TORIES USING OIL PRICES TO JUSTIFY FISCAL MESS THEY CREATED

I agree with Finance Minister Tom Marshall, the provincial government does not possess a bottomless pit of financial resources. The government has to “right size” the public service.

I think we should expect the maximum benefit for every tax dollar our government spends.

The free spending Progressive Conservative government's of the past decade have taken a cross-your fingers approach to fiscal planning coasting on the winds of good fortune.

Has this government been squandering Newfoundland and Labrador's wealth? I asked that question in 2008 when the government was hiring and spending like a teenager with daddy’s credit card. The government offered the raises based on a genuine need but it still had to come up with the money.

At that time, I asked why they increased salaries and were spending more money when the funding might not be there in the future  to pay the salaries, without cutbacks or borrowing? It was unsustainable!  

In 2008, than Auditor General John Noseworthy told the Globe and Mail that the Province was becoming increasing dependent  on oil revenues  "These revenues are generated from non-renewable resources and are very vulnerable to changes in world oil prices and production levels - both outside the control of government."

The provincial government trumpeted it's good fiscal policy when it was really at the mercy of world oil and mineral prices. When revenues were good, the government took credit. Now revenues are low - it is the world economy. Nothing we can do!

The provincial government is coping with a triple whammy, the complete loss of royalties from two offshore production facilities (for 1/4 of the year), a significant drop in royalties related to a sharp decline in oil prices &  the loss of $500 million from Ottawa through the Atlantic Accord.

All those 13 week political appointments that  bloated the public service, reclassified political jobs and the huge salaries that come with them have a price.

P&P was not at all surprised with the finance minister’s fiscal update. I have been talking for months about a $700 Million dollar deficit this year and $1 Billion deficit next year!

I have to note, with some irony, that the person most responsible for diversification in this province, for most of the past eight years is now the premier. Do the math: ask yourself, have more private sector jobs and industries ever been lost under the reign of one person responsible for this province's economic development? Nope, not ever!

Many people are scratching their heads wondering, with all the prosperity around us, how can we be drowning in a sea of red? What will happen in the future, if we cannot make it now? 

From a strategic point of view, if an administration has some unpopular decisions to shove down your throat, the most optimal time to do it is early in the mandate. Perhaps high balling oil revenues this year created an external bogey man for the government to justify a correction made necessary by poor fiscal planning.

Public sector workers might be excused for being shocked. The government preaches fiscal conservatism but practices waste, particularly on partisan hiring, at an alarming rate.

Pensions are a challenge for all public and private institutions. 

The cost of pensions rise and will continue to rise as the work force ages and retires. 

The pension funds got hammered in the recession. The days of high interest and gambling on good returns from the stock markets is over. Clawing back benefits and raising employee contributions will be painful, but it has to happen if there is going to be a public pensions in the future.  The public unions have to be part of the solution. This is not a time to bury ones head in the sand.

Planning for the future, managing our wealth and ensuring all of our people benefit are the most important challenges facing our government.  

Fortunately, we are in a great position to be strategic about the future.

The jury is still out on whether we have the right people in place to do the job.