"Do you smell what The Rock is cooking?" That's a line from WWE wrestler/actor Dwayne Johnson. You could ask the same of finance minister Tom Osborne. Are you buying what Osborne is still saying — that this province is on target to have a balanced budget by 2022-23?
As we wait for the mid-year update for the current fiscal year ending 2019, Mr. Osborne recently stated that our deficit for the year ended 2018 was $910 million (about $100 million more than forecasted). As Mr. Osborne looks to the future, through a combination of increased revenue and decreased spending, the financial situation of this province is supposed to lead to a balanced budget in as little as five years.
It was only just weeks ago that Premier Dwight Ball stated (in the quest to win the byelection in Windsor Lake) that neither the taxpayer nor the ratepayer would carry the burden of paying for Muskrat Falls.
Two important things to keep in mind:
(1) Newfoundland and Labrador Hydro has told the Public Utilities Board that "Hydro would be required to pay the actual costs billed to it in accordance with the Muskrat Falls Power Purchase Agreement & Transmission Funding Agreement."
(2) Rate mitigation that is being expressed by politicians in terms of 13 cents per kwh will require funding of about $700 million per year (September editorial, The Western Star).
How will we hit a targeted balanced budget in 2023 with a $910-million deficit on account and facing another $700-million annual bill yet to be added on the books to pay for Muskrat Falls?
To quote the credit rating agency Moody's from March of this year: "the province faces increased risk that it will be unable to attain its goal of balanced budgets by 2022-23". And that was six months before Premier Ball's September announcement of no tax increases to pay for Muskrat. Prior to Mr. Ball's statement, I never once heard Mr. Osborne say that his figures for a balanced budget included the fact the tax/rate payer would not be paying for Muskrat and that he had figured out a way to find upwards to an extra $700 million per year. To be headed towards a balanced budget, someone other than the N.L. taxpayer would have to be paying for Muskrat. That could only cue PM Justin Trudeau and a bailout from Ottawa.
The aforementioned Dwayne Johnson starred in a movie titled "Tooth Fairy." It was a comedy. It was fantasy. Not unlike this province's path to a balanced budget without the federal government.
Bern Kenny, Corner Brook