New Brunswick may be drowning in debt. In fact, practitioners of the wooly science of fiscal forensics may have already pronounced this province dead on arrival. But don’t we just do a bang-up job reporting our woes to the rest of the world?
The C.D. Howe Institute says we deserve a little praise for a change. Specifically, Colin Busby of The C.D. Howe Institute tells the Saint John Telegraph-Journal that, according to his annual study on government spending overruns in Canada (also known as “The Pinocchio Report”), this province does “reasonably well” predicting its financial condition. We are, in a phrase, “middle of the road”, which is better than road kill, I suppose.
What’s more, we’re brutally honest with ourselves and the rest of the country about the hobo clothes we’re forced to wear. “New Brunswick is one of the jurisdictions where you can clearly find comparable numbers,” Mr. Busby says. “You simply find what the budget promises were and then find the numbers in the public accounts and compare them. That’s a positive story for New Brunswick.”
Still, he adds, “When it comes to spending overruns and the ability to hit budget targets, either overshooting or undershooting (New Brunswick) is not in the range of Ontario and the federal government who have done a significantly better job in terms of holding to what they promised in their spring budgets.”
Here’s how the numbers shake out: Over the past 10 years, cumulative overruns, expressed as fractions of 2013/14 budgeted spending, were highest in Saskatchewan (36 per cent), Alberta (26 per cent) and Manitoba (22 per cent), lowest in Canada, overall (one per cent), Ontario (five per cent) and Nova Scotia (seven per cent).
New Brunswick overspent by $1.2 billion over the past decade, which is bad. On the other hand, averaged out over the period, we came in less than 15 per cent off our annual targeted goals, which is good. Sort of.
For a finance minister, there is, I’m guessing, a certain comfort in knowing, with any degree of accuracy, just how badly off your jurisdiction is in the scheme of things. It’s a little like being sentenced to an indeterminate jail term. At least you know you have a cot; let’s just hope your bunk buddies in the bond market aren’t complete psychos.
But, in the larger context, how instructive or useful are these sort of statistical parlour games?
That New Brunswick manages to “present well” is vastly less important than its moribund economy, the structural instability of which makes accurate budget forecasting a near impossibility (a fact which suggests that the province’s reasonably fair reporting record is more a function of good luck than good prognostication).
Meanwhile, the Conference Board of Canada forecasts continued stormy economic weather for the province. “Prospects for New Brunswick’s economy will remain dim for at least one more year,” it said in its revised winter outlook earlier this month. “Cuts in the potash industry, and the closing of the Maple Leaf Food plant in Moncton, will limit economic growth to 0.8 per cent in 2014.”
How will this affect the next round of budget promises?
An even more intriguing question is whether a fully functioning shale gas industry, which should make us all filthy rich, will also make our elected officials filthy liars, though through no fault of their own.
The C.D. Howe Report notes the paradox common to provinces rich in natural resources: Their budgets are even farther from target than are those of patently poor provinces, such as New Brunswick. Economic instability, it seems, cuts both ways.
“Jurisdictions that are more dependent on natural resources showed sizable positive revenue biases: Saskatchewan, Newfoundland and labrador and Alberta all had biases of eight to 10 per cent,” the Institute noted. The natural-resource dependent jurisdictions that more affected by commodity-price swings also had low accuracy scores.”
So, then, the more money a jurisdiction has sloshing around in oil and gas wells, the less veracious are its budget forecasts.
What a delicious irony.
Still, if I had to choose, I’d rather the province I call home be recognized for the power of its industry, than the accuracy of its numbers-crunchers.