The government’s big gamble

By now you’re probably sick of hearing and reading about the budget, so we won’t delve into the details.

The watch word this time is austerity and the budget truly reflects that. Every government department is being asked to do more with less and the loss of public-sector employment will have repercussions throughout the economy.

The finger-pointing, recrimination and blame game will play out over this spring, so the government can expect to see another drop in popularity when the next CRA reporting period ends.

Cabinet, in approving this course of action, had to be fully aware of the politics involved. Handing your opponents a budget that can be used like a bat to beat you with is tough stuff. So why would they do it?

It all comes down to philosophy and the choices that were available. In this instance, the government had three options.

Option 1: The “stay the course” philosophy. In other words, allow the deficit to grow in the hopes that oil prices and other economic activity would improve over the next couple of years. Increasing economic activity would generate new revenue and the deficit could be eliminated without a lot of pain. While we see a little of this hopeful thinking in the current budget, it was not the philosophy chosen. Whenever you hear a politician say that growing the economy is how you solve the money problem, this is the phi- losophy they hope to employ.

Option 2: The it’s “not as bad as we thought” philosophy.

That’s where the government spends months and political capital painting a dark picture of looming problems which have to be addressed. We saw that philosophy at work last year.

By the time the budget was rolled out, the few cuts and minor layoffs seemed tame compared to the horror story we had written in our minds. Even the deficit was lower than expected. We saw a little of that at work in this year’s budget as well, because the deficit is now much lower than originally forecasted. But again, this was not the principle philosophy the government used to build this budget.

Option 3: The “just as well to be hanged for a sheep as a lamb” philosophy. The basic thinking is simple, and that’s what the government went with: if you have to do bad things, then do them quickly, get them over with and give yourself time to heal.

The government made a conscious decision to take a real political hit in the hopes of rebounding from it further down the road. There is a lot of water to run over the falls before they have to face the electorate again, and if they can get their financial house in order by 2015, things just might work in their favour.

Is it a gamble? Yes it is, but all of the options are a gamble.

In this case, Dunderdale’s administration upped the stakes. The “take the hit” approach usually follows a change of government. In other words, you get to lay the blame for the tough times on the people who ran the place before you.

Danny Williams did it for years. His first budget was a tough one and it led to a public-sector strike. He came to the government declaring that we were nearly bankrupt and that all of the tough things he was proposing were necessary because the other crowd had mismanaged the place.

Dunderdale doesn’t have the luxury of being able to blame the other guy to the same degree. While hers can be thought of as a new administration, it is far from a new government and the decisions being criticized or reversed today were made by them. Cuts in the civil service, for example, come after this same government expanded the civil service to record levels in the first place. See the problem? It’s hard to be a hero for putting out the fire, if you were the one who started it.