Thursday, February 14, 2013


People are shaking their heads in surprise that despite our have province’s financial windfalls, the provincial government is decrying a financial crisis.

Expectations and expenditures have not been managed well. 

It could be argued that the fiscal cliff government now faces is the result of their fiscal chickens coming home to roost. How sustainable were government expenditures on salaries, patronage jobs and unnecessary expenditures?

It is all about choices. Were we so confident that natural resources would be dropped from the equalization program that there was no back-up plan for when Harper stuck it to us?

We needed to be able to catch-up, build and rebuild infrastructure, so that when we stood on our own feet, we could afford the services our seniors, students, the sick, public employees and communities deserve.

The government has taken a do as we say, not as we do approach.

The public service is bloated because of 13 week appointments that circumvented the Public Service Commission, political appointments have received inflated salaries, senior bureaucrats are eligible for bonuses and the government caucus has been reduced to an echo chamber.  

Mix in the fact that the provincial government is coping with a triple whammy,: the complete loss of royalties from two offshore production facilities (for 1/4 of 2012), a significant drop in royalties related to a sharp decline in oil prices &  the loss of $500 million from Ottawa through the Atlantic Accord.

The problem this administration is facing is that of credibility. They only have their own record to consider, the tired refrain of ranting about past governments is as old as Methuselah. Their arrogance, partisan approach and lack of strategic/consistent messaging is hurting them.

If the Minister of finance is serious about saving money, he should examine middle management, ADM and DM equivalent position and cut the number of seats in the House of Assembly by 30%.

As I have said in previous posts, public sector unions have to accept the new economic reality in the wake of the last recession and the very fragile recovery.  
The pension funds got hammered in the recession. The days of high interest and gambling on good returns from the stock markets is over.  Pension funds are not making the returns needed to be self-sufficient. 

Successive governments in the 70’s, 80’s and 90’s robbed the funds by not paying their share.  

If you review the public accounts of the province you can see that the unfunded pension liability is about to balloon after a period of relative stability.

Clawing back benefits and raising employee contributions will be painful, but it has to happen if there is going to be public pensions in the future. 

Governments and it’s employees have not paid enough into the pension funds to keep them whole for the future.

Pension reform is an absolute. 

I think unions have to work with government to find creative, efficient models that allow the creative utilization of existing resources.  Seniority trumps ability, performance or competence.

 How can managers manage efficiently with their hands tied behind their backs? How can government services be maintained when hundreds of employees are being bounced around, forced into roles they do not want to be in and were never trained to do.

Newfoundland and Labrador’s public service needs to be transformed into an  unencumbered meritocracy where skill, work performance and ability are rewarded with stability.

The public unions have to be part of the solution. This is not a time to bury ones head in the sand.

The principle of future economic sustainability should always be top of mind

 If we have learned nothing else from our history, it is that our small population and staple driven economy is subject to the whims of demand and supply.

The new reality demands a new approach. That means putting the provision of government services ahead of partisan favors and union protectionism.


WJM said...

We needed to be able to catch-up

To what? Newfoundland and Labrador already had the highest per-capita provincial government spending in the country.

Peter L. Whittle said...


There was a lengthy period where we were unable to make significant investments in infrastructure or maintenance. When we were being penny wise because we did not have dollars.

That is the catch-up I am talking about. We have agreed to disagree on this for a while now.

Anonymous said...

Heard an interesting quote from Jerome Kennedy was along the lines that we are in transition from an oil based economy to the new Muskrat Falls economy. Now I am no economist but for the life of me I can't figure how Muskrat falls project will replace 30 plus percent that Oil and Gas contributes to the local economy.

For what its worth we should embrace and squeeze every dollar we can from Oil and Gas but ensure we use the revenues wisely to build a sustainable provincial economy.

Anonymous said...

as I understand it, the biggest problem with the pension fund is that government(s) have used it for general revenue in the past leaving it short funded. now this government wants to make hte workers bear the cost of refilling the pension fund?! our pension fund has paid for roads, hospitals, schools, etc...and now we, the public sector workers, have to pay for them ourselves?! government mismanagement of funds should not be downloaded onto the public sector...but that's what happens every 4 years,

Peter L. Whittle said...

There is truth to that. Successive governments have robbed pension funds and not replaced what they took. That said, the fact of the matter is that changing demographics and the recent financial crisis means that the old formulas will no longer work. The funds are no longer sustainable with out increasing premiums. Even in jurisdictions where the county, state, province, nation or company paid it's share - it is not enough! Change is inevitable.

If were the Nurses and Teachers Union, I would ask the gov for what is owed and run the fun independent of gov.

Anonymous said...

A big fixed lump in the budget of a public institution for pensions will grow in size – in and of itself – and will eat up a greater share of the budget tomorrow compared to today. Something has to give.


Anonymous said...

it can only get worse as more workers retire, leaving fewer to fund the plans.