Is the provincial government deficit “real”?

15 11 2014

Published on Wednesday, 14 May 2014 |Dennis Aitchison

The latest provincial government budget was delivered on February 4th, just two days after Ground Hog Day.  The ground hog told us there would be six more weeks of winter. Finance Minister Higgs told us
to be prepared for continued financial doom and gloom for our little province.

Higgs and the Ground Hog have much in common. They arrive at the same time of year with their predictions … it provides a bit of entertainment … but we do not really trust their message.

Consider …

CBC reported: “Higgs is forecasting a deficit of $391 million (for 2014-15) in the coming year  … after a deficit of $564 million for 2013-14.”

Last year Higgs announced the deficit was $183 million for 2012-13 and forecast a budget surplus for 2014-15.

But remember he also stated in 2011-12 a deficit forecast of $471 million.

So … deficit of $471 million two years ago … $183 million one year ago … $564 million today and forecasting $391 for the year coming.

If your teenager, or anyone actually, communicated with you this way would you believe what he or she says to be accurate or believable? Would you trust them?

This topic can be flipped another way. Are budget deficits real?

Consider this news story from 2009 … “Government Finance minister unsure if Grits have set a provincial record for going in the red” (Telegraph Journal March 19/09).

Victor Boudreau, Liberal Finance minister of the day, announced a deficit of $741 million. In the same story it is reported  Opposition Leader David Alward “… scoffed at the Liberals four-year plan to eliminate the deficit …”

But didn’t Conservative Finance Minister Higgs just promise to balance the books by 2017-18? Just like Boudreau forecast in 2009 the deficit eliminated by 2013?

But catch this tidbit from the same story. Former Auditor General Daryl Wilson explained the record deficit  would have been in 1999-2000. He said, ” the decision to scrap the tolls in 1999-2000 generated a deficit of $896 million! However, Mr. Wilson said then Premier Lord insisted the removal of the tolls was an “unusual item” applied directly to the debt, (not the deficit).

A big question emerges.

How can something which is “real” vary from nearly $900 million in 1999 to $183 million in 2012 then to nearly $564 million in 2013? How can this occur in a province where there is hardly any fluctuations in population, economy, and job growth?

It really does beg the question – Is the provincial deficit real?

Maybe we need to change how we talk about this.

Why are governments pressured to “balance their books” when both business and personal households operate with just as much deficit?

Consider the failure rate for the private sector and  “the fact 40 percent of the Fortune 500 companies in 1984 have since gone bust” (Globe and Mail)

Instead of telling one sector – the public sector – to get its house in order, why not recognize we all live in the same “house”.

Let’s start the provincial financial conversation in a new way, with a shared agenda balanced between all three sectors – public, private and voluntary – and let’s ask questions and create strategies which bring us together.

Time to start a narrative based on trust. What we can accomplish together could be amazing.




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