20 July 2020

Change versus more of the same: Summer 2020 edition #nlpoli

Spring 1994.

At the point Clyde Wells spoke to the graduating class of Memorial University’s business school that year, the administration he led had already started getting government spending under control and transforming the economy.  Wells goes through all of that with the class, why government was undertaking the changes, and what he hoped would be the outcome. 

Give the speech a listen.  It’s only 38 minutes and it is striking on a few levels.  First of all, think of the last time you heard a Premier speak to an audience in Newfoundland and Labrador this calmly, rationally, and with as much detail.  This is not a speech of clever quips or turns of phrase.  This is basic information.

Second, notice that Wells talks about protecting the vulnerable in society while, at the same time, making some significant changes in government and society.  This was an incredibly important aspect of what the government did at the time.  Anyone who ignores this when describing events in the 1990s is either a partisan troll or someone who simply doesn’t know what he or she is talking about.
Third, notice the point when Wells talks about the potential for oil and interest in developing Terra Nova.  Within the decade after Wells delivered this speech, oil companies had brought two more fields online and had started talking about the fourth field.  Those are the royalty deals that delivered the cash windfalls in the decade after 2005. In every single deal, including the Hebron deal, the part of the agreement that delivered the most cash to the province came from the pre-2003 royalty regime.

Then notice that it only took 10 years of spectacularly bad policy choices for the Williams Conservatives to demolish everything. They flipped back to the 1970s in energy policy and economic development.  The started overspending in 2006-2007, then continued that overspending through the recession in 2008-09 and with the downturns in commodity prices in 2013 and 2015.

10 years - 1994 to 2005  - to turn things around.

10 years - 2005 to 2015 - to wreck the place.

Ya gotta have a Plan C, Dwight
Dwight Ball and the Liberals kept in place all of the bad strategic policies of the Conservatives when they took office in 2015.  That’s why the problems facing the provincial government didn’t get any better after 2015 and, with the collapse of oil prices *before* the pandemic basically returned us to the massive deficits of 2014 and 2015.  This was a predictable situation and a result of deliberate risk that Dwight Ball and Tom Osborne ran.  There was no Plan B, which is why Dwight Ball’s only response to the financial mess that appeared in March 2020 was to write a panicked and panicky letter to the Prime Minister.

The new Premier who takes office in August will face the immediate financial problem of a deficit of somewhere between $1.6 billion and $2.4 billion.  Deficits will likely a billion dollars or more as the pandemic lingers and oil prices remain suppressed.  But even if those two issues disappeared magically by Labour Day, Muskrat Falls and all the strategic problems resulting from the disastrous policies after 2005 will continue to dog the province.

We should be five years on the road to recovery, but we aren’t because Dwight Ball and his team went into office without a clear plan to change things.  Arguably, Ball himself intended to continue on the same path.  So, the question we have for August is whether the new Premier will start the fundamental strategic changes needed to fix our problems or we will get more of the same.