Hard truth

The Compass - - Editorial -

The protests over last year’s rev­enue-gen­er­at­ing meth­ods - tax changes, the in­tro­duc­tion of the levy - make it pretty clear that peo­ple aren’t will­ing to pay more for the ser­vices they are us­ing, so this is the other side of the coin - re­duc­ing costs.

And it has to hap­pen.

Wed­nes­day, the prov­ince an­nounced that it would be get­ting rid of 287 man­age­ment po­si­tions. As a re­sult, 197 peo­ple will lose their jobs (90 of the po­si­tions were al­ready va­cant).

The move will save some­where be­tween $20 mil­lion and $25 mil­lion, but not right away - the pro­vin­cial gov­ern­ment says it ex­pects to have to come up with $15 mil­lion in pay­ments in lieu of no­tice. The other shoe is, of course, yet to come: Wed­nes­day’s an­nounce­ment doesn’t in­clude ex­pected lay­offs among union­ized em­ploy­ees.

It may sound like a bro­ken record to keep point­ing this out, but we can’t con­tinue to solve our prob­lems by push­ing debt into the fu­ture and onto our chil­dren.

Think of it this way: there are about 519,000 peo­ple in the prov­ince, ac­cord­ing to the 2016 cen­sus. At the begin­ning of this bud­getary year, the pro­vin­cial gov­ern­ment - even af­ter in­creas­ing taxes and fees, with things like the two per cent hike in the HST - was fore­cast­ing a deficit of $1.8 bil­lion.

That means push­ing $3,468.20 apiece into the fu­ture - and since we’re not likely to be able to pay down that debt, even without new debt, you can start adding on in­ter­est.

The gov­ern­ment’s last pub­lic bor­row­ing was a $500-mil­lion bond, a deal that closed Dec. 7, 2016. The best in­ter­est rate the gov­ern­ment could get? Get ready - it’s 3.7 per cent per year. Given that in­ter­est rate, by next year, that $3,468.20 per per­son will be an un­paid $3,596.52.

Still un­paid in the fol­low­ing year (the gov­ern­ment still ex­pects deficit spend­ing then), the debt from this year would be $3,729.59. You see the prob­lem - pay­ing taxes that are only go­ing to dis­ap­pear as an ever-grow­ing amount of in­ter­est is a mug’s game.

To quote Merle Travis from his 1946 coal min­ing song “Six­teen Tons,” we’re “an­other day older and deeper in debt.”

And keep in mind, even that 3.7 per cent in­ter­est rate isn’t the only way we’ll pay for bor­row­ing; tucked away in the gov­ern­ment’s ac­counts this year is $65.2 mil­lion that we’ll pay in man­age­ment fees, un­der­writ­ing com­mis­sions and dis­counts to the fi­nan­cial firms plac­ing the prov­ince’s debt on the fi­nan­cial mar­ket.

It’s worth point­ing out, as the gov­ern­ment did re­peat­edly in an­nounc­ing the lay­offs, that this prov­ince has 94 gov­ern­ment work­ers per 1,000 peo­ple - the na­tional av­er­age is 67.

It can’t con­tinue.

This is, per­haps, stat­ing the ob­vi­ous.

If you aren’t will­ing to pay more, you clearly have to ex­pect less.

Wel­come to the start, just the very start, of less.

— This edi­to­rial orig­i­nally ap­peared in The Tele­gram

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