A signal to election

A$75 million surplus! It would be an understatement to say Islanders were surprised this week to hear Premier Wade MacLauchlan and Finance Minister Heath MacDonald provide details on this unexpected early Christmas present.

There will be those who will find something to complain about. But those criticisms will be muted because the entire amount will go to pay down the province’s $2.1 billion debt. It’s the first time in 10 years that a payment has been made to reduce that debt, which annually drains millions of dollars in interest charges. Any pay-down provides some relief. It also sends a strong signal to the bond markets, and elsewhere, that P.E.I. has its financial house in order – finally.

That the province is in a position to make such a decision is equally astounding. As Premier MacLauchlan notes, the 2017-2018 fiscal position was not achieved by making cuts to programs or services. The province doesn’t seem to be reducing its spending in key social areas.

The government said major increases in corporate business taxes - from the strong economic performance of the province – along with higher personal taxes and HST revenue, account for the $75 million. The figures seem to add up. A growing population and added job creation numbers have also helped. Skeptics will naturally look for other less satisfactory sources of cash, but so far, have found none.

Anticipating criticism about social services supports - in light of the surplus situation - the province took steps Friday to negate those as well. New investments were announced for shelter, food and employment. Social assistance food rates will increase 10 per cent and social assistance shelter rates will increase six per cent. New program announcements for housing and mental health are expected as early as next week.

The surplus does prove legitimate criticisms about the province’s accounting procedures. This surplus is for the 2017-18 fiscal year, that ended March 31, 2018, a full seven months ago. How could the province not have a better handle on its finances and forecasts when it presented a budget in early April predicting a $1.2 million surplus, and only improving slightly over two subsequent years. No one is critical that the province is performing very well, but there should be some questions raised about tracking expenses and income.

The auditor general has suggested the province modernize its accounting procedures, and recommended various changes. Based on this massive error in surplus estimates, the province should heed her advice.

The premier promised he would be ‘doing government differently.’ A huge surplus and paying down the debt are certainly different and will take some getting used to.

The province can’t be accused of salting away the extra cash to trot out a series of pre-election goodies. A provincial vote was expected next spring, and this windfall presented an ideal opportunity for the government to throw open the doors to the public treasury. That didn’t happen either.

An opposition MLA opined that the fat surplus might still be used as an election ploy – to show Islanders they are in fiscally prudent hands. And the string of good-news announcements could all lead to a snap election call next week – right after municipalities vote on Monday.

That would mean an early December election as the government hopes to reap benefits from the economic good times. The premier has been following polls and economic indicators for months, looking for the most opportune time to seek a new mandate. Why wait for spring? This might be the best option.

It would certainly cause mayhem for the Progressive Conservative Party that just announced plans this week for a Feb. 9 leadership convention. It wouldn’t surprise anyone that the Liberals would look for a chance to disrupt plans for their long-time political foes. A similar scenario took place leading up to the 2015 provincial election.

The Liberals are also keenly aware that the PCs are perhaps not the key threat to their re-election hopes. Recent polls have consistently pushed the Greens to the top of the leaderboard. Liberal strategists might argue that a December vote reduces the Greens’ chances to increase their grassroots organization across the Island.

A snap vote would obviously impact the referendum on electoral reform that must be held with the provincial election. It would reduce the referendum campaign period to about 30 days. But there is still no referendum commissioner, and a short campaign would reduce the chances of success for the mixed member proportional representation option.

Would the government be so bold and calculating? We’ll see soon enough.