Tom Osborne insists we're on the right course. Well, so did the captain of the Titanic
Our net debt has practically doubled in a decade; other debt indicators are even worse
When Tom Osborne bounded into a conference room in the basement of West Block a few weeks ago, his smile was hard to miss.
He had come to speak with the reporters voluntarily locked up in the room in preparation for the annual provincial budget.
Osborne's grin was understandable: Newfoundland and Labrador's governing Liberals had already avoided a general strike by sewing up a labour deal with its largest union, NAPE. Osborne's budget — his first — avoided mass layoffs.
It was hardly a good-news budget, but it steered clear of the bad news — or even ignored it.
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The budget's themes were about belt-tightening and getting through tough times, but Osborne was clear to telegraph that the worst was behind us. Deficits, he assured us, were getting smaller and smaller, and a surplus was finally in sight.
683 million reasons to worry
I cannot see how we could really be in the clear. Yes, the worst specific deficit — the bone-rattling deficit of $2.7 billion projected in late 2015 — is in the past, but we're still trying to halt the hemorrhaging.
This year's deficit is $683 million. That's a lot of red ink to feel rosy about.
As long as we keep shovelling even more weight on that mountain of debt at Confederation Building, we cannot say we're out of the woods. We spend more on financing our debt than any other cost, other than health care.
That's right, we spend more on debt financing than schools.
The annual deficit may be smaller, but the debt sure isn't. Each passing year of debt has only created a heftier burden that future taxpayers will have to carry.
The Liberals do not expect the province to move into surplus until the 2022-23 fiscal year, or four years from now.
Even that may be a bit optimistic. More on that in a moment.
About that 'spending problem' we had …
To be fair, Osborne did not come out with sunshine and lollipops to sell the budget. He acknowledges the government is in a tough spot.
But I noticed one thing that he does not say out loud, which marks him as quite distinct from Cathy Bennett, the fiscal conservative who held the finance portfolio before him — until she found herself on the back benches last July.
"We have been clear that our province has a spending problem," Bennett said in last year's budget speech. That phrase — "spending problem" — used to be hammered consistently in government messaging.
Osborne didn't mention it while talking to reporters in a pre-budget briefing, and didn't utter the phrase when he stood in the House of Assembly.
While Osborne will acknowledge that government intends to spend less in the years ahead, his emphasis is a future-forward vision where government has more revenue than expenses.
One can dream, but it bears repeating that the word "debt" appeared just three times in the budget speech, and one of those references is in a graphic.
Maybe you can't blame Osborne for not not talking too much about the debt. It's bloody depressing.
Total public sector debt has multiplied
When government talks about debt, it prefers to reference what's called the net debt, which is estimated now at $15.5 billion. That figure has pretty much doubled over the last decade.
But there are other debt measurements we should consider in the heap of documents that government tables each year.
For instance, the total public sector debt is now pegged at $21.77 billion. That figure includes what government and its Crown corporations owe, as well as debt incurred by municipalities. (It does not include unfunded pension liabilities, which is another headache.)
To put that $21.77 billion in perspective, consider that the same figure was $6.7 billion in the 2013 fiscal year.
It's a sobering statistic to consider when you hear the finance minister insist that our future is bright — an optimistic message in the budget speech.
We may well be on the right track. But there are a lot of assumptions at play here.
One of those assumptions is about oil. The government, probably wisely, chose among the more conservative estimates about oil to peg its forecast at $63 US for the year. (If it makes you feel any better, Brent crude has been trading above that since the fiscal year began a couple of weeks ago.)
The icebergs we cannot see
But it's the unspoken assumptions that have me wondering, including one that seems to anticipate the status quo in external forces that we cannot control.
For instance, it seems assumed that the Canadian economy will keep rolling along for the next four years — not to mention the markets in North America and beyond.
But what happens if there's a recession? If interest rates jump? If oil prices crater as they did in 2014?
No wonder many people are wondering whether this is a good time to consider drilling a hole under the Strait of Belle Isle?
NL recommending tunnel to the mainland when we can’t even finish the highway to Topsail Road. <a href="https://twitter.com/hashtag/nltraffic?src=hash&ref_src=twsrc%5Etfw">#nltraffic</a>—@melissaroyle
The fact that government is seriously considering a $1.65-billion plan to create an underwater fixed link connecting Labrador with Newfoundland is curious, given that the Danny Williams government found it too rich when oil prices were soaring.
Speaking of those heady Tory times, let me take you back to 2013.
That year, Jerome Kennedy was the finance minister in Kathy Dunderdale's government. In his speech that year — and with a budget that nonetheless cut 1,200 jobs — he told the House it was "government's goal to reduce net debt per capita to the all-province average within 10 years."
Well, that didn't happen.
Just a year later, oil was in free fall, and any talk of a 10-year plan was out the window.
Yet, five years later, we're talking about medium-range plans, and Tom Osborne is confident that an era of plain sailing is not far away — right on the horizon.
Well, so did the captain of the Titanic, who had no comprehension of what the Atlantic had in store for him.
Thanks to our accumulated debt, we are already in uncharted waters.
What has me on edge is what else is in the waters ahead of us.