Nova Scotians will be going to the polls again. June 9th being the predicted date.
A scheduled, mandated date, you ask?
No. No, not at all. Rather a totally political decision taken for totally political reasons. Which wouldn't be so far out of the realm. After all, it is politics, right?
Right, but here's the thing. Do we really need to be doing this now? Right now? In the midst of a global economic
Talk about fiddling while Rome burns ...
This is the government that sat for seventeen (count 'em, 17) days during the last sitting of the House. And for a whole twenty days in 2006. For which it claimed the record for fewest days sitting of any Legislature in the country.
Of course, that was when the "cooperative nature of minority government [makes] for shorter debates" and "there's no sense being in the house just for the sake of having endless debates". Right on, that.
But wait, it's been all of one week and a few days this time around. Alas, this time around, with all the talk of "shovel ready" projects to stimulate the economy (or not), now, I guess we have lost some of that "cooperative nature". Pity, that.
There's this little piece of legislation, you see. It's called the Finance Act. Faced by decades and decades of growing debt, a previous Conservative government, touting fiscal responsibility, introduced legislation which demanded balanced budgets.
But MacDonald took a big chance in trying to do a little fast fiscal footwork of his own on Monday, bringing in a budget that needed to drain money that by law must go to debt reduction — Hamm’s law, by the way — in order to balance his books in an economy of shrinking revenues.Which, how did that work for you? Apparently not so well, eh.
All tolled, the government needed to switch in $84 million to balance the books for the year that just ended, plus another $180 million for the coming year.
In effect, the plan would divert $260 million to revenues, just so the Tories could insist that they had balanced the books. But they needed at least one of the two opposition parties to support the plan.
So what's wrong with those opposition parties anyway? After all, don't they know it's spend, spend, spend? That that's the only way to save the day?
Well, it's a mite bit more complicated than that, you see. Apparently the opposition parties would have agreed to a deficit going forward, just not retroactively. To clear the past budget deficit.
As things stood, both last year’s and this year’s budget would have been in deficit – under the law, though not under GAAP – unless one opposition party had agreed to an 11th-hour repeal of 2005 legislation that requires the province to treat offshore-offset revenues ($105.9 million last year and $180.1 million this year) as a minimum surplus to reduce net direct debt. The opposition didn’t bite. So the budget then ran afoul of another law restricting deficits. Mr. Muir’s (law-defined) $84-million 2008-09 deficit would have had to be recovered (again, by law) as a first charge on the 2009-10 budget. Covering this, plus $180.1 million in offset revenue he wouldn’t be able to use, would have swamped Mr. Muir’s micro-surplus and put this year’s budget in deficit, too. But the law also says he can’t table a deficit budget. So this year’s budget would have had to be withdrawn.And as for the proposed budget, itself ... good, bad, indifferent? Who knows?
The muddle was further complicated by the move in March to re-do a funding deal with universities, so $256 million in cash flowed to them in the last fiscal year instead of this one. Why? We were headed for a $278-million accounting surplus in 2008-09 (with $172 million in uncommitted revenue on top of the $105.9-million offshore offset). But by eating into the offset payment, the government made the budget hostage to an unlikely change in the law and an impractical restriction on deficits in a recession.
Ironically, no current cash is associated with the offshore-offset accounting revenue. Nova Scotia received the cash and used it to pay down market debt five years ago. The $180.1 million could only pay bills this year if we borrowed back cash. The budget papers acknowledge "this amount will be included in the borrowing program for the upcoming year."
The budget passed GAAP and tackled recession, but defending it was, and is, akin to explaining string-theory physics, with too many strings.
So we’re into an election campaign whose cost will by itself easily wipe out Mr. Muir’s projected $4-million surplus. It would have been a lot simpler and wiser just to come to grips with running a recession deficit – something whoever wins is likely to do.
So, yeah, politics as usual.
Who knows, maybe someday we will even get to use our piece of the federal government's economic stimulus plan.