Significant Digits – oil production

In 2009, the Canadian Association of Petroleum Producers forecast a steady decline in local oil production. 

The decline is forecast to end around 2017 as new production from Hebron comes on stream, but the increased production only lasts for a couple of years before the decline sets in again

The peak once Hebron comes on stream is forecast to be about the same level as the forecast shows for 2012.  That’s slightly above 80 million barrels.

 

But hang on a sec.

Production for the current year – 2010 – is forecast by government officials at 86 million barrels.

Yessirree, that’s right.  And production last year was 97 million barrels, again a figure CAPP had down for 2011.

In other words, the decline is about two years ahead of forecast. We also know that Hebron is behind schedule as well.  How much behind schedule isn’t clear but it could be as much as a year later than the optimistic projections when the deal was announced or when it was re-announced.

So that period in the low-production trough could well be longer than CAPP’s forecast shows and the rise back up after Hebron could be much slighter.

In other words, when finance minister Tom Marshall admits that oil production is on the down-slide, he’s acknowledging that he already knows exactly what the implications are from that CAPP graph.

Let’s put it this way:  this year, if oil averages around $83 a barrel as the provincial government believes, the total value of oil production offshore will be about $7.1 billion ($83 X 86 million)

In order for the provincial treasury to bring in the same royalty as it forecasts for this year - $2.1 billion – with production at 40 million barrels (i.e. the bottom of the trough) – oil would have to average $178 dollars per barrel in that year.

No sweat, says you, oil got to $147 a couple of years ago.

Yes it did, sez your humble e-scribbler.  And look what happened right afterward.  Oil didn’t average that price:  it hit the number and then fell off quickly.

If that isn’t enough for you, consider that oil prices averaging $178 a barrel would be more than double the average price ($83) the provincial government forecast for oil this year.

So in order for the provincial government to do exactly what they are doing in 2010 in that mythical year we will call 2014 (remember everything is two years ahead of schedule) oil would have to be almost $180 a barrel all year.

For those keeping track, and just to show you how soon this is, just bear in mind that 2014 is one year beyond the period of continuing deficits forecast in the spring provincial government budget.

And just remember, as well, that this year the budget is forecast to be short by almost a billion dollars of cash.

Not only is there not enough of a cash reserve to cover that sort of a shortfall in 2014, there wouldn’t be enough cash in any secret government pockets to handle a deficit half that big.

And that’s without thinking of what tremendous pressures there’d be for higher wages and higher costs and higher priced everything else in a world where the price of oil doubled in a mere four years. 

Yes, gentle reader, that little scenario assumed spending stayed where it is predicted to be in 2010.  But as we all know, if oil prices were to shoot up that way, spending would have to go up just as radically.  The only problem is that spending would shoot up but – as we know – the major source of provincial government revenue would only come in at the level for 2010.

When oil was forecast to be half the price.

Increase your spending dramatically while holding your revenue about the same.

That’s the definition of “unsustainable”.

-srbp-

The burst bubble

Only a few short weeks ago, Premier Danny Williams was claiming that Newfoundland and Labrador would be largely immune from the global economic crisis because it was protected by some sort of magical fiscal bubble.

On Thursday, Williams acknowledged that the bubble burst:

"But going out next year [2009] and the years forward … once you get into the $60 range, then you are starting to look at deficit situations."

Of course to anyone paying attention, Williams' magical bubble claim was preposterous:

1. The provincial government knew for some time  - pre-dating the October 2003 general election - that oil production would decline this year and every year from here onward.
2. The Auditor General, among others, has warned as recently as this past spring that massive increases in public spending since 2005 built on highly volatile  - and hence unreliable - commodity prices were unsustainable in the long run.
3. In October, Dominion Bond Rating Service changed the trending on the provincial government's finances from positive to stable with a cautionary note in its detailed analysis about the heavy dependence on volatile commodity prices.
4. Historic trending, coupled with an analysis of the causes of high oil prices in recent years, strongly suggested a correction would occur.  it was only a question of when the correction would occur.

New wells at White Rose and Hibernia will not restore oil output to the peak level, no matter what the price.  Rather it merely slows the rate of decline.

Hebron is not around the corner.  Even if it is sanctioned within the next twelve months, Hebron will not come on stream until sometime after 2018.  At that point, it will merely replace White Rose, Terra Nova and Hibernia which by that time will have ceased production or be on the verge of being tapped out.  One field cannot replace three.

Of course, we are already looking at deficits on a cash basis.  Bond Papers readers have known that for months.  There have been a series of posts highlighting economic forecasts of extremely poor growth in gross domestic product, forecasts that have only forecast even further shrinkage in the economy. 

On top of that, however, several specific posts addressed in detail the factors contributing to the current and future economic problems to be faced:

• On 27 October, a post described exactly the scenario the Premier confirmed on Thursday. In fact, that post underestimated the scope of the problem by assuming a much higher premium for oil sold in American dollars and then converted to Canadian dollars on a 30% premium.  The Canadian dollar has been trading at a 20% and Brent crude is trading - as of this writing - at around US$51 to $52.  That would translate to about $700 million less in oil revenue next year than this year.  This year's budget already projected a cash deficit of $414 million on current and capital account.
• A 12 March post titled "We live in a fiscal house of cards" describes the massive spending increases over the past four.
• A 21 March post titled "What goes up must come down" described the shaky foundation on which the spending was built.
• A 25 March post titled "Hebron and old people" highlighted two fiscal challenges well known to the provincial government that would boost spending at the very time that - even without a massive economic downturn - would strain the treasury.  One - the impact of demographics - has been known for decades and is unavoidable.  The other - debt for oil projects - was discretionary.

That last one is only one major item which will add to the provincial government's financial burden.  The money needed for the 5% shares of Hebron and White Rose, and possibly for a 10% share of Hibernia South will have to be borrowed, either from lenders or from the other partners.  That debt is not optional any more and in the case of Hebron, there will be no revenue for at least a decade from that project which would make the debt self-sustaining.

Any cuts to government spending in the coming months and years will further tighten the local economy and consumer spending.  The St. John's housing market, for example, is enjoying a boom built almost entirely on public spending.  Some have credited projects like Hebron but since that project doesn't exist yet, it's hard for it to generate anything but marginal economic activity. 

Nor has the St. John's market, for example, been buoyed by remittance workers.  Some of the boom can be traced to that source but the major beneficiaries of migrant labour revenue have been in areas like Stephenville or the Great Northern Peninsula.  St. John's remains a company town and the company is the provincial government.  Hack its spending, either in salaries, programs or capital works and you hack into the local service and retail sectors. Hack into those sectors and consumer spending, another staple of government revenue, will decline as well.

Nor can the provincial government look to other construction projects to boost the economy.  NLRC's refinery is dead.  The gas facility is rumoured to be still on track but until sod is broken, it remains nothing more than speculation.  Harvest Energy's expansion at Come by Chance has been shelved. The Lower Churchill project is also more talk than reality.

More than anything, the looming provincial government financial mess should put paid to the fairy tale that the current administration practices anything looking like prudent fiscal management.  To the contrary, it has shown repeatedly that there is little if any strategic planning to its spending beyond the need to present the best face to the polls or to have spending match income.

The current administration ignored any criticisms of its approach and specifically.  It emphatically rejected constructive alternatives to its spend-happy approach such as creating an investment fund from some non-renewable resource revenues. 

A former finance minister once forecast annual deficits of a half billion dollars a year. His successor borrowed $1.0 billion to fund public sector pensions.  The Premier himself committed to meet any future deficits with increased public debt.

By all appearances, he will get his wish.

The people of Newfoundland and Labrador will get the bill.

It didn't have to be this way.

-srbp-

Strategic Social Plan (1995) – Social Profile

This Province's unique advantage is the strength of character, resilience, ingenuity and enterprise of its people. In the past 50 years, the people of Newfoundland and Labrador have experienced a political, cultural, economic, and social revolution.

People who have not yet reached retirement age have lived through, and coped with, the events of World War II and the impact of the establishment and subsequent decline of American and Canadian military bases; the dawn of the nuclear age; the change of political status from a British dominion to a province of Canada; the surge toward industrial development, inflow of national and multinational companies, globalization of trade, decline of traditional resource industries and shift to new-economy enterprises; the disappearance of hundreds of small rural communities; the victory over tuberculosis, and the threat of AIDS; progress in achieving women's rights and equality of opportunity and the emergence of women as a force for social change, economic renewal, and expansion of the labour market; changes in traditional family structures; the establishment of social safety nets such as unemployment insurance, social security programs, and universal health care; chronic unemployment, the loss of career security and the increase in public awareness of, and concern for, the environment.

The pace of change has been challenging for North America generally, but it has been more dramatic in Newfoundland and Labrador because of the relatively sheltered existence and relaxed lifestyle which we enjoyed before the flood of highways, radio and television, fast-food and retail chains, and computers. Other people in cities and towns across Canada and the United States have not had to make such a quantum leap economically and culturally in the past half-century.  It is a long way indeed from pondering the literary delights of The Royal Readers to indulging in nightly armchair visits to the televised violence in the streets of downtown Detroit.

Economists and historians talk of the three great revolutions which have shaped civilization: the agrarian (natural resource), industrial, and information ages. Many Newfoundlanders and Labradorians have experienced all three eras in the condensed time frame of the past five decades.

We have not only withstood such immense culture shock, but we have profited by it. This Province's unique advantage is the strength of character, resilience, ingenuity and enterprise of its people which has endured and intensified through 500 years of colourful, often chaotic, and always challenge-filled history. We have a tradition of turning constraints into opportunities, adversity into achievement, and despair into hope. It is this legacy of self-reliant determination and creativity that has sustained Newfoundland and Labrador through recession, fiscal restraint and the loss of its basic resource industry, and is building an economy that will be stronger and more diversified in the global market-place. It is also the force which must be brought to bear upon the challenge of effectively addressing social changes and issues of the late 1990s, identifying future trends and planning appropriate long-term strategy and allocating available financial resources in a manner that supports the goals and objectives.

In this respect, the Province's social ing efforts are constrained by national fiscal  realities. Social reform in Canada today is characterized by reductions in Unemployment Insurance benefits, limita­tions on the Canada Assistance Plan, re-evaluation of health care, less federal assistance for education and training, and a move toward block funding for overall provincial social programs.  Untenable and unsustainable national and provincial debt loads and lower transfer payments combine to further restrict the ability of Newfoundland and Labrador to address pressing social issues. The comparative national and provincial fiscal resources are shown in Figure 3.

The message is clear:  we have to find ways and means to spend smarter; in other words to do more with less.  It is a daunting challenge.

In order to accomplish this task, we must first consider realistically where we are and where we are heading as a province.  We cannot address 21st century problems with 20th century (or in some cases 19th century) approaches, solutions, or attitudes.

Although sectoral issues and trends will be dealt with in greater detail in succeeding chapters of this Consultation Paper, certain elements of our Provincial social profile are highlighted in this section in order to put the planning exercise in perspective and to provide the basis for determining an overall social vision, appropriate guiding principles, and attainable goals and objectives.

-srbp-

Next:  Demographic Change and Challenge

Serendipity do dah #nlpoli

Some people on da Twitter were talking about verbal tics like saying “ya know.”

One of ‘em asks if the other had counted Danny Williams’ penchant for them.

Yes, butts in yer humble e-scribbler who was not part of the original discussion:  Cameron inquiry.  270 in a four hour stint, plus eight “quite frankly”s. If anyone on the Internet had that kind of obscure information, it would be The Scribbler or labradore.

Ya knows, right?

So then, you know your humble e-scribbler had to check the record by searching on SRBP for all appearances of the phrase “verbal tic”  and the plural.

Pension deal = good news #nlpoli

Three things:

1.  The agreement to deal with the unfunded pension liability is a good thing for workers and for taxpayers.  It deals with a substantial financial problem, which is the bonus for taxpayers, while preserving defined benefit pension plans for workers, which is the big win for them.  The costs are relatively modest in terms of increased premiums, averaging, and early retirement age.

2.  This is only part of the province’s financial problem.  It’s the easiest one to deal with.  The others – Muskrat Falls and the embedded unsustainable overspending – are much larger financially and it will fall to the next administration after the Conservatives will have to deal with.  Coming to grips with them won’t be easy by any means.

At least Tom Marshall took care of the problem he created.  In an interview with CBC on Tuesday,  Marshall tried to blame others for the problem and claim credit for fixing it for himself,  but as with pretty much everything a provincial Conservative politician says,  nothing could be further from the truth. 

Efforts to deal with the unfunded liability started in 1997.  A decade later,  the problem with less than half the size it is today.  Instead of dealing with it then, Marshall began the program of fiscal mismanagement that ballooned the unfunded pension liability and added all the other financial mess that we’ll be cleaning up for decades to come.

3.  The St. John’s Board of Trade,  the Canadian Federation of Independent Business, and other similar lobby groups should be ashamed for providing false information to the public while pretending it was truthful and unbiased. Even in an election year, some politician would be doing a public service by issuing an appropriate tongue-lashing to the crop of bullshit-mongers running those two groups.  The Board of Trade in particular has a lot to answer for.  They have screwed taxpayers twice;  first by being party to the Muskrat Falls mess and then by attacking public sector workers with falsehoods.

-srbp-

Up the harbour and down the shore... once more #nlpoli

Here's another one that started life as a column at the old Independent. 

And, as with "The politics of history" it can serve as a reminder of just how little has changed in local politics over a very long time.

In this case, it shows how little has changed in a very short time.

As it turned out, Danny Williams and his colleagues didn't create private sector jobs.  They created public sector ones that they knew were unsustainable. 

The Stacked House Filibuster #nlpoli

Democracy is a beautiful thing. 

The people of Newfoundland and Labrador are witnessing its full beauty in the filibuster against the Conservative government’s latest assault on openness, transparency and accountability. 

Fragile Economy – The Public Sector

Last week, labradore comments on the size of the provincial labour force occupied by the provincial government public sector.  He capped it off with a chart (below) showing a comparison for all 10 provinces over the past decade.

All this brings home one of the points made here earlier this year in a series of posts on the increasingly fragile state of the provincial economy. More the provincial economy is dependent on trade with a single market, namely the United States.  There are fewer private sector industries driving the economy and, at the same time, provincial government spending has assumed an increasingly large role in the economy as a whole.

If you extend the picture back over the three decades for which data is available, you can see both the persistent over-reliance in Newfoundland and Labrador on public sector labour compared to the situation in other provinces as well as the increase in the public sector labour force over the past three years.

These charts go a long way to demonstrating the extent to which popular perceptions of local prosperity  are entirely wrong.  Whatever is going on locally is most certainly not the result of private sector economic development.

Rather there are more public servants making more money, 20% more, in fact over the most recent four year contract.  Couple this with the dramatic increase in overall provincial government spending – upwards of 60% in four years – and the picture is unmistakeable.

Those who want to talk about prosperity in the province or those who want to celebrate the province’s “have” status would do well to look at the three provinces with the smallest proportion of their labour forces working for the provincial government.  It is no coincidence that those provinces with the strongest economies are also ones in which the public sector labour force is a relatively small proportion of the overall working population.

That doesn’t mean that public servants and public services are unimportant.  Rather, the situation in Newfoundland and Labrador demonstrates the extent to which successive provincial governments in Newfoundland and Labrador – but most particularly the current one – have failed to create the climate in the province for sustainable economic development let alone diversification of the local economy.

What makes the current administration stand out, though, is that increasing the role of the public sector in the economy, whether through NALCOR or through admittedly unsustainable growth in public spending, is openly stated as the goal.

The fact that observers outside the provincial government have repeatedly failed to notice that this is occurring is another matter.  No surprise, though, that if they cannot even correctly identify the trend to growing fragility, they may not pay any attention at all to the very serious implications from policies that promote the hollowing out of the province’s economic underpinnings.

- srbp -

Damn the finances! Full spend ahead! #nlpoli

We don’t know precisely what economist Wade “the Can-Opener”  Locke is doing to earn his loonie from the Newfoundland and Labrador taxpayers.

Finance minister Jerome Kennedy hired him this year to give advice on how to manage the province’s financial mess.  According to the Telegram his contract caps of his pay at $75,000 for a couple of months work.  Locke says regardless he’ll only bill a dollar.  That’s decent of him given that the university is giving him 80% of so of his usual paycheque now that he is on paid research leave from his usual job.

Locke has given the provincial government advice before on everything from Equalization to the annual budget to Muskrat Falls.  We don’t know what, if anything, he got paid for those other stints, but that’s really neither here nor there.  The thing is that Locke is closely tied to the current administration and to what they are doing.

We may not know what else he has been doing the past few weeks but Kennedy released a short memo Locke sent him on March 25, the day before the provincial budget.  It’s a telling little document in many ways.

Kremlinology 7: Desperate in the Straits

Signs that things are not good in some parts of the province for some people:

1.   The Other One Percent:  Danny Williams rockets into Flower’s Cove a few days after advance polls and announces he’s managed to find the last one percent under the cushions of his Avalanche.  Lab and x-ray will stay in Flower’s Cove regardless of who wins the by-election.

2.  How many shifts of position does that make?  It really depends on how many shifts of position you want to count. 

In Flower’s Cove alone, a suggestion last February from the regional health authority to reduce clinic hours in the community as a way – theoretically – to save money was never implemented because cabinet ponied up the cash.

Suddenly and inexplicably that became a decision - by cabinet as it turned out - announced in August to cut operating hours and take out lab and x-ray service.

On top of that there was a review of x-ray and lab services everywhere in the province.

As the by-election started in the Straits and White Bay North, the clinic hours miraculously reappeared.

Then the lab and x-ray cuts became mere possibilities if savings could be found.

Then the review went into the “Doubtful it will be finished” pile.

Then suddenly the Premier was 99% sure the lab and x-ray service could be saved.

But only 99% sure.

And now it’s 100% back.

That’s eight shifts and it doesn’t even begin to count the finance minister flip flops on whether there is cash for everyone or things are tight and previous decisions were unsustainable.

3.  Who actually made the decision?  Paul Oram claimed he made the fateful decision in late August.  No one really contradicted him directly but the Premier said early on that the decision were know before Oram became minister.   Maybe Ross made it. 

After Oram resigned, the Premier told someone on the campaign trail that “Paul Oram had proceeded on the basis of recommendations made to him by the health authority.”  The story was picked up in the local paper.

Now it turns out that isn’t true. 

Well, at least according to Jerome! Kennedy it isn’t true.  In an interview with Here and Now on Thursday, the former finance minister and current health minister Kennedy told Debbie Cooper that the decision to cut lab and x-ray service was not made by Paul Oram but by cabinet.  Paul was just the messenger boy.

That means that Jerome and Danny made the decision  - along with every other cabinet minister in the district St. Anthony is in -  a fact they didn’t disclose as they started campaigning and began switching positions.

4.  Who’s fault is it anyway?  Apparently, Jerome was in a fessing up mood on Thursday.  He told VOCM that this has been a useful exercise for government since it forced government to look at the issues and admit they were wrong.

That’s pretty good for a guy who only a few days ago was admitting to the same  media outlet that he and his cabinet colleagues would be playing the whole issue of lab and x-ray and the by-election by ear and see how it went.

Evidently making it up as you go along isn’t a good strategy after all.

5.  How many ministers can dance on the end of a line?  Pretty well all of them, if the radio call-in shows are any indication.

Shawn Skinner was charming if not a wee bit patronising as he recounted how Trevor Taylor had taught him so much about rural Newfoundland in their discussions around the cabinet table and in caucus.

Best of the bunch?  Kevin O’Brien, the minister of permits and licenses for two reasons. 

First he talked about much money this government had spent in the district and allowed that they wanted to keep doing that.  Sounded a bit like a threat, it did.

Second – and the best bit – was when he stumbled repeatedly trying to remember the name of the district he was in.  Finally O’Brien blurted out something like how great it was to be in the district St. Anthony was in. 

Evidently he wasn’t in the same cabinet meeting as Shawn.

6.  Things are that bad, eh?  During his report on Here and Now, CBC’s David Cochrane referred this evening to senior Conservatives who admitted to him that the race was tight in the Straits.  If the Tories are admitting even that much, along with Danny’s win-or-lose-ya-got-it-back, you can guess the Tory campaign shows the Liberals out in front.

That would also explain the steady barrage of cabinet ministers and Jerome’s repeated admissions of mistakes and errors and acceptance of blame.  Odds are good the Tories are trying everything, including backing as far away as possible from their usual arrogance to try and win over  every vote they can.

-srbp-

Kremlinology 44: the 2009 Rift in Cabinet #nlpoli

Trevor Taylor left politics in 2009 in an unseemly hurry.

One minute he was there. 

Next minute?  Gone from cabinet and the House of Assembly.

Very odd.

Then right on his heels went Paul Oram, who muttered something about unsound financial management by the Conservatives as he ran from the Confederation Building.

A very big clue to what was going on at the time turned up on Tuesday in Trevor Taylor’s column in the Telegram.

Political Fashionistas #nlpoli

Before the year is out, we will have yet another strategy from the provincial government.

We were supposed to have this one on July 1, however like pretty well everything associated with the current crowd running the place, it is a day late.  The minister responsible for the strategy – Fairity O’Brien – says we will now have it some unspecified time in the fall.  That will be after Fairity releases a document that tells us what the government heard during some sort of consultation process that they are almost as fond of as they are of strategy writing.

The thing will likely also be a dollar short, as well, if recent experience is any guide.  You see this “population growth strategy” is actually the second kick at the cat for the provincial government.  Their existing strategies aimed at dealing with some of the factors affecting population were all dismal failures.

“And one fine morning…”, or change versus more of the same #nlpoli

 Wanted: One Saviour  

No experience necessary 

Apply:  Liberal Party of Newfoundland and Labrador

Since Joey died – politically, that is - the Liberal Party has often wandered the political desert of Newfoundland and Labrador.

They are out there again, searching for the a saviour who will - single-handedly and by sheer force of his magical personality - lead them back to the corridors of power just as Joe S did long, long ago.

In another world, Danny Williams would have been the Liberal Jesus-de-jour. 

Would have been, that is, except his Mom wouldn’t let him.

So instead, Danny transformed the provincial Conservatives into a crowd of drooling arse-lickers the likes of which the province hasn’t seen since the 1960s.

Inside the party, Williams surrounded himself with a bunch of people who, when they were not tugging forelocks, apparently believed the Danny-love they felt as they looked out Mordor’s windows would one day be Darin-love or Dunder-love or [insert-name-of-generic-Tory-here]-love. They are getting a rude shock.

The Liberals flocked to his nether regions, too, lips primed for fish kisses just as their fathers did and their fathers before them. Decades of conditioning is hard thing to break.

You’ll still hear them on the open line shows, pining for Danny’s posterior.  I am a Liberal, said one fellow on Thursday’s call-in show, but I backed Danny and I’d do it again.  Lots did.  Like Kevin Aylward, for example, and the people who are behind Aylward’s recent sojourn as fill-in Liberal leader.

One of the perennial saviour-wannabes of recent times  - Dean MacDonald - popped up this week delivering a speech on leadership and vision to the members of the Conception Bay Area Chamber of Commerce.

The story made it to the front page of the Telegram on Thursday, right up at the top above everything else. 
On cue, both NTV and CBC obliged the saviour-in-waiting with fawning, gushing interviews about his intentions, vis-a-vis the salvation thing.

And Dean, coquettishly protesting that he did not wish to be coy, was coy.

At least one of the interviewers asked about Danny and well, like he’s a Tory and like Dean’s a Liberal, so like what’s up with that? 

What’s up with that was obvious from Dean’s speech and from his comments during the interviews.

Dean lambasted Kathy Dunderdale for all the things he either praised Danny for or ignored when Danny did them. Unsustainable public spending?  That was Danny’s stock in trade.  Dean loved Muskrat Falls and then talked about the need for everyone to put politics to one side and get down to the political job of negotiating business deals. 

Sound familiar? 

It should.

Dean MacDonald is fond of saying things that are absolutely correct.  He did it a couple of years ago when he told a bunch of young Liberals that in politics you needed to distinguish yourself from the Other Guys.

And just as he says things that are correct, Dean likes to stand up for exactly the opposite of what he advocates.  In Gander in 2009,  Dean proceeded to explain  - as he did in his interviews on Thursday - exactly how he supports the same political ideas and piss-poor management that got the province into the mess it’s in.

No change. 

Exactly the same.

And therein lies the problem.

The province needs real change.

Dean MacDonald is just more of the same.

Dean would be so much more of the same, in fact that it is like something out of a Brian Tobin speech:

So we beat on, boats against the current, borne back ceaselessly into the past.

- srbp -

Easter Traffic 2011 #nlpoli #elxn41

So this Easter with all the politicking going on, will people get a visit from the Dunderbunny instead of the Easter Bunny?

As far as the federal Conservatives seem likely to find, a visit from the Dunderbunny doesn’t net you a stash of lovely votes or even chocolate. There just seems to be a little pile of odd-smelling brown buttons - if there is anything at all – and it’s probably best not to nibble them.

Maybe that’s what we will have to call members of a political leader’s fan club or her caucus?

Sounds like some cartoon comic-bookish all-girl band from Riverdale, though.

Josie and the Pussycats?

Meet Kathy and the Dunderbunnies.

Anyway…

On this second last week of April, the growing number of readers of these humble e-scribblers enjoyed these 10 posts more than others.

Alliteration is apparently quite popular.  You know.  The repetition of an initiation consonant sound, as in A fish called Wanda;  K-K-K-Ken’s c-c-coming to k-k-kill me. late week posts that get into the weekly Top Five are there for some reason.

Maybe it is alliteration.

Maybe it is something else.

Who knows?

In any event, here’s the list:

1. Buckingham not only local Tory to buck Dunderdale line on Harper
2. On minority governments
3. NTV/Telelink poll:  close, closer, no cigar and a referendum on Dunderdale
4. One big happy Conservative family…maybe
5. Kathy’s Keystone Kops Konfused on Konservative Kampaign
6. Seen on the campaign trail
7. The view from Flower Hill
8. Risky Business
9. The unsustainable lightness of Tom Marshall
10. Recycling a tire recycling story

- srbp -

The Bow-Wow Parliament lacks bark and bite #nlpoli

In the wake of the latest revelations of financial mismanagement in the provincial government, SRBP has been looking at some of the possible contributing developments over the past decade or more.

Last week, SRBP noted that it appears the provincial government broke up the treasury board secretariat around 2007.  They sent some of its bits off to one department and put the rump of its administration  – about the size it had been in 1968 -  under the finance department, as it had been before the 1973 reforms introduced by the Moores administration. 

At around the same time, the provincial cabinet started a series of massive annual increases in public spending that Premier Kathy Dunderdale admits is unsustainable.

And the same cabinet also ballooned the size of the provincial public service. Again, it’s something that Kathy Dunderdale admitted was something she and her colleagues now had to sort out.

These three things are connected. 

Even if the government loosened the constraints of its internal financial controls, there are other agencies that have a role to play in keeping an eye on the public treasury.

Thinking about the Unthinkable #nlpoli

Only a decade ago, voters turfed Roger Grimes and the Liberals from office as punishment for – among other things – signing a deal to develop a nickel mine even though it was a really good deal.

[Not one teaspoon, they said, echoing a line Brian Tobin used.  Better to leave the ore in the ground than do a deal that involved any ore leaving the province unprocessed]

But leave the oil in the ground rather than pump it out?

Unthinkable. 

That’s curious because leaving the oil in the ground is a valid policy choice for any government, including one in Newfoundland and Labrador.

A statement of fact isn’t a criticism

Finance minister Tom Marshall told the Telegram’s Dave Bartlett a few interesting things in an interview that appeared in the Saturday print edition but hasn’t turned up on line yet.

Like this bit about the annual “consultation” farce:

He also said it's not true consultations are a waste of time or that he's made up his mind already on where he will spend taxpayers' money.

Marshall said every year someone raises that criticism.

"We're open minded. We're prepared to listen. But we're listening to a lot of people and the problem is ... everybody can't get what they want," he said.

Marshall said if he gets 100 proposals, 95 of them make sense, but there's simply not enough money to go around.

Okay well, the consultations aren’t a waste of time for Marshall since he uses them as a way of sending a message to people of the province.  He isn’t really looking for substantive input on how to spend public money.

That’s because – as your humble e-scribbler noted last year – the major decisions are already made. The same point turned up the year before, with an entirely different example of how the major spending decisions are already made long before the finance minister hits the road.

Not a waste of time for Marshall, but for anyone else looking to shift budget priorities via the consultations?  Yeah, pretty much an exercise in the utmost futility.  The people who show up for these things would have better chances of changing Marshall’s budget if they gathered around a kitchen table, held hands and stared at the magic blue spot from the National Enquirer all the while thinking nice thoughts.

And sure, Marshall listens.

But, as he noted, five percent are patently OTL.

And the other 95% of the ideas he listens to are sensible.

But Marshall can’t do anything about them because he just doesn’t have the money for them, as he told Dave Bartlett and the Telly.  A guy who has more money in temporary investments than his predecessors  had to spend in total some years doesn’t have the money for these great ideas for one simple reason:

By the time he gets to the “consultations” he’s already decided where the money is going.

And that’s why the whole exercise is a farce.

You see, a statement of fact is not a criticism.  It’s like unsustainable spending.  Marshall knows it’s a matter of fact.  He just won’t admit it until he has no choice.

-srbp-

15 ideas for a stronger Newfoundland and Labrador

Introduction

When Brian Peckford and Clyde Wells spoke of getting the provincial government off Equalization, they understood that such a development would merely reflect a greater strengthening of the provincial economy and society. Their policies and those of successive administrations aimed at economic development and diversification which would deliver a stronger economy that would in turn create wealth for Newfoundlanders and Labradorians.

The current state of affairs in Newfoundland and Labrador reflects more the result of those policies coupled with the unexpected good fortune of global economic conditions than it does a sustained commitment by the provincial government to implementing coherent strategies.

The following series of posts will offer 15 ideas on different areas of social, political and economic affairs aimed at strengthening Newfoundland and Labrador.

Strengthening the treasury

1.  Reduce the public debt by 50% within 10 years.  Beginning in the early 1990s, successive administrations restructured public borrowings to convert debt held in foreign currency.  As a result, the current burden on the treasury is significantly reduced and uncertainty due to currency fluctuations has been all but eliminated. 

Since 2003, the accumulated borrowings of the provincial government and its agencies has grown and the current government commitment is to increase public debt to meet any unforeseen needs. Direct debt had actually declined before 2003.

Debt servicing costs - paying only the interest on the debt - is one of the largest amounts spent by government annually.  Paying down debt frees up more money to spend on needed programs and services and improves the ability of government to meet any economic downturns without resorting to borrowing.

2.  Balance the books, every year.  Government surpluses in recent years have been built on the blind good fortune of astronomical oil prices.  Those prices are an unreliable source of cash.  On a cash basis, the provincial government has actually been in debt each year since 2005.  That means new borrowing to add to the burden of public debt.

Balancing the books is possible.  It just needs the political will to do it.

3. Limit annual spending increases to the rate of inflation.  Provincial government spending has increased by as much as seven times the annual rate of inflation in each of the last three years. That's unsustainable in the long run and with the current economic crisis, the excesses of the past three years are about to catch up to everyone.

Limiting spending to the rate of inflations allows for natural increases and commits government to eliminate unnecessary, ineffective or wasteful spending.

4.  Make non-renewable resources revenues a long term benefit by creating an investment fund, paying down debt and funding infrastructure. 

5.  Ensure that any new programs can be funded within the spending limits for annual increases and anticipated revenues.  Review existing programs annually to ensure they meet objectives and are run as efficiently and effectively as possible. 

-srbp-

Changing the direction. Changing the tone. #nlpoli

A month ago,  a CBC “analysis” by David Cochrane warned against a band of Liberals running the government with too much power.

Two weeks ago,  another CBC “analysis” by David Cochrane told us that Dwight Ball was an “unlikely” fellow to be Premier who now faced an enormous task of dealing with the government’s financial problems based on a campaign platform that was, supposedly, “greeted with enormous skepticism in the final week of the campaign.”

And now we have the latest Cochrane “analysis” that tells us that the public service is liking their new bosses.  The administration has been delivering on “Ball's campaign promises of evidence-based decision-making and to bring [sic] stability to cabinet by ending the practice of frequent shuffles, thereby leaving ministers in place long enough to build command of their portfolios.”

What changed?

Well, it certainly hasn’t been Dwight Ball and the Liberals he led to a substantive victory in the recent election.

Reality Check: drops and buckets version #nlpoli

Via labradore, a chart that plots Conservative unsustainable public spending since 2003 with recently announced controls on discretionary spending.

-srbp-