Brace! Brace! Brace!
“Assume the brace position!” It’s the last thing you want to hear if you’re a passenger in an airplane. It means a crash is imminent, and bad things are about to happen.
Though they may be phrasing it a little more delicately, the message from Premier Kathy Dunderdale and Finance Minister Jerome Kennedy in recent days is the political equivalant of a major crash alarm.
The province’s financial situation is dire, they say, and some significant slashes to public spending is on the way. The massive splurging of the past decade — the province’s annual budget has all but doubled over this period, and the public service has swelled to one of the largest, per capita, in the nation — is about to disappear in a mushroom cloud of cuts.
Just how dire is the situation? The province is projecting a $725 million deficit for the 2011-12 fiscal year, and jaw-dropping $1.6 billion deficits for each of 2013 and 2014.
That’s a potential $4 billion shortfall within three years, and would wipe away nearly all of the gains made towards the province’s massive long-term debt in recent years if left unchecked.
Such is the reality of a public treasury that is so closely linked to the highs and lows of a resource-based economy, and ammunition for those who regularly preached that government spending was unsustainable.
Kennedy is in the midst of a series of pre-budget consultation meetings throughout the province that began in Carbonear last week. He can expect a steady stream of presenters to argue why certain programs and services should be funded. He’ll listen politely, take a few notes, and, as he did in Carbonear, dash all hopes with a sombre dose of reality.
We’re not saying these meetings are a waste of time, but no one can accuse Kennedy of giving false hope. The big spending days are over, and the tone of his budget speech will be much less upbeat than any in recent times.
As expected, the message is not being welcomed by those who work in the sector, and collective bargaining will be as tense as any we’ve seen.
The year 2013 is still very young, but it’s quickly shaping up to be one to remember, and not for all the right reasons.