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Russell Wangersky: Liberals living on borrowed time


The clock is ticking — and not just on Premier Dwight Ball’s leadership. Inside the party, Liberals may be nervous about the reaction to the spring budget and the precipitous plunge in polling numbers. There’s clear dissatisfaction about the under-performance of the premier in a host of situations, from Ed Martin’s payout to the shifting sands of the premier’s own staff, and on and on.

But let’s hope some common sense prevails before the only opportunity this government has to make major changes disappears. Top managers know you can make a decision and it will end up being right or wrong. If it’s wrong, you can try and change it. But the one way you can guarantee making a bad decision is by leaving things for long enough that the decisions actually make themselves.

Insiders might be nervous enough now to try and pressure Ball into changing, delaying or dropping the other shoe — the government’s planned secondary budget in the fall, when the government was expected to start cutting costs and the number of provincial civil servants. The tea leaves certainly show a concerted effort inside the party to well, get Ball’s attention.

But trying to back out of — or even delay — the cost-cutting now is only going to make it impossible to deal with the fiscal storm we’re already in, perhaps for years.

After the few steps in the spring budget, all the government has successfully done so far is to telegraph that they are willing to fold when there’s pushback.

The budget was, in its own way, small potatoes. With all of the fee and tax changes in the spring budget — no matter how much you disagree with them — the provincial government didn’t even manage to stop the growth of the provincial current account deficit.

The new fees and taxes bring in $421 million in additional cash, but gross expenditures actually rose by $799 million. Expected current account expenditures alone — the everyday costs of running the government — grew by $277 million over last year.

As an austerity budget, the best the Liberals can argue is “We managed to go bankrupt a little more slowly.”

Facing a second kick at the budget in the fall, it’s no wonder that there are those in the Liberal party who are getting antsy.

But having the administration back down or lose its nerve — no matter how much insiders might feel the need to build bridges — essentially extends the pattern of spending money we don’t have in exchange for votes (the mantra of the past Tory administration) right up to the next election.

Timing is everything. Fiddling while deficit burns won’t fix it.

As a people, we’re singularly unprepared to hear the cold, hard truth about our fiscal situation: in this time of historically low interest rates, the cost of servicing our public debt is expected to grow by $151 million this year alone. That’s a 38 per cent increase in a single year, a change that by itself will eat up more than a third of all the new taxes and fees coming into government coffers. It’s also $544 million that will essentially leave the province.

Other money that’s leaving? Well, the province is saying it expects to be sending $69.5 million for things like “underwriting commissions and management fees on new capital market borrowings” as well as “discounts and premiums” on those borrowings.

And that’s just in the core government, not including Crown corporations like our energy poorhouse, Nalcor.

There is a huge structural problem in the province’s finances, and the cold, hard fact is that the best — in fact, the only — way to deal with it in our current system of government is for a newly elected government to make radical and necessary changes and hope that the benefits of those changes become apparent to the electorate by the time the next election rolls around.

Twice, during regime changes in Newfoundland and Labrador politics, new premiers moved on what they termed to be a province teetering on a fiscal cliff. Clyde Wells did it shortly after taking power, as did Danny Williams. Neither of them made any friends — but both managed to find friends again in time for the next election.

Every month that goes by with the Ball government failing to make structural changes actually makes it harder for the sitting government to make the kind of shift it clearly has to. There’s less time to show results, and the pain of cutbacks and fees is that much more fresh in voters’ memories.

The window of opportunity — and for this government, the window for change with any kind of survivability — is closing fast.

Russell Wangersky is TC Media’s Atlantic regional columnist. He can be reached at russell.wangersky@tc.tc — Twitter: @Wangersky.

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