to balance the books.  After all, they couldn't do it the year government forecast oil at $124 a barrel and oil revenues were more than the government ever got in Equalization.