Friday, December 14, 2012


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.


Anonymous said...

How can they cry foul when sitting on Billions in cash?

Anonymous said...

Gold plated pensions that those of we in non-government jobs is paying for. It is high time that the government jobs has same benefits as the rest of us. Some deal they got. than look at all the money that goes into arts. Government should only be providing services they needs to. Get out of the rest.

Cyril Rogers said...

It is a deliberate attempt to beat back union expectations but, on the other hand, we are not in great shape.

The public sector should have stabilized or decreased over the past 6-7 years but it has escalated rapidly since 2007. Now, these employees expect good raises but I don't see how it can be sustained, with or without oil revenues.

Pensions are not as gold-plated as some people think and most of us will lose a significant portion of it when we become eligible for OAS. Of even more concern is that future benefits will be eroded, or decreased, if the province can't get a better handle on its finances.

My advice to the government is two-fold:

1. Start reducing the public service and freeze wages for a couple of years to determine how the economy will perform; and,

2. Abandon plans to build Muskrat Falls.

Unless they do both of these, the province's economy is in grave danger. Imagine..... we will owe about $20 BILLION dollars if they go ahead with Muskrat Falls. That works out to a debt of close to $40,000 dollars for every man, woman, and child in the province.

With the long term uncertainty surrounding oil prices, that prospect is chilling!

Anonymous said...

I am looking for your 2008 statements re overspending.

Peter L. Whittle said...

Go back and read them!

Anonymous said...

This crowd is trying to fabricate a crisis to justify stripping contracts.

Peter L. Whittle said...


I think you will be disappointed! I have been fairly critical of government spending on salaries, expansion and raises. In fact I have been criticized for being negative. My issue has been sustainability and bringing down the public debt.

Anonymous said...

Been looking but can't find them. Links?

Maybe they are filed with Dean McDonald's 2011 donations to his Liberal Party? Can't find them either!

Peter L. Whittle said...

Considering that both can easily be found, I can only assume that your research and reading skills are as negligible as your intellect!

Begone anonymous ninnyhammer!

Anonymous said...

Dean McDonald's name doesn't appear in the disclosure.

And I scoured your archive for 2008. Buppkiss.

Peter L. Whittle said...

Your definition of scour must be akin to that of the lady I used to pay to clean our house. In her case I did not get my money's worth. In your case it is not costing me anything, but you are either as lazy as she was or your stunned!

Anonymous said...

Can't find anything from you criticizing PC spending in 2008. No donations to Liberals from Dean either. Imaginary.

Peter L. Whittle said...


Imaginary, that is your little facade.

I really can not be blamed for your lack of research skills. Seriously, a little elbow grease, a few taps of the keyboard and you will find all that you need.

Make you a deal. As I know two things are factual:1) you are lazy or just stupid 2)My criticism are here in black and white.

You stop cowering behind your anonymous moniker and I'll do what you are incapable of doing - chapter and verse of my comments.