Nfld. & Labrador·Analysis

Liberals bending to budget criticism, but will they break?

The fault lines in the Liberal caucus over the budget have started to go public with MHAs describing their own government's fiscal plan as "terrible" and calling on cabinet to review its controversial decision to close libraries.
Premier Dwight Ball talks to a budget protester outside CBC Monday. (Mark Quinn/CBC)

The fault lines in the Liberal caucus over the budget have started to go public with MHAs describing their own government's fiscal plan as "terrible" and calling on cabinet to review its controversial decision to close libraries.

"No doubt, this budget is a terrible budget," Stephenville Port au Port MHA John Finn wrote on his Facebook page this weekend.  

Scott Reid, the MHA in the district next door, also posted his concerns on social media.

"The more I talk to (library workers) and hear of the wonderful work they are doing in their communities the more I am convinced that the decision to close libraries needs to be reviewed," said the MHA for St. George's–Humber.

Government members smile for the camera as they raise awareness about Epilepsy, but behind the scenes they face pressure in their districts. (Twitter/Andrew_Parsons1)

It all confirms the rumblings of a jittery and uncomfortable caucus trying to ride out a storm of public opinion.

And it comes on the same weekend the Liberals were taking heat for hiring a law firm to help with union negotiations — at the cost of one taxpayer levy for every hour worked.

But none of it should be taken as a sign that the budget is going to change in any significant way.

Letting off steam

Education Minister Dale Kirby made it clear on Monday that he has no intention of revisiting the cuts to library funding.

Finance Minister Cathy Bennett has repeatedly said the budget will be voted on without change.

In question period on Monday, Premier Dwight Ball said the unpopular deficit reduction levy would stay until the province was in better financial shape.

This is an inexperienced caucus that is facing its first major test. The venting by MHAs is a pressure release valve for a caucus that needs to let off some steam.

And as angry as the public is right now, the Liberals are keenly aware of an even more difficult reality — that as tough and unpopular as this budget is, the hard part is still to come.

The budget is still $1.8-billion away from balanced. To get rid of that deficit the Liberals need to find a combination of cuts and revenue increases nearly twice as large as what we've already seen in this budget.

Worse to come

People still reeling from the tax hit in this budget better steady themselves before the cost-cutting supplemental budget arrives in the fall, and then find something strong to hold onto before the 2017 budget next spring.

The austerity era is just beginning.

Finance Minister Cathy Bennett has said the budget will be passed without change. (House of Assembly)

This budget was all about Bennett pulling the revenue lever as often as she could to keep the banks and the bond rating agencies at bay. The province's credit rating still went down, but there's a suggestion that it has found the bottom as outlooks have been upgraded from negative to stable.

However, that outlook could change again if the Liberals don't follow through on the cost-cutting part of their plan. The most immediate challenge on that front is the contract talks with the unions.

The hiring of McInnes Cooper and communications consultant Cathy Dornan is being viewed in labour circles as a clear signal that the government is intent on seeking concessions at the bargaining table. The unions are making it equally clear they won't agree to rollbacks during negotiations.

If the government is intent on concessions, it will likely be forced to legislate those, much like what happened in 2004 under the former PC government.

All indications are that the unions will want to drag out these negotiations for as long as possible. The price of oil has recently started to trend up.  And if there is a marked improvement in the province's fiscal situation, that can only help their case at the bargaining table .

If the government is going to legislate rollbacks, the unions want that to happen as close to the next election as possible.

The Liberal front benches have been working hard at caucus management, trying to reassure rookie MHAs to hold firm and even stage-managing the tabling of anti-government petitions by Liberal backbenchers.

But the pressure will only increase from here when formal talks with the unions begin and the days start ticking off towards the supplemental budget and the next phase of austerity measures.


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