March 15, 2017

Our Government Is Insane

One definition of insanity is doing the same thing over and over, and expecting a different result. That describes government in Newfoundland and Labrador!

The result we keep getting is unsustainable spending for worst-in-class performance.

For example, health and community services is 41 per cent of our budget. We spend more per person on health care than any other province, but have the highest chronic disease rate and the lowest life expectancy.

This outcome is indefensible, but government plods complacently on, doing the same thing over and over, and hoping for a different result.

What may stop this cycle of insane behaviour is that we have nearly run out of the money needed to keep repeating it!

You see, just like individuals, governments have credit ratings based on how they spend, borrow, and pay back money. Currently, the Government of Newfoundland and Labrador is spending a lot of borrowed money on poorly managed projects.

Our lenders may be willing to keep advancing money for a while longer, but this willingness to lend may not last even to the next election in 2019.

We are on a negative outlook with the two largest credit rating houses, which means they don't believe the government's promises.

The next budget, often handed down in April, will be crucial. If the 2017 provincial budget disappoints the rating houses and we suffer a credit worthiness downgrade, we have maybe one more downgrade to go before lenders won't lend money to us.

Without emergency help from the federal government, the business of the provincial government will stop. Bills won't be paid, pay cheques will bounce.

This is serious stuff. Some people may think this is fear mongering, but I’m interested in transparency, so I’m simply stating the facts as I see them. My trademark is to call it like it is.

The good news is, there may be light at the end of the tunnel – if we play our cards right.