Graham Steele: Eavesdropping on the Minister of Finance
Graham Steele imagines the conversation that might take place ahead of a fiscal update
A new majority government.
A new Minister of Finance.
The minister and political staff gather in the minster's boardroom on the seventh floor of the Department of Finance to talk about how to handle their first fiscal update.
"This first time, we can stuff all the bad news onto the balance sheet, even if accounting standards say we don't have to," says Aide One, who comes from the premier's office.
"The deficit will end up around half a billion dollars, but that doesn't matter. Actually, the higher the better. We'll just blame it on the last government. We'll say they knew it all along. We'll say they were hiding it before the election."
"Don't forget the good stuff too," says Aide Two, who does something in communications.
"There are lots of groups unhappy with the last government. We want to show them we're different and that's not cheap. Nobody will notice if a few departments are a few million over budget. I mean, the deficit's so high anyway. What's the difference between a $100-million deficit and a $500-million deficit? Politically, there's no difference. A hole is a hole."
"That's right," says Aide One.
"We're still on our honeymoon. People will give us the benefit of the doubt. They're still ready to believe the worst about the last government. And since all the bad news is stuffed into this year's budget, whatever happens next year is bound to look better by comparison. It'll create the impression that the finances are improving. When they do, we'll say it's because of our good management."
Fact or fiction?
"I don't know," interjects the minister, who has been feeling uncomfortable as the aides talk.
"After all, we're now relying on the same civil servants, the same models, the same methods, and the same accounting rules as the last crowd. How can we say they were all wrong? Won't that just boomerang on us eventually?"
"Don't worry," says Aide One. "That's not the way politics works. If you repeat something often enough, it's like it becomes true. We'll just repeat and repeat that it was the last government's fault. Eventually people will believe it."
"Yes, I suppose that is politics," admits the minister.
"But what about the revenue side? The auditor general signed off on the last government's revenue estimates, just like he always does. And other provinces are reporting softer revenues too. So is it really believable for us to blame the last government?"
"You worry too much," says Aide Two.
"Details about what happened in the past or what's happening in other provinces just get in the way of a good story. And we have a good story. We can communicate this."
"Okay," the minister says after a pause.
"Half a billion dollar deficit. Blame the other guys. Promise to balance before the end of the mandate. Got it."
Fact or fiction? 2009 or 2013? Me or Diana Whalen? Yes.
Dividing the $9.5-million budget
I could have written something more profound but it's hard to write about when pension liabilities should be recognized and whether it's better to amortize them or recognize them all at once.
Or about the intricacies of the multivariable model that every government uses. Or about the auditor general's examination of the revenue estimates and what exactly his certificate — which is printed every year in the budget documents — really means.
Provincial finance is complicated. We're talking about a $9.5 billion budget covering health, education, support for the poor and disabled, roads, courts and jails and about 1,000 other things.
The accounting rules, especially around pension accounting, are enough to make any non-accountant reach for the Pepto-Bismol. And don't get me started on forecasting.
But on some level, provincial finance is also very simple. Revenue has to equal or exceed expenditure. Taxes pay for services. Services are paid for with taxes.
If you want your taxes to go down, we have to figure out what services we'll no longer offer. If you want your services to improve, we have to figure out who will pay. You can run deficits, but not forever.
Don't let anyone tell you it's more complicated than that — or that conversations very much like the one above never happen.
Graham Steele delivered the province's last fiscal update in August when he was filling in for Maureen MacDonald, the finance minister at the time, who was ill.