It should be the single-most thought-about three sentences in the province this year. Why?
Not only because it quite simply trashes all the pablum we’ve been told about what great financial stewards the current government is, but because it also heralds a financial reckoning in this province that may be nothing short of alarming when it arrives.
We’ve heard a lot about net debt and budget surpluses (driven almost exclusively by non-renewable oil royalties), but anyone in business knows that, when it comes to actually managing finances, the devil isn’t in the revenues, it’s in the expenses. Because revenues in business — as our provincial government has discovered, time after time, when its budget numbers are wildly out of whack — aren’t in your control. Expenses are — in fact, expenses are the only thing you can really control. Or, more to the point, that you can control if you want to.
But back to those three sentences, which came late last week from the province’s auditor general, Terry Paddon: “Since 2004, the province’s expenses have grown from $5.1 billion to $7.7 billion in 2013, an increase of $2.6 billion, or 51 per cent. Per capita expenses in Newfoundland and Labrador are the highest in Canada. In fact, per capita expenses are approximately 40 per cent higher than the average of all other provinces.”
It doesn’t really sound that scary at the outset. But it should be pretty darned terrifying.
Stop and think about what that means.
First, that government services in this province cost more than in any other province in the nation. Second, that for what costs $1 (on average) in every other part of Canada, taxpayers in this province are paying $1.40.
Now stop and think about what it means about the province being able to hold the line on anything — wages, budgets on major projects, you name it. You don’t sound like a good financial steward — in fact, you sound downright fiscally sloppy.
It’s not the first time numbers like these have come up. In fact, numbers pretty much like this came up almost exactly a year ago when the Fraser Institute did a review of health-care costs for provinces across Canada, (which is hardly surprising, given that health makes up such a large percentage of the provincial budget).
At the time, the response from government was a quick one: “They haven’t considered, at all, that we have the oldest and the fastest aging population anywhere in the country. That’s a reality for us,” Health Minister Susan Sullivan said.
“We have 33 hospitals and clinics, health centres, for that population of 500,000. I suspect if you go down to downtown Toronto, you’re only going to find two or three hospitals to serve that population.” (The TC Media story on Sullivan’s comments pointed out that “there are at least 15 hospitals in the city of Toronto.” It’s also worth keeping in mind the Fraser Institute has its own mandate.)
The argument that we have an aging population is certainly true — there have also been arguments that our geography contributes to costs, with a sparse population well spread out around the edges. But northern Manitoba is no picnic for supplying government services, nor is northern Ontario. And British Columbia? Well, if you’ve been there recently, you know many parts of the place are stuffed to the gills with old people. Driving in Victoria means spending a lot of time being very, very careful that you don’t drive into Miss Daisy. Or have Miss Daisy drive into you. There are plenty of aged people driving up B.C.’s health-care costs, too.
There’s nothing wrong with a government choosing to spend more than neighbouring provinces on your population — but there’s no sign that our government has actually made that choice. The problem, of course, is that if you’re spending $1.40 for what everyone else is spending $1 for, there should be some pretty remarkable returns on that spending; we should have significantly better health care and education and social welfare than pretty much anyone else in the country. Because, after all, this is a big, spread-out country with equally big and spread-out expenses. And we don’t.
Stop and think about it this way: if you were in the office supply business, would you think you were doing a good job if, on average, everything you bought wholesale cost 40 per cent more than the average wholesale price for your competitors?
Would you go to your boss with those numbers and boast about what a good job you were doing? And would you think that such spending — and your job, for that matter — was in any way sustainable?
Russell Wangersky is editorial page editor of the St. John’s Telegram. He can be reached by email at email@example.com.