Crisis at Tammany

Well, not really.

It’s really just a couple of councillors who have opted for hysterics over reason given the decision by Fortis to withdraw its proposed 15 storey high rise development in a heritage zone that had a four story height restriction.

Read that again, just to make sure you are clear.

A proposal that already violated the city building restrictions died before it got to a vote.

And some councillors are a wee bit miffed.

Like At Large councillor Tom Hann and mayor Doc O’Keefe (via CBC):

"Some of us were labelled gutless wonders, and spineless. So in the present atmosphere, why would anyone want to come here and be part of the city," said Hann.

"We slammed the door, your worship. We slammed the door in their face."

A disappointed Mayor Dennis O'Keefe agreed, saying the company had voiced similar concerns to him.

"They felt that they weren't getting a fair shake," said O'Keefe. "What they heard the loudest was the naysaying and the branding of being arrogant."

If Hann would stop with the foolishness for a moment, he’d realise that there are plenty of places in St. John’s, including in the downtown area, where a developer like Fortis can build high rise towers.

So if a developer like Fortis decides to submit a proposal for development that violates the area height restrictions, then it’s their own fault if the thing fails.

There was nothing stopping Fortis from submitting a proposal that fit within the rules and that incorporated a redevelopment of their existing 12 story property.  That one would have been grandfathered through anyway.

But there isn’t a single developer who will refuse to come build in the city of St. john’s because  - to use his own words - some people think councillors like Hann are “gutless wonders” and “spineless”.

Developers likely don’t care that much about Hann’s feelings.

As for Fortis, they did a pretty slick job early on of lobbying people like Hann and O’Keefe and putting them in the bag long before the residents of St. John’s even heard about the proposal. That’s the sort of old-fashioned crony politics that has left this city in a development mess there is. That’s the one where no one knows what the rules are.  They don’t know what the rules are because there are a few councillors who can be persuaded to toss the rules out the window if the mood strikes them.

Ultimately Fortis lost this round because of a pretty effective lobby.  Those opposed to the development just put the squeeze on the notoriously fickle councillors.

That’s the way things go in politics.

And if Hann wants to fix things  - if he wants to show he has a spine - well he can start by bringing about some changes that open up city hall to greater public scrutiny. That way people wouldn’t be worried that developers can get their way around the rules.

Who knows?  If the rules were suddenly clear and fairly and consistently applied there might be more people willing to invest.

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The Fragile Economy: reductio ad argentum

Political parties that come into power without direction tend to fall back on a couple of crutches to help them get through.

One is inertia.  They just keep going with what happened before.  Sometimes they just take ideas pushed up by the bureaucracy but that is really just another form of carrying on with the set of assumptions everyone knows.

The collapse of health regions and education districts into just a handful is just such an idea.  Faced with an apparent financial problem – which the new Williams administration should have known all about before they got to office, by the way – the novice Premier took a couple of suggestions pushed forward by bureaucrats as a way of saving cash.

Poof:  four health regions and five education districts. The changes didn’t actually deal with the problem nor does it appear they were thought through. Yet they were quite accepted quite readily as the election commitment of growing our way out of economic tough times  - “Jobs, jobs, jobs” - was replaced by the staples of cuts, freezes and re-organization.

That’s not really all that surprising.  After all, this was an administration that had not even been able to figure out what its departments were going to be called.  That decision wouldn’t arrive for another month.

The noobs elected in October 2003 took five months to get enough material together to present to the House of Assembly.  But even then, the overwhelming majority of the bills were modest amendments to existing laws that had been in train before the election. 

Those that weren’t already planned by the old administration didn’t produce dramatic changes of direction for government. Amendments to the Elections Act, for example, mandated that a by-election had to be called within 60 days when a vacancy occurred.  The old version dated from the early 1990s and set the maximum at 90 days.

For a government that supposedly had a plan and was keen to get to work on its new agenda, there wasn’t much sign of that new agenda from the first session of the legislature.

Aside from a toothless lobbyist registry, the Transparency and Accountability Act was the only major new piece of government business. Duly passed after a cursory debate the government then didn’t bother to put the law into force until two years later.  Even then, the bill only took effect two afters later still, that is, four years after it was passed.

Another new bill, the Court Security Act, is still not in force and likely won’t be implemented.

It’s only when one goes back and looks at that first session in hindsight that one can see exactly how little new material the brand new government brought to its first legislative session.

Directionless governments also have difficulty making decisions.  Most governments find decisions difficult to make because they issues involved are enormous and the opportunity to make a tragic mistake is great. Contrary to what people may think politicians are sincere people trying to do what they think is best. But in a directionless administration, all those sincere people have to struggle to agree on what “best” actually means.

Now by directionless, we mean nothing more than a group of people who have not learned how to work together effectively as a team.  Lack of direction may also arise where political power generally or on a given issue is so diffuse that no one individual or group of individuals can get enough support among colleagues to move in a particular direction.

Directionless governments tend to decide in favour of the lowest common denominator.  On some issues the LCD is no decision.  But, more often than not, agreement is easiest to reach if it involves spending money.

Take a look at the current administration and you can quickly see the prominent role money plays.  In fact, money is the only real measure of anything.  news releases typically refer to how much money will be spent and how much has been spent.  When asked about how important a subject like the fishery is, a typical Williams administration reply will focus on how much money has been spent on fisheries-related issues.

A by-election is fought based on how much money the premier and his party delivered to the district.  Puzzled at a by-election loss, the Premier will note how much money the district received and then roll his eyes up dismissively at the rejection.

The final Hibernia South agreements were not good enough in themselves. Rather, the estimated valued of the deal had to be inflated by an entirely artificial means.

Everything - not just principle - converts to cash. Indeed, so pervasive is the reference to money that you likely took it for granted.  But from this point onward, you will likely have a hard time looking at any news story from the provincial government and not seeing the focus on, the near obsession with cash.

There are other examples of how the current administration lacks focus and direction.  Equalization, the delays and cost over-runs throughout government, the health care cuts that sparked last fall’s crisis,  the break-up of Fishery Products International:  all are signs of an administration which lacks a coherent view of the problems it faces and a cohesive organization that can tackle them successfully.

Knowing how the current administration has a problem finding its way is one thing.  The consequences for the province and its people are something else.

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The Fragile Economy series:

• “Staying the course”
• Next –    “…and two steps back”.

Colonel Mustard…

in his jail cell with aluminum foil and cardboard.

Accused murderer Russell Williams tried to off himself in his cell at the Quinte Detention Centre.

Now QDC is crowded and all, but surely someone thought about putting this guy on suicide watch before now.

Next stop:  Kingston Psych, on the shores of lovely Lake Ontario.

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Seven cent nickel

How the Tories plan to balance the budget:

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Colbert doesn’t RATE

Retired at Taxpayer Expense that is.

If Gerry Colbert wants to retire after 25 years of working, then let him.  No one would begrudge him a rest after his labours.

It’s one thing to hear the rumours that Colbert spent most if not all of the last municipal election in warmer climes, but Colbert’s got another thing coming if he thinks  that time spent during council meetings is nothing more than “face time”.  Let’s not even talk about the idea that for the rest of the week Colbert thinks he can just phone in the job from the Sunshine State.

Maybe Colbert ought to just give up council altogether.  

The taxpayers of St. John’s shouldn’t have to pay him a nickel while he swans off to Florida and enjoys the condo life with the rest of the retired and soon-to-be-retired townies.

Better that than try and retire at taxpayer expense, as he currently is doing.

If Colbert won’t pack it in on his own, then maybe we - the poor sods who are foolishly paying people like Colbert to serve as city councillors -  should reconsider the contents of their pay envelope. 

After all, if being a city councillor is such a lightweight job that you can safely frig off out of the city for upwards of a third or more of the year, then taxpayers shouldn’t be forking over any payments to anyone elected to serve on city council. 

Period.

After all, it’s not like Colbert is alone in being absent from council.  There are others with dubious attendance records.

Maybe it’s time to end the gong show that is city council.  What better way than by punting the biggest gong.

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Epic Fail of The Week: prov gov loses to Abitibi… again

First, the provincial government’s Legal Genius(es) drafted the expropriation bill which seized - all, as it turned out -  AbitibiBowater assets in Newfoundland and Labrador.

They told the good burghers of Danny-ville that this meant only that the power plants and everything else belong to the people of Newfoundland and Labrador.

Everything, except that is for the mill itself, they said which would be used as leverage in negotiations over any compensation for the expropriation.

It would all be a wash, in the end.

Or so people were told publicly and in briefings before the expropriation bill turned up in public.

Then, people discovered that the same Legal Genius(es) didn’t actually exclude the mill as they’d originally claimed.

Nope.

They seized it all.

Big screw up.

Now, the people of Newfoundland and Labrador discover that trying to get some sort of court action forcing the former mill owners to foot the bill for environmental clean-up – as the legal genius(es) assured everyone – won’t work either.

Hands up anyone who is surprised at the latest failure by the provincial government?

Okay, well just stop and think for a minute: 

The Legal Genius(es) behind this latest string of expropriation epic fails would be exactly the same Legal Genius(es) who brought you the Ruelokke legal mess.

And they’d be the same Legal Genius(es) who are now betting massive chunks of the public purse on a law suit against Hydro-Quebec to try and settle a dispute over the 1969 contract.

Any bets on how good that one will turn out for taxpayers in the end?

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Medvale School for the Gifted Update:  Seems the Legal Genius(es) indeed have caught themselves in another bit of jurisprudential bother.  As Russell Wangersky astutely points out, the lovely Abitibi expropriation bill clearly gives no value to water rights and timber rights.  Yet, the scheme to funnel money to Corner Brook Pulp and Paper is based on timber rights having value.

The two things cannot live in the same space.

So either no cash will go to CBPP or, as your humble e-scribbler expects, the real legal geniuses who work for AbitibiBowater (they are 2-0 so far) will use the CBPP cash hand-over to put a much higher price on the expropriation now that they can legitimately claim cash for timber and water rights.

Not only that but AbitibiBowater can also claim – quite rightly – that the expropriation was unusual and punitive aimed specifically at one company and remains without any merit. Coupled with all the nasty words flicked by ministers toward Abitibi, they can likely show that the whole thing was prejudiced and that will only add to the poor beleaguered Newfoundland and Labrador Taxpayer’s legal misery in other places (NAFTA challenge anyone?)

Momentous Update:

Hypothetical Answer by Hard-done-by Citizen:  “Golly Gee Mr. Finance Minister, what will happen if they get more money?”

Not-so-hypothetical Answer by Finance Minister:  “The debt will go up.  We cannot stop the momentum.”

Happy Confederation Day!

Signing of the Terms of Union between Newfoundland and Canada, December 1948.

The union took effect shortly before midnight on March 31, 1949 but events marking the occasion took place on April 1, the start of the new fiscal year.

For a worthwhile perspective, one first generation Canada – your humble e-scribbler – will recommend the words of another first generation Canadian at nottawa along with some thoughts offered from this corner last year on the 60th anniversary of Confederation:

“As we mark this 60th anniversary of Confederation, it is worth considering the extent to which current government policies fail to continue those changes.  It is worth noting that in the endless wars with outsiders, there has been a steady rebuilding of the walls and barriers we have worked so hard to tear down.  We worked to tear them down because they served only to restrict us.

It is worth noting that genuine pride, innovation and self-reliance can be stifled by a late-night telephone call and by the relentless personal attacks that come from merely dissenting from official views. By choking off healthy debate about public policy issues within Newfoundland and Labrador, by strangling any alternative views we serve only to return this place to self-defeating isolation.

Confederation gave Newfoundlanders and Labradorians the tools and opportunities to make for themselves a better place in the world. In 1949, we became once more masters of our own destiny and masters of our own house.

On this 60th anniversary of Confederation, we must be mindful of how far we have come and at the same time, be aware that if we are to continue to grow and prosper we must safeguard the foundation on which our current prosperity is built.”

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The Fragile Economy: staying the course

“Obviously, I don't like to run deficits, but if I've got to fight a recession ... if we've got to get the economy booming again, then I'm not afraid to spend money and we're not afraid to lower taxes to stimulate the economy - that's good public policy.”

Finance minister Tom Marshall often speaks about one thing and does another.  He’s famous for trotting out a debt clock during one budget consultation farce only to deliver a budget that did nothing to reduce debt.

This year Marshall has been trying to pass off deficit spending as if it was something new for this administration.  It isn’t. They’ve run cash deficits in all but two years since 2004.  If their current forecast holds, they will be adding a considerable amount of debt for the foreseeable future.

Adding debt is just staying the course for the Williams administration.

Premier Danny Williams himself has dismissed balanced budgets as meaningless. Marshall explicitly rejected any action like balanced budget legislation or having a debt reduction policy.

Marshall’s predecessor as finance minister - Loyola Sullivan  - talked about balancing the books on a cash basis – he only did it once – and possibly not balancing the accrual books for a number of years.  That was back in the early days of the administration when it looked like they were actually going to deal with some of the provincial government’s financial woes. But even for all that notice debt got within the first couple of years after Williams and the Tories took office,  they were willing to rack up additional public debt.

Since we are discussing debt, let’s dispose of one of the finance minister’s more laughable claims from budget day:

“But we have cash to pay for that deficit. We will not increase our borrowing. Our debt will go up, but we don't have to borrow for that.”

On the face of it people may well wonder how you can increase public debt while not borrowing money.

The answer is pretty simple and it goes to the heart of the public debt charade Marshall and his colleagues have been foisting for the past few years.

Marshall covered the half billion shortfall in 2009 from temporary investments – extra cash – the provincial government had on hand.  He didn’t have to go to the banks and negotiate a loan but he sure as heck borrowed the money:  he borrowed it from taxpayers.

As for the debt, what he is referring to is net debt.  Now for those who may not know, net debt is a calculation of what is owed compared to assets – cash, property and so on – that could theoretically be sold off to pay down the money that is owed.

Those temporary investments that the provincial government racked up over the past couple of years helped to make it look like the public debt had been paid down. That’s because they are exactly the sort of assets that would have bee used to figure out the net debt:  liabilities less assets.

So when Tom took the cash and spent it, the net debt could only go back up.  The net debt will go up again next year and the year after and any other year Tom winds up having to cover off over-spending.

Just remember, though, that the total liabilities haven’t changed much in the past few years. You can see that from a post last December on net debt and liabilities and in another post on net borrowings.

This is not a subject the Fan Clubbers like to talk about but it is real. it also just happens to be one of the major financial problems facing the province that isn’t being addressed by the current administration.

Just to give you a sense of how much the past two budgets have followed what we could call the Williams administration debt addition policy, take a look at just the current account spending since 2003.  That’s the money that pays the heat and light and delivers the services and salaries every day of every year. 

And just to really keep it in perspective think of it this way.  You can have a great net debt because you have a nice house, an expensive car and some jewels that could possibly be sold off if the bank called all your loans. 

But since the house and the jewels don’t generate any cash each year they don’t help you pay the bills today.  If you can’t afford food without whipping out the credit card you could be in a situation of being cash poor. Lots of nouveau riche business types are leveraged to the max.  They drive flashy cars but they don’t really have a copper to their name. So without considering the cash deficit, the net debt could be a very misleading figure.

Anyway, take a gander at this table.  It shows the percentage increase in current account spending every year from 2003 to the current budget.

Fiscal Year	Percent increase from previous year
2004	Zero
2005	5.3
2006	4.6
2007	8
2008	7.8
2009	10
2010 (forecast)	7

That’s right.

Except for that first year, there’s never been a time when current account spending didn’t go up by at least twice the national rate of inflation.  In some years spending shot up three and four times the rate of inflation.

This sort of spending is unsustainable.

This sort of financial state – all that spending coupled with all that untended debt – is unsustainable.

There are other consequences to the Williams administration economic policy, consequences that will become more obvious as this new series – The Fragile Economy – rolls out in the days ahead.

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Jobs that depend on tax money: stump of forest industry edition

So the provincial government is pumping taxpayer cash to keep a paper mill in Corner Brook alive.

Gee, like that hasn’t been done before.

2006.

2007.

And that’s just the stuff we know about.

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NL economy “fragile”: Williams’ finance minister

“When there is uncertainty, when the economy is fragile, government steps into the breach.”

That’s the way finance minister Tom Marshall explained the reason behind the Williams administration’s plan for three more years of deficit spending including a projected deficit in 2010 of nearly $1.0 billion on a cash basis.

Marshall made the remarks in an interview with CBC’s Debbie Cooper Monday evening.

In his budget speech Monday, Marshall forecast accrual deficits of between $156 and $194 million to follow the accrual deficit of $294 million in 2009.  Marshall gave no forecast of when he expected the provincial government to balance the books again or return to surplus.

In the past, Marshall has explicitly rejected the idea of balanced budget legislation.  Earlier in March, Danny Williams dismissed balanced budgets saying that delivering “balanced budgets is just achieving a number.”

During the interview Marshall referred to the deficit for the year just ended as being half a billion dollars,  after a string of surpluses which he said totalled almost four billion.

But that’s an odd mixture of numbers. Since 2007, the provincial government has kept two sets of books, delivering the finance minister’s budget speech on an accrual basis and delivering the Estimates on a cash basis. Marshall and one-time finance minister Jerome Kennedy typically have referred only to the accrual numbers.

They never mention the cash numbers since they show deficits in all but two years since 2003. And last year’s deficit of $494 million was on a cash basis.  That’s the half billion Marshall mentioned.

But on a cash basis, the Williams administration only produced a cash surplus  - the same figures Marshall used - in two years since taking office in 2003.  In every other year, the Williams administration had to borrow to make ends meet.

Marshall’s 2010 budget forecast that trend to continue.

The green lines in the chart represent deficits.  In Fiscal Year 2006, the shortfall was $707 million, followed by $88 million in 2007.  There was a cash surplus in 2008 of roughly $820 million.

Marshall delivered a $494 million deficit in 2009 and forecasts a cash shortfall of $949 billion in 2010.  It doesn’t take a rocket scientist to realise that if Marshall is only half right in his deficit forecasts for the next three years, the Williams administration will add $1.5 billion to the province’s debt load over the next three years.

Even the deficit forecast for 2010 of $959 million is based on oil averaging US$83 over the next 12 months.  If oil were to average US$70 a barrel -  as it did in 2009 -  the deficit would balloon by another $500 million.  In other words, oil royalties would be only $1.6 billion compared to the $2.1 billion forecast.

And if all other projections held, the 2010 deficit would be more like $1.4 billion in a single year rather than what Marshall forecast on Monday.

None of that includes any debt incurred by the province’s energy company to pay for construction costs on its share of oil projects or the Lower Churchill. Both would show up on the provincial government’s books since NALCOR energy and its subsidiaries are owned wholely by the provincial government. At the same time, the province’s oil and gas company isn’t required to pay any royalties to the provincial treasury like other oil companies.  Instead, NALCOR will pocket the cash, pay off debt or use it to fund other projects which also likely won’t generate any money for the provincial treasury.

The apparent surpluses Marshall claimed during his interview were actually paper transactions resulting from the accounting practice of distributing the one time advance cash transfer payment from Ottawa in 2005 over the fiscal years in which the money was actually earned.  In 2008, an apparent surplus of almost $2.5 billion on an accrual basis produced an actual cash surplus of only $820 million.

The one-time transfer was used to reduce unfunded pension liabilities.

No other money was received under the 2005 deal before it expired in 2009.  The provincial government will receive one last cash download as a result of the 2005 agreement but that amount is based on the 1985 Atlantic Accord.

Approximately $1.8 billion in temporary investments apparently held by the provincial government would not be enough to cover the likely cash deficits over the next three years, based on current budget projections. 

There is no explanation for Marshall’s claim during the CBC interview that the provincial government had the cash to cover the anticipated shortfalls.

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No bubbles in sight: GDP dropped 26% in ‘09

The value of goods and services produced in Newfoundland and Labrador dropped 26% in 2009 compared to 2008.  Those figures are in an appendix to the finance minister’s budget speech delivered on Monday.

GDP in 2009 hit $22 billion compared to $31 billion in 2008. That’s only slightly above the GDP in 2005.   The single year drop erased the gains of 2006 and 2007 which together saw an increase in GDP of 27.9%.

Real GDP declined 8.9%.

In 2008, Premier Danny Williams claimed the province would be protected from the global recession by some unknown means.  He and finance minister Tom Marshall continue to claim the recession did not affect Newfoundland and Labrador as severely as it did other places.

Average annual employment in the province during 2009 remained below employment levels in 2006 and the current forecast is for negligible growth (one half of one percent) in the coming year.  Meanwhile the labour force remains swollen with returning migrants thrown out of work in other parts of the country by the recession. 

Wages and salaries in the province are higher, driven primarily by increases in the public sector.

Sales of manufactured goods (shipment value) were down 33% in 2009. Housing starts fell 6%.

Oil production hit 97 million barrels in 2009, compared to 125 million in 2008.  That’s basically the forecast production from Budget 2009.  Interestingly, the December financial update had forecast an increase in oil production to 101 million barrels.  Oil production is forecast to drop again – to 86 million barrels – in 2010.

Newsprint shipments in 2009 were down by 49% from 2008 and 66% from 2005.  The value of fish landings was down 19% in 2009, wiping out gains in the preceding two fiscal years.

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“…Jobs that pay taxes, not depend on taxes…”

From the 1996 provincial election campaign, here are the provincial Conservative commitments on managing the provincial government’s finances.

Lynn Verge must be cringing at what Tom and the boys are doing especially with that bit about using policy to create private sector jobs instead of creating jobs that depend entirely on tax money

Mandatory sunset clauses turned up again in 2003 but there’s no sign the current crowd are going to give it another thought.

Balanced budgets have never been a goal of the current administration. In fact, the finance minister and the premier have explicitly rejected the idea.  When they had money they spent it and now that they don’t have money they are spending too.

 

A PC Government will:

• balance the budget over four years, through a combination of measures to stimulate economic growth and re-order spending priorities. Deficits designed to protect funding for essential services in the lean years will be offset with planned surpluses in the growth years.
• fix the rate of growth in borrowing below the rate of real growth in GDP, thus bringing down the debt-to-GDP ratio.
• use tax policy to stimulate private sector job creation - jobs that pay taxes, not depend on taxes.
• re-establish an Expenditure Review Committee to identify areas of inefficiency in government and take early and decisive action to eliminate inefficiencies.
• set priorities for program delivery and reduce spending on expendable and low-priority programs. 
• streamline and consolidate regulations to eliminate duplication and reduce the number of regulations and regulatory bodies.
• put emphasis on patient care and high-quality education while seeking efficiencies.
• impose mandatory sunset clauses on spending programs and regulations.
• appoint a Public Service Pensions Task Force within 60 days to investigate ways to address existing liabilities while honouring our commitments.
• reform the MHA pension plan to bring it more in line with those of public employees.
• cut the number of seats in the House of Assembly to 40.

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Burdening our children with increased debt: fish centre costs escalate wildly

An aquaculture centre that was supposed to have opened in 2009 for a cost of $4.2 million will now cost $8.8 million and construction isn’t set to start until later this spring.

Cost of the project shot up 22% in 2009 alone on a project that even then was already 71% over budget. Former fisheries minister Tom Rideout announced the project in 2007 as part of government’s pre-election vote buying orgy of public spending.

The provincial economy shrank by 26% in 2009.

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Bob Fowler’s speech

The video link.

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Budget 2010: prep work

Some things to watch for in Budget 2010:

1.  Deficit 2009.  Check to see how big the accrual deficit is, but expect that to be pretty much zeroed out.  The pension plan should have recovered its paper losses and with revenues being higher than the deliberately lowballed forecast, some people might be fooled into believing things are healthier than they are.

Just remember that as he headed out the door Paul Oram described provincial government spending as unsustainable.  The finance minister said the same thing.  Odds are government will try and make things look smurferrific by pointing to the accrual numbers but don’t be fooled.

Check the cash deficit in a document titled the Estimates.  That will give you a picture of what the actual cash flows looked like in 2009. Budget 2009 forecast a cash shortfall of $1.3 billion.  The cash statements will give you a good sense of whether the the provincial government will have a significant financial problem in the medium- to long-term.

Your humble e-scribbler would expect a cash shortfall of something on the order of $800 million. 

That would make it the largest cash deficit in Newfoundland and Labrador since …well…ever and certainly since 2004.

In previous years, oil revenues erased just about every one of the projected cash deficits.  This year expect something closer to what they forecast a year ago on a cash basis.

That’s because…

2.  Oil revenues should be down.  The only question is by how much.

The finance department’s Decemberish estimate was for a drop of 30% which would bring in royalties of about $1.7 billion. The March 2009 prediction was for revenues to be half of what they were in 2008.

As it turned out, that was a pretty good estimate.  In the first half of the fiscal year royalties were down by almost 60% from where they were in 2008.  That was actually about 15% below the forecast in March 2009.  The year actually started off worse than the low-balled finance department estimate.

The December financial update claimed there’d be a jump in revenue from forecast but oil production figures – one of the revenue factors – stayed persistently below the volumes needed to help generate the cash.

Again, check the revenue figures in the Estimates. And don’t forget your humble e-scribbler had to get information from the feds because provincial finance basically refused to release any information. In itself that’s a reason to put a question mark over what’s coming.

Your old e-scribbler wouldn’t be surprised to see oil royalties of about $1.5 billion for 2009, give or take a couple of hundred million.  Just remember what finance minister Tom Marshall said during debate on the interim supply bill last week:

While production, natural production will come back when Hebron comes on, but it is never going to come back to what production was two years ago; unless, of course, we discover additional fields, such as in the other basins where they are continuing to explore…[Bold added]

Production is one factor in determining royalties.  Price and percentage are the other two.  Since we know the percentage and the price is unlikely to zoom back up to the stratosphere of mid-2008, we can reasonably expect the provincial government will have less money in the future than it has had in the past couple of years.

There are not new ideas.  Regular readers have seen them discussed before.

And that pretty much jives with something else…

3.  Other revenues were down in 2009, too:  Marshall put some numbers on the table in January and February during a series of speeches across the province.

• Personal income tax revenue for 2009 should come in somewhere around $800 million. That’s above forecast but remember that they lowballed the figures.
• Sales tax should be about $600 million.  That’s way off the forecast of $728 million.
• Mineral tax and royalties should be somewhere around $184 million.  Again that’s a wee bit above the forecast of $171.6 million

4.  Check the deficit forecast (cash) for 2010 and beyond it.  Revenues aren’t going to climb so the provincial government needs to lay out a plan on how to bring the books back into balance.  Deficit budgetting is what got us into a financial mess over the course of decades.  if the current administration doesn’t have a plan to balance the books sooner rather than later than we’d all better start wondering.

Former Bank of Canada governor David Dodge pointed out over the weekend that Canadians can expect health care costs to outstrip revenue growth by about 1.5% in the decade ahead. That’s just one aspect of the demographic challenge our province is facing but it is a very significant one.  The problem can’t be made to disappear with magical thinking or the cavalier dismissal that balanced budgets are just numbers on a page.

5.  We’ve been living in a fiscal house of cards and the house is collapsing. Take a look at the growth in interim supply spending since 2004, shown above in thousands of millions of dollars.   In six years, the interim supply spending has pretty much doubled;  it’s gone from 1.2 billion to 2.3 billion.

In four of the past six years, the leaps have been double-digits;  from 10.2% in 2007 to 17.5% in 2009.  This year it is seven percent above the year before.  The average increase in spending is 10.8%.  At that rate, the provincial budget in 2014 would be about $10.5 billion.

Just remember, though, that as Tom Marshall noted, oil production won’t be what it has been for the past two years.  Oil prices won’t be skyrocketing either and as such, provincial government revenues won’t be growing at the rate of 11% per year or better.

If provincial government spending continues to grow as it has since 2004, it won’t be very long before this province is in the same state it was during the late 1980s.

 

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PIFO

If the supporters of the administration believe that something has been done for entirely partisan reasons (let alone that such partisan decisions are justified), then it seems rather …pointless…ermmm…silly…to argue that a decision taken wholely, solely and totally by politicians was somehow not a political decision.

It would seem to be a penetrating insight into the friggin’ obvious.

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Dipperdoom

Dipper Dale’s Dead.

Again.

Well, at least his online presence Tickling Bight has gone the way of Brigadoon, back into the mists of the Internet moors.

Yep.

He’s hydroqueened for the second time in about a month.

No explanation.

Just poof and the blindly partisan  - and sometimes downright bizarre - rantings are gone.

Now maybe like Sue  - or the fictitious Scottish village Brigadoon -  the whole thing will pop back, just like the last time your humble e-scribbler noted it had up and run off without so much as a tip of the hat or a goodbye.

She’s gone, b’ys, she’s gone Update:  It’s been a week.  Looks like Dale the Dipper’s propaganda space is gone for good. [31 March 2010]

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Wanted: adults

Former Bank of Canada David Dodge laid it out in stark terms for anyone who wants to listen.

“It” is the challenge facing all Canadians of continuing to provide public services like health care in the face of shifts in the workforce among other things.

But the hard choices for any prime minister go beyond energy. Former Bank of Canada governor David Dodge spelled it out in bleak terms, saying Canadians need to have the courage to engage in an "adult conversation" about what governments can afford at a time of a shrinking workforce, ageing population and slowing economy.

"We kind of are wishing the problem away by assuming that we can curtail expenditures without curtailing the real services that governments are providing to you and me as citizens," he said after addressing 250 convention attendees.

Adult conversation has been missing from what public discussion there has been of major issues in this province for the past seven years.  Around these parts, the challenge of having a substantive discussion is greater given the prevalence of magical thinking throughout society.  Magical thinking in this case would be any suggestion that there are no problems at all or that they will be easily solved.

Let’s see if there is continued magical thinking in Monday’s budget.  Bet the farm on a “yes” and you won’t make much:  everyone who has been paying attention is expecting just that.

They likely won’t be disappointed.

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From the safety of the ivory tower

Some professors at the University of Regina don’t like a scholarship for the children of Canadian soldiers killed in Afghanistan.

They argue it “glorifies imperialism” and:

“It conflates heroism with the death of individuals who are in the military service and we think that the death of individuals is always a tragic matter, but we think that heroism is something different,”

Lots of people conflate lots of things but in this case one is tempted to suggest that the learned ones at Regina U have conflated their thoughts with anything approaching reason.

But in light of these thoughts offered from the prairies, one wonders what the view is at the administrative level at a university that is part of the scholarship program, a university built as a lasting memorial to men who gave their lives in military and naval service.

Noreen Golfman, Memorial University’s managerially-challenged grad studies dean, wrote a piece for the now defunct Independent back in  January 2007 in which she vented her frustration over the prevalence of images from the war in Afghanistan during the holiday season:

Every time you opened a newspaper or listened to the news, especially on the CBC, you were compelled to reach for the box of tissues. If it wasn’t a story about some poor sod’s legs being blown off then it was an extended interview with some dead soldier’s parents. Indulging in another bite of dark chocolate was meant to be more painful this year. Here, have a plate of guilt with your second helping, my dear, and pass the self-reproach.

Golfman also lamented the lack of protest in her typically insightful way:

What in the world is going on? Where are the protest songs of yesteryear? I guess, when General Rick “MUN graduate” Hillier invites you to come along and share the joy ride you have to join up faster than you can say “Bob Hope is dead.” Reading Mercer’s widely circulated piece on the joys of serving gravy to the grateful Canadian boys was almost as painful as watching Peter MacKay flirt with Condoleezza “Condee” Rice.

One wonders if then Professor Golfman, now Dean Golfman, still holds the same miserable opinion of the men and women who served in Afghanistan.  Some of them might be graduates of Memorial or, mercy sakes, might even be graduate students there.

Does she share the  views of academics at Regina? Did she offer her opinion of the Project Hero scholarship before memorial endorsed it?

Perhaps she might be moved to offer a comment if she has the time, that is, coping with the financial mess in the grad studies school.

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Related:  Rick Mercer’s answer to Golfman.

Jacks and the Auditor General

What is it about Dipper leaders named Jack and their problems with having the Auditor General check over their expense claims?

Here’s Jack Layton using a worn out excuse that hasn’t been tried since well before the spending scandals in legislatures in St. John’s, Halifax and among Jack’s political brethren in Westminister:

"Well, those are already audited, so I don’t know why wasting money on a second audit of something that has already been audited would make sense," he said.

Yep and there were audits in the House of Assembly too during the peak of the spending scandal.  Layton should ask his defence critic Jack Harris who, as it turns out, is the former leader of the New Democrats in Newfoundland and Labrador. Here’s what he had to say in voting for a government bill that proved to be a key foundation stone for the spending scandal:

Similarly, we have a new provision which requires an annual audit of the accounts of the House of Assembly which I think is appropriate; that there be accountability through an annual audit.

That proved to be so incredibly effective, as a subsequent review by an Auditor General revealed. Heck, Jack Harris’ old bench mate wound up going to jail for his part in the whole business.

The days of the kind of unaccountable political privilege the two Jacks  and the rest of the Ottawa Dippers are clinging to is long over.

A little sunshine in dark corners goes a long way to killing off any untoward activity that is taking place, the glare of public scrutiny also helps to keep it from taking root.

Imagine what might have been prevented if political donations were scrutinised more closely.

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