An inherently unstable minority legislature where the parties have a history of finding political agreement through public spending is not exactly a recipe for tough decisions.
There is something seductively sweet about the idea
that the minority government that resulted from last week’s general election
has now solved all our problems Just get back to work, some people are saying. And play nice, together. No more of this bickering and name-calling.
Something seductively sweet but the sweetness reveals
itself as bitter naïveté when one considers that we now have a fundamentally
unstable legislature at the very time when both the government’s finances and
the Muskrat Falls mess are coming together.
Make no mistake about it. Minority legislatures are inherently
unstable. They tend not to last more
than a couple of years. The one elected last week will get through six months
or so without much chance of upheaval.
But once the opposition parties have sorted out their finances and, in
all likelihood, the Tories have found a new leader, they will be ready to bring
down the House.
What’s more a major
poll taken during the election showed voters were overwhelmingly interested
in a change of direction for the province. They are worried about the economy
and jobs and they are worried about provincial government finances. Their
concern for health care - the third of their top three issues according to
polls - is as much a worry for the future as it is for any current
problems.
Voters know that if the
government cannot get its finances under control, one of the areas that will
take the hardest hit is health care. Health
care consumes 42% of the government’s budget annually.
In an unstable situation, the government needs
stability. That will cost money. All principles in Newfoundland and Labrador
politics convert to cash these days and spending money is the one way to make
everyone happy. The Liberals abandoned their 2016 budget plan as soon as it
became clear that spending money was the way to get re-elected.
They will keep on the same path. Dwight Ball has no
interest in being unpopular, even before the election. He has less interest in it now. To keep his
caucus in line, Ball will put all of them on extra pay. The ones not in cabinet will be drawing bonuses
for their jobs in the House of Assembly like Deputy Speaker or chair of
committees, government whip or chair of caucus.
Don’t be surprised if parliamentary secretaries get a small salary back.
Ball’s caucus has no interest in being unpopular
either. They will not support anything
that makes the government unpopular. Nor do the ones first elected in 2015 want
to go to the polls any time before their pensions are salted away. That’s November 2020. They will back anything
that avoids going to the polls. In the
meantime, any of them looking for an appointment to cabinet or one of the jammy
House jobs will tell you that everything is fine, and that this situation is
tailor-made for The Great Conciliator®, as Dwight Ball will quickly become
known.
In practice, all three parties want government to
spend differently and the opposition parties would both be happy with spending
more. Their election platforms called
for more spending on top of a budget that is already heavily in the red.
If you think the Liberals wouldn’t go for that, guess
again. As SRBP noted a couple
of weeks ago, the 2019 budget understated the deficit for the next couple
of years. The government is not on track to balance the books by 2022. In fact,
the deficit next year will almost certainly be close to double what is forecast
for this year. The year after will likely
be larger again. The big deficits will continue. All of that is*before* the opposition parties
extract their price for approving the government’s budget.
Then there is Muskrat Falls. Both the Conservatives and the Liberals share
the same plan. Neither plan will
work. As SRBP pointed out just before
the election campaign started, both plans include significant amounts of money
that is entirely fictitious. This money
will have to come from government’s general revenues. That extra cost is included in SRBP’s revised
budget figures. They are *not* in the
government thinking yet.
But that is not all.
The Conservative and Liberal “mitigation” plans effectively freeze
electricity prices slightly higher than they are right now. As with the university tuition freeze, that
means any future increases in electricity rates – even the stuff not connected
to Muskrat Falls – will eventually start coming from general revenues as well. That’s
not an immediate worry but you should get ready for it.
In the meantime, though, that prospect is something the
bond-rating agencies will add to the uncertainty caused by the minority
government now running the place. One has already given the government a negative trending
on its rating. That means they expect
the government’s financial situation will get worse. The others may well
revisit their outlooks once the new budget is passed. And they certainly will revisit their ratings
after the minority legislature.
The provincial election is over, but the province’s
problems are far from solved. The government planned to boost spending before
the election. Now, they have to try and
get a budget through an inherently unstable minority legislature where the parties
have a history of finding political agreement through public spending. Not exactly a recipe for tough decisions, is
it?
-srbp-
