Deficit *is* higher than previously announced #nlpoli

The House of Assembly will have to deliver a budget that keeps access to new public debt for the foreseeable future. The politicians must satisfy the bond-rating agencies, not the voters. 

Parties don't matter.  Ideologies don't matter.  Voters don't matter.  

That is the essence of politics in Newfoundland and Labrador in the early 21st century.

Anyone who knows Dwight Ball knows that he does not make simple mistakes with numbers.

Yet, the official explanation is that he made a simple mistake with numbers on Sunday's Issues and Answers when he said the deficit for the current year is between $800 and $900 million dollars. SRBP pointed out his comments on Tuesday.

As NTV's Michael Connors reported first via Twitter and later on the NTV Evening News,  Premier's Office and finance department officials claim that the Premier's comments "were actually looking ahead to 2020-21, which has a projected deficit of $796 million."  The deficit projection for 2019 remains at $577 million, according to officials.

The 2005 and 2019 Federal-Provincial Agreements #nlpoli

The Atlantic Accord functions in Newfoundland and Labrador politics in two ways.  There is the agreement between the Government of Canada and the provincial government that established the joint management framework for the Newfoundland and Labrador offshore. At the same time, there is the political prop and the associated mythology that has, in largest measure, replaced the actual agreement in both the popular and political/bureaucratic understanding of it.

Neither the 2005 nor 2019 federal-provincial agreements commonly referred to as the Atlantic Accord or revised Atlantic Accord had anything to do with development and management of the oil and gas resources offshore Newfoundland and Labrador. Neither changed the 1985 agreement directly or indirectly.

The widely-held belief is completely different. The popular misconception comes from the fact that in both cases, the premiers faced with financial difficulties linked their demands for money from Ottawa to the Atlantic Accord. In both cases, the issues were about something else.  In 2005, the discussion was actually about Equalization. It 2019, the final agreement was about financial assistance for the provincial government about its own financial difficulties and to deal with the troubled Muskrat Falls project.   

The Newfie Thing #nlpoli

Facebook has become hugely popular in Newfoundland and Labrador and, not surprisingly, some creative and enterprising fellow came up with a running joke - these days called a meme - featuring a fellow in a sou'wester.

You will find it called "newfie word of the day". The text that goes with the picture involves a joke based on some mispronunciation of a standard English word or phrase and out of that comes some sort of joke.

The one above is an example.  There are dozens more.  The thing is quite popular as you can tell by searching the Internet for "newfie word of the day".

Memorial University's political scientist slash sociologist Jamie Baker has discovered that the guy in the picture isn't a Newfoundlander.  He's actually Czech.  The picture came from a post on a Northern Peninsula blog by cabinet minister Christopher Mitchelmore.  It's about a Screech-in ceremony in the Czech republic that Mitchelmore ran during a visit there on one of his numerous globe-trotting ventures.

Baker posted the link on Facebook and asked folks to give them their thoughts. Feel free to do so by sending him an email:  jbaker at mun dot ca.  Baker's also written about about nationalism and racism, if this interests you. He got some notoriety last week not for this "newfie" meme story but for one on a paper he wrote about young people's attitudes to the word "newfie." He interviewed 30 university students and found that among the young people, the word is either an insult or no big thing.  You can find a CBC story about it, one from Radio Canada, and one from NTV.

The Narrative War (2015) #nlpoli

The day after a massive Liberal victory in the general election,  CBC’s David Cochrane posted an analysis piece on the new administration.  CBC distributed it nationally.

Cochrane described Dwight Ball as a man “unlikely” to be Premier:

Four campaigns. Two losses. Two wins.  By a combined 75 votes.

Cochrane’s account leaves out relevant context.  When it comes to describing how the Liberals won,  Cochrane focuses not on anything the Liberals did but rather a string of Tory blunders that  - according to Cochrane  - made it easy for the Liberals to win the election essentially by accident.

And now, as Cochrane’s story goes, Ball The Unlikely will have to face enormous financial problems using a plan that Cochrane claims “was greeted with enormous scepticism in the final week of the campaign.”

In the supper hours news, Cochrane then reported on information leaked to him by someone with access to highly confidential government  information.  Their purpose  - quite obviously – was to maximise the the damage to the new administration before it even had a chance to take office.  The information fit quite neatly with Cochrane’s ongoing narrative and so, he naturally, had no hesitation in using it. 

The Tibb's Eve Accord #nlpoli

Health minister John Haggie said that the health deal signed with Ottawa on Tibb's Eve was the best deal that could be got.

Haggie's probably right.  At least, the deal contains a clause that if another province gets a better deal, we can opt for that one instead.

It's been so very long since we've seen federal-provincial rackets over money that most people in Canada seem to have forgotten what they look like.  Stephen Harper didn't run federal-provincial fiscal relations like other prime ministers so the provinces stopped squabbling publicly.  Even Paul Martin was basically about handing out cash so, aside from premiers who postured entirely for the show of it, there was never really much of the sort of disagreement and negotiation that Des Sullivan reminded us all about on Monday past.

From a decade of prosperity to $2 billion deficits: What happened?

By Roger Grimes

Reflecting upon becoming the eighth Premier of Newfoundland and Labrador 15 years ago this month, I found myself chatting with a few friends and associates about where the province found itself fiscally at that time, what happened during the next decade, and where we find ourselves today.

During my tenure as Premier, we were a persistent “have not” province with a deficit problem of roughly ten percent. We ran annual deficits of roughly $500 million on a total budget of $4.5 billion. Now, after a decade of unparalleled prosperity and “have” status within the Equalization system, we find ourselves with a twenty-five percent deficit problem comprised of a $2 billion deficit on an $8 billion total annual budget.

Let's hear it for the Fraser Institute geniuses #nlpoli

A year after Kathy Dunderdale left office, the Fraser Institute said she was one of the best fiscal managers of all the Premiers in Canada.

Provincial Conservatives repeated the story anywhere and everywhere they could, just as they had done the other time the Fraser Institute said Kathy was a financial genius.

Sound fiscal management was a big thing for the crowd that just finished up their latest term running the place.  Danny Williams listed “sound fiscal management” as one of his big promises when he announced his first cabinet.

In his first budget speech,  Conservative finance minister Loyola Sullivan reminded everyone of the promises he and his colleagues made in the 2003 election.

Prior to and during the election, we outlined a number of commitments to the people of Newfoundland and Labrador. I would like to focus today on three major commitments: 

First, to balance the Budget on a cash basis in four years and restore sound fiscal management; 

Second, to expand the economy and create jobs; and 

Third, to ensure that our health and education systems meet the needs of Newfoundlanders and Labradorians and are sustainable into the future.

In hindsight, it all looks like some kind of sick joke.  And it would be finny too if we all weren’t the ones living through the awful truth of just how badly wrong the Fraser Institute and all the rest of them were.

The Bridge to Ottawa #nlpoli

Premier Dwight Ball said everything is on the table to deal with the massive financial problem facing his administration.

And then, in a string of year-end interviews,  Ball immediately took everything off the table.

No cuts to spending as that would slow the economy.  Ditto for tax increases.  Even “efficiency” went out as Ball told the Telegram’s James McLeod that you couldn’t deliver existing services without the existing staffing levels.

Ball told NTV’s Mike Connors that we “need to find a way to bridge us [from] where we are currently until the commodities rebound and be [sic] the significant contributor we need them to be."

The bridge Ball wants to take is a familiar one.  According to McLeod, Ball is “ counting on infrastructure money from the federal government to help out some, and he’s also taking a close look at the equalization formula, to see if the province can wring any more money out of Ottawa.”

What are Ball’s options in Ottawa?

Consistency #nlpoli

"We need to find a way to bridge us [from] where we are currently until the commodities rebound and be [sic] the significant contributor we need them to be." That’s what Premier Dwight Ball told NTV’s Mike Connors in an interview that will air in full this coming Sunday.

The words are very familiar. 

We heard them just a few short months ago.

"I have laid out a five year plan,” Conservative finance minister Ross Wiseman told the House of Assembly last spring, “to bridge the commodity revenue dip and get us back to surplus, step by responsible step." 

The Narrative War #nlpoli

The day after a massive Liberal victory in the general election,  CBC’s David Cochrane posted an analysis piece on the new administration.  CBC distributed it nationally.

Cochrane described Dwight Ball as a man “unlikely” to be Premier:

Four campaigns. Two losses. Two wins.  By a combined 75 votes.

Cochrane’s account leaves out relevant context.  When it comes to describing how the Liberals won,  Cochrane focuses not on anything the Liberals did but rather a string of Tory blunders that  - according to Cochrane  - made it easy for the Liberals to win the election essentially by accident.

And now, as Cochrane’s story goes, Ball The Unlikely will have to face enormous financial problems using a plan that Cochrane claims “was greeted with enormous skepticism in the final week of the campaign.”

The ABCs of ABC #nlpoli

 

In 2004, Danny Williams fought for three months against a federal government decision that had been settled – at least for the federal government – earlier in the year as part of the usual budget cycle.

Williams got the money the federal government had allocated but won the domestic war for public opinion.

In 2007,  Williams and his provincial Conservatives launched a second political holy war against the federal government’s budget decisions.  Williams waged a much longer war,  lost it, but was widely credited at home with a victory.

There were other similarities

The uncivil Civil War #nlpoli

At the heart of the ongoing civil war between Danny Williams’ provincial Conservatives and Stephen Harper’s federal Conservatives is the claim by Williams that Harper broke his 2006 election promise on Equalization.

Williams wrote to each of the federal party leaders and asked the leaders to state their party’s position on Equalization.

Mr. Williams Goes to Hell #nlpoli

The story of the 2004 war with Ottawa is the story of disconnects,  mismatches, incongruities, of things that just didn't add up.

October 2004 is a good example.  In the middle of the month,  Loyola Sullivan,   the provincial lead negotiator, went to Ottawa for a meeting with federal finance minister, Ralph Goodale.  he headed the negotiations for the federal government in the effort to find a draft agreement.

Sullivan told reporters the chances of a deal looked good.  The two governments were talking about something that would last eight years and bring the provincial government between $1.4 and $2.0 billion depending on the price of oil.

At exactly the same time, Premier Danny Williams was telling reporters the provincial position had not changed.  "There are no movements from the government of Newfoundland and Labrador,”  Williams told Rob Antle of the Telegram on October 16.  “There's no doubt about.that. We have no intention of moving.”

From agreement to disagreement #nlpoli

On June 4, 2004, Danny Williams delivered a keynote speech to delegates at the oil and gas conference organized annual by the association that represented offshore service and supply companies.

“Newfoundlanders and Labradorians should not support any candidate or any party in the upcoming federal election” he said, “that does not clearly and unequivocally provide us with a commitment to keep 100 per cent of our provincial revenues under the Atlantic Accord.”

The day after Williams’ speech, Martin was in St. John’s as part of his election tour of Eastern Canada. Martin told the CBC that in an early morning conversation with Williams, “I have made it very clear that the proposal that he has put forth is a proposal that we accept."

Lions or jellyfish: a review

Historian Ray Blake’s new book  Lions or jellyfish:  Newfoundland  - Ottawa relations since 1957 is likely to be be on many reading lists. 

It should be.

Blake examines:

• the Term 29 dispute,
• hydro-electric development in Labrador between 1960 and 1970,
• resettlement,
• offshore oil and gas ownership,
• Meech Lake,
• the 'Williams’ “fair share” argument.

Resettlement gets two chapters, one before 1965 and one for the period afterward.  Likewise, offshore oil and gas gets two chapters, the second focussing on the period between 1979 and 1985.

Blake examines the relationship between the province and the federal government in the context of Canadian federalism and, specifically, through the lens of executive federalism.  That is, he frames the discussion as one focussed primarily on the relationship between the individual first ministers. There are sound reasons for doing this. Blake describes his reasons for doing so and puts the book in a general theoretical framework in a crisply written introduction.

Conservatives stay the debt-building course #nlpoli

Budget 2015 offered absolutely no surprises.

On major areas the Conservatives continued their policy of spending more than the provincial treasury can afford.  That’s been their trade-mark since 2003 and it became etched in stone in 2009.

As SRBP forecast a couple of weeks ago, the Conservatives raised a modest amount of money through a two percent hike in the provincial sales tax and a variety of small fees.  They added some new tax brackets at the upper end of the income scale.  The small twist in that one came from the actual release of the proposal by Memorial University’s economics department.  They recommend an improved rebate scheme to transfer the additional tax revenue to lower income residents.

Other than that, the Conservatives borrowed heavily. The deficit is a record for any government since Confederation. Your humble e-scribbler knew it would be bad.  It was worse than imagined.  That’s because – contrary to the forecast – they didn’t reduce capital works spending.

Lots of people are focused on the tax increases.  They amount to slightly more than than 10% of the total deficit. In the bigger scheme of things it is nothing.  It is just laughable for anyone to call this budget “tough”. 


Let’s look at some specific points.

Bond Raters and other things to wonders about #nlpoli

Cast your mind back a couple of years and you will probably remember finance minister Jerome Kennedy told us a couple of things.

One was that he expected the government would run deficits for three years, totalling about $1.6 billion.

The other was that surplus would follow after that.

Well, here we are three years later and the latest finance minister – we’ve had four in three years – is now saying we can expect to see another  five years of deficits before maybe, possibly, getting the budget into surplus in Year Six ALE. 

That’s ALE as in “after the latest estimate.”

Better more, and better #nlpoli

The provincial government has a very serious financial problem. 

The forecast deficit for the current year is the second highest on record at $916 million. 

No one knows how big the deficit will be next year,  but with oil prices forecast to stay in their current range for the next couple of years,  odds are very good that the provincial government will turn in a record deficit next year.

That is saying something.  The forecast in 2004,  the first year the Conservatives took office, was for a deficit of $840 million.  Finance minister Loyola Sullivan called it “the largest deficit in our province’s history.”  He was a wee bit off.  The actual accrual deficit in 2003 was $958 million.

Rational. Disciplined. Principled. #nlpoli

Back at the start of the current Conservative administration in 2003, they were very sharply aware of the problem with using one-time revenues for day-to-day spending.

They were so concerned about using that one-time money that they tried to get the federal government to do the impossible, namely give the provincial government here a permanent handout equal to oil revenues, in addition to the oil revenues that the provincial government collected.

Then they tried to get the federal government to exclude those one-time revenues from the Equalization formula so the provincial government could get the oil money and the hand-out at the same time. That didn’t work either.

The one thing the Conservatives didn’t do – for all their rhetoric about independence – was to act like a responsible, independent government.  They didn’t manage public finances for the long haul.

The Federal Boogeyman #nlpoli

The Liberals kept poking at Premier Paul Davis in the House of Assembly on Wednesday about the European free trade deal announced last year.

Specifically, Liberal leader Dwight Ball asked Davis for the second day in a row about a joint federal-provincial fund under the deal that would see the federal government spend $280 million and the provincial government drop in $120 million on something to do with fisheries.  We say “something to do with fisheries” because there really hasn’t been much substance to go with the announcement in the year since the provincial government announced the thing.

Tuesday’s questions led to Davis admitting there was some kind of unspecified problem with the talks.  As the Telegram reported,  Davis told reporters outside the House that he “wouldn’t say [the funding deal was] falling apart, but having not been able to reach a finalized agreement yet is troubling.”