Shots traded on $1-B borrowing

James
James McLeod
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Lorraine Michael says Tories are inciting fear with pension liability

Despite running a $537-million deficit, and plans to borrow $1 billion from the bond market this year, Premier Tom Marshall was at pains Monday to say that the Tory government’s decade-long streak of not borrowing for operational purposes is still — technically — alive.

Tom Marshall. — Photo by James McLeod/The Telegram

Marshall said that really, the government has around $1 billion in the bank, and its only borrowing to refinance old bonds that are coming due, infrastructure spending and Nalcor.

“This year we will not be borrowing for operational purposes,” Marshall said during question period in the legislature. “We will not be putting money on the credit card to pay groceries. We will not be borrowing to pay the light bill. We will in fact have a surplus of $400 million on operations this year.”

The deficit, he said, comes from infrastructure and other expenses besides program spending.

In the House of Assembly, Monday’s question period seemed like a tug-of-war between the political parties for how to frame last week’s budget.

Liberal Leader Dwight Ball continued to frame it as an election campaign budget, even though Tory leadership frontrunner Frank Coleman came out over the weekend to say that he doesn’t plan on calling an election until some time in 2015.

“Why are you borrowing a billion dollars to pay for an election-type budget against a backdrop of weak economic growth?” Ball asked.

He also took aim at the government’s population growth strategy, considering the budget documents forecast population shrinkage of more than 2,000 people in the next few years, and he wanted to know how much it’s going to take to remediate the Abitibi mill site in Grand Falls-Windsor, years after the government accidentally expropriated it.

“With remediation costs estimated to be around $100 million, the total cost to taxpayers for this government’s botched expropriation is now close to $400 million,” Ball said.

“I ask the premier: How much money is in this year’s budget that is allocated for the demolition and the remediation of the Abitibi site?”

Transportation Minister Nick McGrath wouldn’t give a clear answer to the question. He said the government has a number of things it wants to demolish, but there is only so much money for demolition, so tough choices have to be made.

“We have several properties throughout the province, the Abitibi site being one of them.  We have the hospital site in Grand Bank,” McGrath said. “We have several sites here in the capital city that needs to be demolished or looked at. There is an amount of money this year allocated in the budget that there is no specific amount for a specific project. What we will do is look at the projects, prioritize them, and then we will decide which money of that allocated money will be spent on those projects.”

New Democrat Leader Lorraine Michael used her time in question period to go straight for the most pressing fiscal issue in the province, according to Finance Minister Charlene Johnson: public sector pensions.

In fact, Michael demanded that the government admit that it’s not actually such a pressing issue after all.

“Since Thursday, I have heard from public service pensioners who fear they could lose their pensions based on what they are hearing in the media from government and its apologists,” Michael said. “I ask the premier: Can he assure pensioners that their pensions are safe?”

Michael said that the public sector unions will come up with a fix to the pension problems, and the government’s concerns about the unfunded pension liability is “scaremongering.”

jmcleod@thetelegram.com

Twitter: TelegramJames

Errors in this story have been corrected

Organizations: Tory, Grand Bank

Geographic location: Abitibi, Grand Falls-Windsor

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Recent comments

  • Maurice E. Adams
    April 01, 2014 - 10:21

    My measly $4,600 'investment' in my heat pump will provide me in the vicinity of $800-$1000 savings (20-30%) every year. ... Nalcor's $8 billion dollar expenditure of our one time oil revenues, our scarce tax dollars and billions more in borrowing will cost me anywhere from a 50-100% increase in my yearly power bill. At the least the 50-100% will be of a lesser amount (no thanks to this government and Nalcor)..........Wake me up when this nightmare is over. Great population growth strategy.

    • Morry
      April 01, 2014 - 12:12

      A dog and his bone.

  • Virginia Waters
    April 01, 2014 - 09:45

    Some people make terrible liars. Even as the words were being mouthed, the body language was telling a different story. Can anyone doubt the absolute absurdity of these statements? A half-billion dollars annual dividend a few years from now (when the Tories are no longer in government and can blame the Liberals) and $3 billion by 2040. Why not make it a billion a year starting right now? If this were a private sector investment, it would be bankrupt before the switch could be thrown. The only thing that could make this profitable is that, as a government owned, government financed, government regulated project, it has a captive market (the lowly Newfoundland homeowner) and government can charge whatever it wants for the power. So when Marshall says the province will soon be taking in a half-billion a year from this boondoggle, that's you cue that things are about to get really nasty for the average homeowner. Jack will be rolling in his grave.

    • joebennett
      April 01, 2014 - 12:34

      Someone please, please tell me how you're supposed to make 3 billion dollars a year on a medium size power project. This must be some kind of "new" math that Marshall dreamed up. Oh yeah, that's about the same year that the CB hospital will be built (2040 ).

  • Moderator
    April 01, 2014 - 07:59

    What a difference one letter makes. Thanks folks, for pointing out the typo. We meant $537 million — not billion — and have corrected the story online.

  • correction required
    April 01, 2014 - 07:21

    537 billion really

  • New Veteran
    April 01, 2014 - 07:21

    So, the Province of Newfoundland is running a $537-billion deficit?? The country of Canada is only $650 Billion in Debt and the deficit is only what they add each year. Should the story have read $537 Million???

  • concerned
    April 01, 2014 - 06:23

    The arguments for Muskrat Falls were simple. We needed the power, and it was the lowest cost option. It was also argued by Marshall himself that the project would not contribute to our debt, as we had the value of the asset. Now 20% through construction Nalcor will not tell us how much power (MW) Muskrat Falls will deliver in winter. They will not tell us what it will eventually costs. And now lone and behold we find out that Muskrat Falls will in fact cause us to borrow, and it will increase both our net and public debt. Then on top of that Marshall is still singing the same song, about 500 million in dividends in 2019, with MF providing 3 Billion in revenue by 2040. The Premier can not nochalantly through around these types of numbers and arguments any more. They make no sense. Lets see it!!!! Lets have a truly open government. Right now they have zero credibility.

    • joebennett
      April 01, 2014 - 08:59

      To concerned - You're spot on. Show us the proof. If in fact we're going to get all this money from MF, then it should be applied against the power rates ( to double ) that will be charged to the regular public.