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RUSSELL WANGERSKY: Time for a fiscal reckoning

The Confederation Building in St. John’s. Joe Gibbons/The Telegram
Confederation Building in St. John’s. — Telegram file photo

I wish I had been wrong.

You have no idea how deeply I wish I had been wrong.

But I wasn’t. I wasn’t wrong in 2011 when I pointed out that Muskrat Falls was based on a slew of assumptions, almost all of which have proven to be wrong. Oil prices didn’t rise into the stratosphere, the project wasn’t the strange outlier among government-built hydro projects that would actually come in on time or on budget, electricity prices didn’t spike upwards, provincial electricity demand didn’t skyrocket as we all got rich and built massive houses, and the list goes on.

But where I really wish I had been wrong? With Premier Dwight Ball’s letter to Ottawa asking for help because the province couldn’t borrow money to pay its bills. I wish I’d been wrong during the years I’ve been writing about just this very fiscal problem.

The years and years and years — especially during the years when there was actually big oil money coming in.

I wrote in June 2011: “It is, apparently, either a hard concept to grasp, or else it’s a concept that no one’s in a big rush to grasp — because recognizing it would actually mean having to tighten our belts. With non-renewable resources, particularly oil, accounting for as much as one out of every three dollars that come into the provincial treasury in the run of a year, and with our annual expenses as a province growing astoundingly and far outstripping the rate of inflation, we’ve put ourselves in a dangerous position as a province.”

And this, from another 2011 column: “Most years, we’ve been making more than we spend — the problem is that we’re spending hand over fist. And the question is whether or not that spending will be sustainable in the future.”

The hard work we have to do now is going to be much harder because we have waited so long and wasted so much.

In an April 20, 2011 editorial, I pointed out how the government expanded all sorts of spending: “Compared to the first year of the Tory administration, overall government costs have been raised by $3.56 billion — an increase of 83 per cent in just eight years. During that same eight-year period, inflation has increased costs across this country by only 16.9 per cent.”

I raised that same issue in 2007, 2008, 2009 and 2010. In 2012. In 2013. In 2014, 2015, 2016, 2017, 2018, 2019 and now, in 2020.

In 2006: “Outside of high oil prices, we still have a fundamentally flawed economy. ... Hey, this year’s budget may even give you a warm, fuzzy feeling all over. But you can get hooked on it — and coming down from that high is rough.”

In 2007: “There is no doubt that this province has had to spend money to bring its citizens an adequate level of public services. The only questions are how big can government get? And how long will it be until there are real problems finding the cash to support that style of expanding government?"

In 2011: “Have not will be no more? Well, maybe it isn’t right now, but have not could come back pretty darned fast. … It is fiscally irresponsible to keeping doing this. We have to lower our expectations and our expenses — and if we don’t do it now, circumstances are going to do it for us.”

How about this, also from 2011, when I wrote about the overwhelmingly positive names the provincial government was giving to its own budgets? “Eventually, though, the names might have to become more pragmatic. Budget 2013: ‘We can’t afford all this.’ Budget 2015: ‘Too bad we spent like drunken sailors back then.’ More likely? Budget 2017: ‘It’s their fault.’”

We’re there now. And worse. And on top of all that, we’re in the midst of a huge and expensive looming medical crisis. You can legitimately say we couldn’t prepare for COVID-19. You can also legitimately say we didn’t prepare for anything.

The hard work we have to do next is going to be much harder because we have waited so long and wasted so much.

As I’ve also pointed out for years, if you let your finances get bad enough, eventually the people who are left to loan you money start saying, “We’ve got some rules about how you’re going to spend, and you’re going to follow them if you want the money.”

We are running out of last-ditch fixes.

Russell Wangersky’s column appears in SaltWire newspapers and websites across Atlantic Canada. He can be reached at — Twitter: @wangersky.


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