Just a ‘slight variance’
By Roger Bill
In what could be the last economic update before a provincial election, Finance Minister Siobhan Coady said there was much to be optimistic about. An expanding economy and an uptick in the employment rate are positives. The provincial population is growing, and the inflation rate is falling. More positives.
Oh, says Siobhan Coady, and one more thing. The forecast for the budget deficit is off a bit. What was supposed to be a $152 million deficit is going to be a $218 million deficit. But not to worry, says the minister, it’s just a “slight variance.”
Ah, yes Minister as you note the variance is less than 1 per cent of total spending but your government has still overshot its budget deficit target by 43 per cent. In any other kind of job, try telling your boss the project you are managing is 43 per cent over budget, but not to worry it’s just a “slight variance.”
In a curious but perhaps innocent bit of timing, the province’s Auditor General, Denise Hanrahan, commented on the Province’s financial statements for the year ending March 2024 just hours after Ms. Coady described the current fiscal year’s performance. Ms. Hanrahan was less optimistic.
In 2020, when Andrew Furey won his party’s leadership, he described the provincial debt as “crushing.” He inherited a net debt that was on track to grow to $16.7 billion. According to Denise Hanrahan the net debt is now $17.7 billion. Maybe Siobhan Coady would describe that increase as a “slight variance” too, but in urging caution, Denise Hanrahan notes the Province’s net debt per capita is double the rest of Canada.
The Province’s Auditor General says, “Even with an increasing population, these financial indicators and the challenging demographic and economic risks we face suggest that the province’s financial position is worsening.”
The Big Reset
When Andrew Furey became the Premier, he appointed Dame Moya Green to examine the state of the province’s finances and recommend a way out of what her report, The Big Reset, said was a “grave… dire… perilous… unprecedented crisis.”
Dame Moya Greene recommended the Province “urgently” address spending that is “out of control” and “unsustainable.”
How is that going?
Spending in 2020 – 2021 was $8.97 billion and Siobhan Coady is forecasting spending of $10.4 billion in 2024 – 2025.
Dame Moya Green also recommended the Province sell assets, including Nalcor and the province’s equity stakes in offshore oil fields. In what was described as “re-profiling” the province’s “asset portfolio” The Big Reset recommended selling, whether you like it or not, the provincial liquor corporation, the motor vehicle registry, the Registry of Deeds, and the Marble Mountain Ski Resort. The only thing Andrew Furey has tried to sell is the ski hill and there is still no deal.
Deficits and net debt are just two measures of economic well-being, but Denise Hanrahan and Siobhan Coady have access to more economic data than any other two people in the province. One says overshooting the deficit is merely a matter of a “slight variance” and the other says the province’s “financial position is worsening.”
Why the starkly different views? Maybe it is because one person may soon be facing an election, and the other one isn’t.