Budget 2017: Holding the Line

Budget 2017: Holding the Line

By: Ryan Young

After months of speculation and debate, Cathy Bennett delivered her second budget speech in the House of Assembly on Thursday. The large scale public sector layoffs that everyone was expecting did not materialize, and there was very little of anything to make headlines in this year’s budget speech. The deficit went down thanks to a rise in oil prices and production and the harsh revenue measures from budget 2016, but other than a few bright spots, the budget itself was pretty lackluster. Even the flagship peace offering, a decrease in the gas tax, was preempted by a seven cent rise at the pumps on Thursday. During it all, a small but boisterous crowd gathered on the front steps of Confederation building with food and music to let the government know that the people are still angry and they are not going away.

The really good news in the budget was that oil revenues were up, which along with the extra tax revenue, reduced the deficit from a projected $1.83 Billion to $1.1 Billion. The projected deficit for 2017-2018 is $778 million as long as oil prices hold steady. Oil production is expected to be slightly lower this year with a projected average price of $56 per barrel. Hebron will come online later this year but with an equity stake in the project, the province will not reap many benefits from that development in this fiscal year.

The gas tax reduction was the other big news in the budget, with the Liberals pledging to reduce the tax by 75% by the end of the year. The first reduction of 8.5 cents will come into effect June 1^st with an additional 4 cents coming off in December. The remaining tax will be evaluated before the fall fiscal update. Unfortunately for the Liberals, their good news piece of the budget was counteracted by a big bump in the prices at the pumps. In any case, the reduction of this tax is good news, even if the other 299 taxes and fees they raised in budget 2016 are still in place.

Some other good news items were included in Bennett's speech. Money for child care subsidies and raises for Early Childhood Educators are positive stop-gap investments in lieu of a new child care strategy for the province. New money was allocated for planning for the replacement of the Waterford Hospital and the penitentiary. Money was also added to the justice system, including $250 000 for free legal advice for sexual assault victims and more crown attorneys to help reduce caseloads. Federal monies for mental health and home care came down the pipes, and $500 000 will be spent to hire new student assistants for inclusive classrooms. Funding was also restored to the operational grant for libraries to keep the doors open until the EY report is complete.

Transfers to Nalcor will come in at around $485 million, which is significantly lower than the $1.3 Billion allocated in budget 2016. Nalcor has also been instructed to find $210 million in revenues by 2020 to help offset electricity rate increases. No specifics were given on how that would be accomplished, but both Bennett and Premier Ball offered assurances that rate mitigation is a priority for this government.

It was a budget that tried to get a little bit in for a lot of groups and it did a good job of doing that without ruffling too many feathers. The downside is that the budget left in limbo thousands of public sector employees who still have no idea how safe their jobs are. Minister Bennett stated that mass layoffs would not be her approach but that her government would continue to find efficiencies moving forward. That has many believing that instead of facing the hard criticism of big job cuts, that they will dole them out instead as a death by a thousand cuts. While many public employees were breathing a sigh of relief that they still have a job today, they are still in a position of uncertainty when it comes to planning for their short and long-term futures. That will likely mean another year of decreased consumer confidence which will continue to negatively affect the economy.

Very little was done in this budget to address government spending. Nearly $300 Million in spending reductions are planned although we don’t know exactly where those savings will come from. A wage freeze was also introduced for this fiscal year for all managers and non-unionized public employees. While the freeze itself will not offer much in the way of savings, it may be setting the tone for future negotiations between Bennett and union leaders.

The overall theme put forth by the government seems to be that their tough decisions are working and that we are turning a corner and need to stay the course. The reality, however, is that we are doing better because of the price of oil, and even the massive hardships that have been placed on the people of the province have made little difference to our bottom line. The Liberals claim to be on track to reach their target of a return to surplus by 2022, but that claim is based on assumptions that oil will continue to rise and bail us out from our grim situation.

While there are a few good things in this budget, it is mostly an exercise in smoke and mirrors designed to buy the government another year in the hopes that oil royalties will allow them to spend their way out of the people’s bad books. There is no obvious plan to address spending issues or our escalating provincial debt, and despite a little well intentioned money being spent, all they really have to show for their efforts are plans to make more plans. While few would argue that proper consultation is needed before a government acts, many are wondering when this government will stop consulting and start acting on what they heard. The solutions offered in this budget are band-aids at best and offer no indication of what this government’s plans are, beyond waiting for the price of oil to go up.

As benign as Budget 2017 seems to be, the devil will be in the details and it might be quite a while before the full effects are known. Instead of large scale cuts we should expect layoffs in dribs and drabs, but the final number will likely depend on how much the price of oil rises. Even after the rude awakening we just went through on the dangers of relying to heavily on oil royalties, the Liberals seem content to ride the wave and hope to utilize offshore revenues to offset all of the new taxes and fees. They keep promising us a plan but what they delivered was a hold-the-line budget that does nothing to address the real issues at play. I guess all we can do is pray to the great god of oil and hope that the prices can stay up until we have time to elect a government that does have a plan.

Validate and Prioritize

Validate and Prioritize

By: Ryan Young

Last week the government announced its 2017 pre-budget consultation schedule. Yes, that’s right, more expensive consultations, just so the government can say that they consulted with the people prior to bringing down their new budget next spring. I am all for consultation, as long as it is productive. That, however, would mean that the government actually listened to what the people were saying instead of cherry-picking a few ideas that suit their plans and presenting it as what the people said they want.

During the public sessions that were part of the Government Renewal Initiative that the Liberals began last fall, people were asked three questions:

1. Thinking of all of the things government spends your money on to provide the residents of the province with services, what are three things that could be stopped in order to save money?

2. Given the financial challenges facing our province, what three things do you think government could do to raise money (increase revenue)

3. How can government be more innovative or efficient to provide quality services at lower costs?

While the official results of these consultations are not due to be released until March, likely at the same time as the budget, these questions guided the direction of The Way Forward document that was released last fall. This year, people are now being asked to provide their input on the four main pillars of The Way Forward.

1. A more efficient public service

2. A stronger economic foundation

3. Better services

4. Better outcomes

Looking at the “Our Fiscal Future” road-map, the consultations happening next month are listed as “Validate and Prioritize” with the subheading as “Seek Public Feedback on Choices Presented.” That indeed seems to be what they are attempting to do by setting the events up with the four main questions for discussion. This will be the final phase of the renewal initiative before it is completed and incorporated into The Way Forward, and future Liberal budgets. Whether on not what people have to say will change anything in The Way Forward will remain to be seen, but this writer wont be holding his breath.

You can be sure that the last thing that these Liberal ministers and MHA’s want to do right now is to publicly engage with people across the province. Unfortunately for them, it is a necessary step for them to be able to complete their promise of public consultation, and so they will be able to fall back to the argument that they asked the people what they wanted when more “tough decisions” come down the pipe in subsequent budgets. For them it is all about the optics of it, but as we recently saw on the Prime Ministers optics tour, things can quickly backfire when you put arrogant politicians in a room with angry people who are directly suffering under their policies.

It will be interesting to see if there is any productive discussion at all or if the whole thing just turns into a long parade of people who want to air their grievances directly to government. I expect it will be a very tough tour for the Liberals who will be asked to publicly answer for their poor choices so far. Last time around people were still somewhat optimistic that they might actually have a say in the future of their province, but with the actions of this government over the past year, only the most partisan reds still share that view. The rest of us just see it as an exercise in futility and even more wasted taxpayer dollars. I really wish I could write with a less cynical view, but I can only work with what I am given. At the end of the day, Dwight, Cathy, and all the rest already have their minds made up and no matter what they hear from people over the next couple of weeks, it will be full steam ahead for The Way Forward.

If you are interested in attending a session, you can find the information here:

http://www.fin.gov.nl.ca/fin/budget/prebudget2017/index.html

Looking Ahead

Looking Ahead

By: Ryan Young

Welcome to 2017, my dear constant readers. As you may have noticed, The Rogue Bayman has been a quiet space for the past couple of weeks. I apologize to my readers who may have been expecting some commentary to digest over the holidays, or some response to the big items that are currently dominating the headlines such as snow clearing and gas prices. I had intended to be more active over Christmas, but after finding my way back home to Bonne Bay on Christmas Eve, I decided to take a step back from writing and commentary to reflect on the year that just passed, and the new one that just began.

The previous year was certainly an eventful one. I don’t think anybody could have predicted the turmoil that resulted from a change in government from the Tories to the Liberals. We all knew that times were tough in the provincial treasury, but when the new Liberal Government brought down their first budget last April, it quickly became apparent that the “Stronger Tomorrow” they had campaigned on was not actually what they intended to deliver. I had contemplated doing a “Best of 2016” style post, but there have been plenty of those to go around, and to be honest, I don’t really have the stomach to go back through it all. Instead, I have decided to do a list of stories to watch for 2017 that I hope you will enjoy.

1. Grieg NL

The proposed aquaculture development by Grieg NL on the south coast was a major story in 2016, and it will likely become an even bigger story in 2017 as the project begins to move forward. The decision by Perry Trimper to excuse Grieg NL from a full environmental assessment has raised many questions about the project and many people are worried about what the negative effects of the development might be. On the other side of the coin, we desperately need the employment that the project will provide for the province, especially with unemployment numbers predicted to hit 20% by 2019. We can expect to see plenty of discussion about this story in the coming year, including a feature post by The Rogue Bayman in the weeks to come.

2. Public Sector Job Cuts

Despite Dwight Ball assuring us over and over again that there would be no public-sector job cuts under a new Liberal government, unions are bracing for a battle as it is becoming apparent that job cuts are very likely on the table for Budget 2017. It is very hard to imagine that the government can reach its own financial targets without job cuts, but they money they save will come with a very deep cost to their political capital, which is already dangerously low. Any job cuts will result in a negative PR campaign by the unions that will likely include more public protests and marches in the streets. With contract negotiations due to begin soon, it will be interesting to follow how this story unfolds in the months ahead.

3. Ed Martin Severance Report

The Ed Martin Severance story dominated the news for several weeks in the spring of 2016 and then it kind of went away as we were asked to wait for the Auditor General to complete an investigation into the matter. The report was expected in the fall, but as of yet we have not heard anything from the office of the AG. People want to know who knew what, and when they knew it. The premier was caught in several lies on the issue, and it was the first of many knocks against Dwight Ball’s credibility. When the report is released it will bring the story back into the light, and from the way I see it, there is no way that Ball can come out of this looking good. He simply lied too many times for people to trust him on this issue.  While this may not be enough to force a resignation, this story has the potential to do serious damage to the premier’s already rocky reputation.

4. Hydro-Quebec

There was plenty of talk about backroom deals with Hydro-Quebec during the last sitting of the House of Assembly and I expect that it will evolve into a major story to watch in 2017. For starters, Newfoundlanders and Labradorians have a legendary distrust for Quebec, and in particular, Hydro-Quebec. Even if the government were in a position to get a good deal, (which they are not) it would be a hard sell to the voting public. With the Upper-Churchill renewal kicking in last summer, we were reminded again of that great Smallwoodian giveaway, and people will be wary of any deal with the Quebec boogeyman. Any discussion around developing Gull Island will create even more controversy and will draw the ire of Land Protectors in Labrador and create an even wider divide between the big land and St. John’s. Will Ball and Coady sell out our future once again for a little bit of short-term relief for Muskrat Falls? I guess we will have to wait and see

5. Budget 2017

It might be hard for many to imagine that Budget 2017 will draw the same sort of backlash that Budget 2016 caused, but with the aforementioned public-sector job cuts, the budget this spring will be a major story to watch. With nothing left to tax or put fees on and no real diversification plan, cuts are the only thing the Liberals have left to meet their own financial targets. We can likely expect more cuts to unionized jobs such as teachers and health care providers and less money for programs and services. It is hard to predict how deep the cuts will go, but there will be cuts and people will be angry. There will likely be more protests and marches and if the unions are hit hard they will spend plenty of money to make sure everyone knows that Dwight Ball lied to public-sector workers. No matter how much the government and the media try to portray the problems last year as just bumps in the road, people will not forget, and they will continue to be very vocal in the year ahead.

2017 has the makings to be another very eventful year, and The Rogue Bayman will be here to bring you the issues that matter to you. I believe that while we need to keep the governments feet to the fire on the issues that matter to us, we also need to start looking ahead and talking about how we can do things better. If 2016 was the year of anger and disappointment, then let us make 2017 the year of creativity and innovation. We don’t have to reinvent the wheel. The research and the solutions are out there, we just need to bring it all together and start looking at real evidence-based policy decisions. It is clear that our politicians do not understand the reality of information sharing in our new digital age, and we must continue to share the real truths about our lack of democracy and what we can do to enact real change. I wish you all the very best in the year ahead as we dig in our heels and show this government that we, the people WILL be heard.

RB