Paying the bills

George Macvicar & Paul Herridge
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The provincial PC government has reported on its mid-year financial statement, noting once again its revenues for the current year will exceed March’s budget predictions and put the province in an improved financial position.

The provincial PC government has reported on its mid-year financial statement, noting once again its revenues for the current year will exceed March’s budget predictions and put the province in an improved financial position.

The budget surplus is now predicted to be $755 million – after an original forecast of $59 million.

Finance Minister Tom Marshall, like many other finance ministers, brings down budgets with tempered predictions only to bask in the limelight when things show improvement. Former federal Finance Minister/Prime Minister Paul Martin did this all through the 90s, bringing the federal government to an enviable budget/debt ratio.

Of course, those efforts came at the expense of ordinary Canadians.

In Newfoundland and Labrador the long term net debt is now down to $7.7 billion, gradually declining from over $11 billion since the current PCs took office in 2003.

Many economists, bankers and conservative-thinking individuals are patting Mr. Marshall on the back for his achievement. But in fact, the finance minister is a very lucky man with oil revenues now being generated offshore Newfoundland in an increasing manner with scaled up production.

When Mr. Marshall announced his update, the price of oil on the markets had reached $103 a barrel. His March budget predictions were based on oil in the mid $80 range.

For those people who think the additional oil revenues should be used for other expenditures to improve health care, education and infrastructure programs – it is a good argument.

But paying down the long term debt also means not saddling our children and their children with our financial responsibilities. These improved revenues are not going to be available later on as oil resources dwindle.

Comparing our long term debt is like looking at present day households when young people live together, some start families, build large homes, buy two vehicles – one for him and one for her, put one or two recreation vehicles in the shed(s) and expect the oil money to flow endlessly to pay their debts at some later date. Have it all today and worry about what tomorrow brings, tomorrow!

Our parents and grandparents’ philosophy was to pay down what you bought, before you bought something else. Our generation failed to instill that same thinking in our children and now our grandchildren.

Providing needed social programs now for the current generations is admirable, but so too is owning what you have and not drowning in long term debt.

This is what the American public did in this past decade, and why many of them lost their homes because simply put – they couldn’t pay their bills!

George Macvicar, Editor/Manager

Geographic location: Newfoundland

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