Back Stabbing the People of Newfoundland and Labrador

Financial crunch, requiring deep cuts and discipline, is the state of our provincial government's finances according to our PC government. On the radio waves, on the tv, all we hear is the necessity for cuts and lay-offs, but is it true? Well, frankly no, it isn't.

Despite all the foreboding of impending doom, oil revenues for 2012, $ 2.8 billion, were the highest ever. The province recorded a whopping $883 million budget surplus for the year. Just another in a line of offshore oil fuelled surpluses. It is strangely odd then that the province would lay-off 1200 employees, affecting all those families as well, and cancel numerous programs - including the West Coast Training Centre today. The mantra is austerity. The tool is responsible care taking of the treasury, but is that real? No, not even close.

Consider this: between 2005 and 2012 the province received $12.25 billion in offshore oil revenue - that's an average of $1.3 billion a year since 2005. Now consider this: the gross debt of the province is actually larger today than it was back in 2003, before oil income bloated the coffers. Specifically, the gross debt in 2003 when the PCs took over was $12.8 billion. Today, as of March 31, 2012, our gross debt $13.4 billion. In other words, despite bringing in over a $12 billion in oil revenue since 2003, the province is over a billion dollars further in debt. How can that be possible? It's called poor decision making.

The gross debt is made up of primarily three things: borrowings; unfunded pension liabilities; and group health and life insurance retirement benefits for public employee and politicians. In 2003 net borrowing was $6.5 billion, unfunded pension liabilities stood at $3.56 billion, and group health and life was $1.05 billion. Nine years later, and $12.25 billion richer in oil money, the same categories looked like this: unfunded pension liability $3.09 billion; and group health and life $2.09 billion.

So, if all that oil money came in over the last while where did it go? Clearly the oil profits were not used to really reduce these retirement liabilities. Back in 2003, the provincial government had a total of cash saved and invested of $441,855 million. Today, that same bank account is almost $2.5 billion ($2,442,963,000 as of March 31, 2012 to be exact).

The revenue went way up. The spending went way up. The bills of the future went unpaid, and the difference was left in the bank. It begs the question: Why the austerity program with so much money squirrelled away? There is only one answer to that: Muskrat Falls. Before you roll your eyes and say here we go, take a moment. The memorandum of understanding regarding the federal loan guarantee for Muskrat Falls requires the province to have a down payment of 35% down before it will guarantee any loans.

The province's estimate of its share of the project is about $6.5 billion. Projects this size never come in on budget, and normally have a contingency fund of 25%. Given that, the province is looking at raising at least $8.25 billion. That means the federal loan guarantee would require them to raise about $2.9 billion for their down payment. They had $2.4 billion in the bank as of March 31, 2012.

Bottom line, the province is laying people off, cancelling programs, not expending department budgets in a desperate effort to bank their down payment for Muskrat Falls. Simple as that. We are expendable in the name of a dam. Ask the people who lost their jobs, or the groups that lost their funding or their schools. Ask those desperately waiting for the construction of hospitals, or road paving, or a number of any other services. It's a real point of curiosity that the issue of the funds in the bank is not a bone of contention in our media or for our opposition groups for that matter. It seems that the knife never stops striking the people of this province in the back.