’Til debt do us part

The Packet (Clarenville) - - Editorial -

Dear New­found­land and Labrador: you’re over­drawn.

Your ac­count cur­rently shows a neg­a­tive bal­ance of $21,770,800,000, and it seems that you plan to con­tinue to spend more than you make …”

Imag­ine that in a let­ter from your bank.

But that’s where things were fore­cast to be at March 31, 2018: a to­tal pub­lic sec­tor debt of $21.8 bil­lion (up $4.3 bil­lion from 2017), a to­tal pro­vin­cial direct debt of $13 mil­lion (up $1.1 bil­lion from 2017).

This year alone, the govern­ment is set to add an ad­di­tional $683 mil­lion in debt — less than last year’s $812 mil­lion deficit, but sub­stan­tial just the same.

The num­bers are dizzy­ing. In fact, they’re down­right con­fus­ing. The pro­vin­cial govern­ment rolls out terms like “to­tal debt” and “net debt,” and, in most in­stances, uses what­ever num­ber that will make the fi­nan­cial pit we’re in look the best it can.

That means that, this year, $1.4 bil­lion will be spent on debt and fi­nanc­ing, much of it flee­ing the prov­ince to sat­isfy the peo­ple who lent us money. (That num­ber was $956 mil­lion last year.)

The truth is that our eyes are big­ger than our stom­ach — and more im­por­tantly, big­ger than our wal­let.

The govern­ment ob­vi­ously feels it has to con­tinue to spend money to keep the wheels of the prov­ince’s econ­omy turn­ing; at the same time as the pro­vin­cial govern­ment keeps its foot on the gas, though, our ever-grow­ing debt has a foot on the brakes.

Debt charges and fi­nan­cial ex­penses are now the sec­ond-largest ex­pense on the govern­ment’s books, ac­count­ing for 18.6 per cent of the prov­ince’s en­tire bud­get. Last year, it was only 14 per cent.

That means that, this year, $1.4 bil­lion will be spent on debt and fi­nanc­ing, much of it flee­ing the prov­ince to sat­isfy the peo­ple who lent us money. (That num­ber was $956 mil­lion last year.)

That’s money that never comes back, that never gets a chance to move through our econ­omy, pow­er­ing busi­ness and com­ing back as tax rev­enues.

That’s the brake, slow­ing us down.

And it’s go­ing to get worse.

Even at its most op­ti­mistic, the govern­ment doesn’t fore­see do­ing any­thing but bor­row­ing more money un­til pos­si­bly reach­ing a bal­anced bud­get five years from now. By the time we reach that bal­anced bud­get (some­thing that can only be seen as the rosiest pos­si­ble gaze into the fu­ture), the govern­ment ex­pects to add $2.1 bil­lion in new debt to the to­tal — es­sen­tially, a 10 per cent in­crease in pub­lic sec­tor debt even if none of the prov­ince’s other agen­cies bor­row an­other dime.

We’re clearly over­drawn, and while the govern­ment likes to talk about “a bal­anced ap­proach,” bal­anc­ing the com­pet­ing needs of the prov­ince and its abil­ity to pay, that bal­ance — es­pe­cially as we near the next pro­vin­cial elec­tion — is clearly tipped to­wards ap­peas­ing vot­ers, de­spite the clear, long-term fi­nan­cial im­pacts.

When close to 20 per cent of your in­come goes to ad­dress the fi­nan­cial charges on your debt, and you plan to keep bor­row­ing for the next four years, bal­ance is the least of your wor­ries.

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