Truth and Reconciliation #nlpoli

Long ago, so long ago no one remembers when, they did away with Virtue in Newfoundland​ politics.  To be on the safe side, they slit the throats of her twins, Truth and Justice, and tossed the little corpses on top of their mother's still-moving body before leaving the three in a shallow, unmarked grave in the woods.

Newfoundland politics is a daily metaphor of that Original Sin. This fall, we are seeing the crime repeated everywhere with more people drawn in than ever before. Such is the power of modern media.  Such is the state of democracy that mortal sin, like political power, is no longer the exclusive domain of the rich and powerful.  Everyone can get their taste.

There is no monument to Virtue and her murdered children but if Muskrat Falls is ever finished, we can perhaps use it to remember what happened, who was involved, and why.  That is the only way you can reconcile,  the only way you can sincerely balance the accounts  - financial, historical, political - one with the other.

Measuring Thick: business edition #nlpoli

You cannot manage what you cannot measure, says Des Whelan, president of the Board of Trade this year.  Des gets a column in the province's largest daily newspaper.

Des is right.  You cannot manage what you cannot measure.

Unfortunately for Des, we can measure the Board of Trade's record on the public sector spending, debt, and policies over the past decade.

We call the measure  Thick.

Thick measures 4.

Gimme that Old-Time Religion #nlpoli

Kim Keating is the president of the St. John’s Board of Trade this year.

In her Telegram column on Saturday, Keating offered some advice to the provincial government about the upcoming budget and taxes.  “As the voice of business, the St. John’s Board of Trade does not support tax increases.”

Funny that.

A couple of years ago, the Board of Trade enthusiastically supported a new tax called Muskrat Falls. The whole scheme is premised on raising electricity rates in the province to pay for the deal and to generate sizeable profits for the companies involved.  The profit for Nalcor is supposed to go to the provincial government to help pay for government services.

So maybe what Kim said wasn’t entirely inside the Ring of Veracity.  The Board of Trade likes some taxes. Like say ones where its members can make crap-loads of money from government procurement.

The Vision Thing #nlpoli

The St. John’s Board of Trade is about the only business advocacy group in the world that doesn’t actually believe in free enterprise.

The Board doesn’t believe that government should control public debt.  They claim they are worried about it, but in practice the Board will shout with joy the more the government spends.

That sounds ridiculous, but it is true. 

The Board of Trade supports the Muskrat Falls project, for example.  The project involves a massive increase in public debt. There’s no evidence it is the cheapest way to meet the provinces electricity needs.  The only way it can work has been to create a complete monopoly in electricity production in the province that will force locals – including businesses – to bear the full cost plus profit, so that the provincial government’s energy corporation can sell discount electricity everywhere else except inside Newfoundland and Labrador.

The Board of Trade likes Muskrat Falls for two reasons.  Above all else,  the Board’s members want a piece of the construction phase for the project.  It’s pretty simple.  Right behind that,  the Board is notoriously sycophantic. It doesn’t actually advocate for business – like you might expect - as much as follow whatever line the provincial government lays down.

Bizarre, yes.  But simple to understand.

The Board is also a pretty funny organization, too.  Not funny as in bizarre or weird, aside from that anti-free enterprise thing, but funny as in roll on the floor and pee your pants laughing.

Budget basics: debt #nlpoli

Board of trade president Sharon Horan wrote in her Telegram column last weekend that the unfunded pension liability will make up 85% of the provincial government’s debt not to long into the future.  That will be up from the 75% of the public debt it makes today.

There you have proof that even the president of the largest business organization in the province does not understand the first thing about the state of the provincial government’s finances.

Public debt is a really basic idea that you have to know if you want to understand public finance.  And you need to understand public finance if you want to have a useful say in how the government is running things.  That’s what the folks at the board of trade want to do, one would expect.

And yet Horan got it wrong. 

Not a mere technicality.

But dead wrong.

So if the board of trade can bugger up public debt, let’s see if we can walk everyone through the notion in a way that we can all understand.

The Politics of Fashion #nlpoli

As it turns out, Corporate Research Associates president Don Mills had lots to say to the St. John’s Board of Trade besides a few guesses.

Newfoundland and Labrador can’t create economic booms in every nook and cranny.  Instead, we should focus on growth centres where people are moving anyway.

Such radical - dare one say revolutionary  - ideas. How blessed the Board of Trade members were to hear these comments the likes of which they have never heard before.

Surely.

Never heard the likes of it before, except for the 1992 Strategic Economic Plan.

Money Talk

1.  From labradore, a post titled “Responsible Government”.

2.  From the Telegram, the editorial follows up on a story from the Saturday edition noting the difference between Jerome Kennedy’s take on the pensions business and that of his immediate predecessor.

It asks a question - So, why the huge difference between ministerial attitudes? – that is worth answering, or at least attempting to answer.

The difference has to do, in part, with the length of time in the job and the amount that one knows about the fundamentals of the job. 

Tom Marshall gave the answer any finance minister might give who understood his job and felt comfortable in the roll. 

The long-term effect of a drop in asset valuation is to force the government and maybe the unions to drop more cash into the fund.  As Marshall noted, over the long haul, the pension fund’s asset valuation has gone up and down yearly but has average over 10% growth since it was created in 1981 [See chart at left].

No big sweat in other words.

Jerome, on the other hand, left the impression huge mounds of cash might have to be dropped into the fund in the next “number of years”.

Big sweat, in other words, since most people would take the tone of his comments to mean more cash was needed in a hurry.

Kennedy’s shown this sort of thing before, this lack of understanding.  His answers to simple questions in the legislature last session – his first as finance minister – were overly aggressive, snarky and condescending.

What else is new, sez the wag in the gallery.  True, but look at the words and you get more the sense of a fellow who is anxious to make sure people don’t realize he doesn’t understand a lot of what he is talking about.

He is covering up, maybe temporarily, maybe as part of a pattern.

Another part of Kennedy’s interpretation versus Marshall’s has to do with the annual budget requirement to find some sort of theme for the farce known as “budget consultations.”  Last year it was a debt clock.  Tom Marshall talked a lot about dealing with the debt but in the end did virtually nothing about it all.  This year, Jerome didn’t have a lot of time to find something to use as a prop, as a theatrical device around which to frame all talk.

CBC’s piece gave him that prop, albeit at the last minute. 

A prop really isn’t necessary though, if any of Friday’s session in St. John’s is the guide.  The Board of Trade – predictably – called for tax cuts for businesses as the way to help get through the coming tough times.  otherwise, government should stay the course.

What that means exactly is unclear, since the current crowd have been spending like there’s no tomorrow and no paying down the public debt to any appreciable degree. Plus, as labradore notes, their entire debt pay-down thingy is merely designed to open up room for more public debt.  That hardly sounds like something the Board of Trade would endorse but yet it does.

The only thing more predictable than the always Tory Board of Trade was the Canadian Federation of Independent Business. Times are good:  cut taxes, says Bradley George.  Times are bad?  Cut taxes, says Bradley George.

Again, no concern for the drain on public resources represented by debt and the odds such debt would increase with all those tax cuts.  How will we pay for everything if we cut taxes and cut them again and then cut them thrice for good measure?

The shortcomings of both the Board and Bradley are evident since neither made any reference to the gigantic shortfall in revenues coming this year. They either do not know or care not to know about the billion or so that has to come from somewhere since it won’t be coming from oil and mining and forestry next year.  It is like the debt:  best ignored except to support action which does not occur.

The size of the “or so”part of that equation by the way would be increased, inevitably, by the size of their tax cuts but this is all of no concern.  The only crowd equal in irresponsibility to the business bunch would be the labour and “social” bunch.  Where the business crowd seek to  cut revenue, the other would boost spending in just about every direction simultaneously. 

The current administration enjoys the support of both business and labour, it should be noted. 

Of course, none of this consultation has to make sense, nor must it bear any resemblance to what is actually going on in the world. The purpose of the consultation farce is merely to allow everyone to recite their scripted lines and if it can be held at the hotel owned by a loyal supporter of the government, all the better.

The whole thing is like the annual Christmas pantomime in grade school.   Everyone must memorise the lines and say them, even if they do make sense only in the fantasy world of the moment.

There’s no requirement that the participants in the entertainment actually understanding what they are talking about either.

That, of course, is both painfully obvious and the answer the Telegram’s question.

 

-srbp-