Mixed messages

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It's an interesting point: the province's largest public sector union has launched an advertising campaign asking why the provincial government is threatening job cuts and restraint, while at the same time spending almost every waking moment trumpeting the province's "white-hot" economy.

It's a good question, because the government is certainly doing that: speeches by cabinet ministers are so liberally sprinkled with "white-hot economy" that it seems like the government is trying to implant the buzzwords in our heads. And if the future's so darned bright, why on Earth would they also be talking about cutbacks?

There are a couple of possible explanations. First is that the government is simply talking out of both sides of its mouth, trying to lessen the expectations of unions it's been negotiating with for over a year. That's the position the unions clearly believe is the case.

Second, more sinisterly, the "white-hot economy" is something of a fictional construct.

Or third, the status of our relatively small provincial economy and our actual finances aren't really connected.

In other words, even if the local economy was exploding, it wouldn't mean the province was doing that well overall.

And that's probably closer to the truth.

Here's a rather fractured explanation of that option, courtesy of a recent speech by Municipal Affairs Minister Kevin O'Brien: "When you've got a white-hot economy, it doesn't mean that your provincial government shares in that economy. The simple reason is that our revenue streams are down as compared to the capital side and the business side of the economy. You can't compare the two. A lot of people compare a white-hot economy to a rich government."

OK, here's a translation: in our case, a white-hot economy, if such a thing exists, doesn't really have much to do with whether or not we can afford the public services we have.

Why? Because in reality, the province's finances depend on one single thing: high-priced oil, and lots of it being produced. Oilfields are declining and prices have not held up, something that creates big worries for a provincial government that, in recent years, has depended on oilfield dollars for as much as one out of every three dollars of provincial revenue.

It has depended on those oilfield dollars, and it has had a huge hand in creating the so-called "white-hotness" by dumping huge amounts into capital and infrastructure spending - meaning that a dip in oil money is a double-edged sword.

Not only does the province not have the coin it needs for basic services, but any withdrawal from stoking the putative "white-hot" furnace with petrodollars will bring about a resulting dip in the economy.

The government clearly feels it needs to pump up the "white-hot economy" concept to keep people spending in this province, a sort of Hail Mary pass to try and keep non-oil revenues chugging along while oil dollars are drying up.

But does the government have the dollars to keep spending the way it has been?

The answer to that is clearly a white-hot "no."


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Recent comments

  • Corporate Psycho
    January 23, 2013 - 19:23

    I've been confused on this "have" thing ever since Danny first brought it up. I guess we are "have" only when it suits the government. With the price of everything going through the roof how are people supposed to keep up?

    • RJ
      January 25, 2013 - 00:39

      We have cheap food prices and a fair fuel price.Seems many ppl expect things for free.

  • Too Funny
    January 23, 2013 - 14:14

    "There are a couple of possible explanations." Then the editor lists three. I guess gov't isn't the only one bad at math.

  • rose
    January 23, 2013 - 09:59

    Cuts - Where are the cuts to the salaries of our "top people" in government, do we really need to be paying top dollar for so many unnessary postions (the queen's representative??? WHY?) We are paying for so much travel, hotels and fine dining beside thier salary. All I seem to hear is how poor we are we can't afford services, but we can pay to have all these unnessary people working for us?? They are certainly not working for $10.00 an hour. How long would they last???

  • W Bagg
    January 23, 2013 - 09:30

    The govt is cash strapped due to Muskrat Falls financing, and finanicial obligations for their equity shares in Hebron etc.... We are running defiicts due to major cash dumps to Nalcort, look at the last few years and how much cash we have dumped into their account.

  • saelcove
    January 23, 2013 - 08:51

    Did the government pay you to write this garbage

  • Herb Morrison
    January 23, 2013 - 08:16

    The economy is considered to be white hot because individuals and companies alike, who already have more money than they know what to do with, are in a position to become even wealthier. As for the, the majority of people including working people, seniors, the unemployed, we continue to be lost in the proverbial shuffle. As long as we have an economic system which is really a "For Profit" business there will be the "Haves" and the "Have Nots." Injustice and deprivation will remain a fact of life for the majority, while the rich wallow in prosperity.

    • RJ
      January 23, 2013 - 09:15

      There will be always some who complain about others ability to take advanage & bettering themselves.Instead of "Poor ol me", Use what god gave all of us "Greed". Use it to ur advantage & u too will have a complaint free life. :)