Tag Archives: Blaine Higgs

May 21 2016
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Business, Economy, Government

Whole ‘loto’ money

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Candour is one of Blaine Higgs’ more endearing qualities. As finance minister under the former Progressive Conservative government in New Brunswick, he was always good for a quote that would, as often as not, knock you back on your heels. “Did he just say that?”

So, it should come as no surprise that when asked to explain his department’s use of $14 million in payments for shared gaming revenues made in error to the province’s First Nations communities years ago, he had this to say to the Saint John Telegraph-Journal last month:

“It was there as a potential bargaining tool to say if we get satisfaction in other areas we’ll discuss (the more than $14 million in overpayments). But if we don’t we’ll go after the$14 million.”

Mr. Higgs further explained that his government was prepared to let the largess stand only if it could obtain undertakings to stamp out illegal video lottery terminals, alcohol and cigarette sales on First Nations. It also sought to renegotiate broader revenue-sharing agreements that, it believed, benefitted only a few of the 15 aboriginal communities in the province.

Arguably, none of this would have come to light had the T-J failed to embark on some truly enterprising reporting. But now that the cat’s out of the bag, should we be surprised by the revelation that at the root of politics-as-usual is, frequently, real politick as deal making?

It’s hard to fault Mr. Higgs and his finance department operatives for attempting to make the most of a useful mistake they, themselves, did not commit. (The blame for the overpayments lies squarely with the Atlantic Lottery Corporation, which, apparently, first made the accounting error back in 2003).

On the other hand, someone owes the province’s taxpayers – a point that New Brunswick Auditor-General Kim MacPherson is all too happy to emphasize. Recouping the funds from the recipients, she told the T-J last month, “would definitely have to happen over a period of time in consultation with the First Nations given it’s a very significant amount of money and recognizing it would definitely impact the First Nations. It happened over many years, so it stands to reason that it would take quite a period of time to negotiate repayment terms. But the thing is there was no authority to make those payments and that’s why we say it needs to be corrected.”

On the face of it, she’s right. But it seems broadly unfair to expect those who unwittingly benefited from a clerical error to shoulder the burden of redressing the mistake. That would be a little like demanding that a taxpayer return his refund years after the money had been spent.

The other logical option is to require Atlantic Lottery Corporation to dig into its own corporate pockets. Still, that, too, is fraught with difficulties. As the gaming company is actually owned by the governments of the four Atlantic provinces any repayment would amount to a zero-sum exercise in futility. Or, as our favorite quote-maker Mr. Higgs said last week, “It’s kind of like taking your wallet out and paying yourself. It may not be a net gain.”

All of which suggests that the former finance minister’s solution – to make the best of a bad deal – might not be such a weird idea, after all.

If the current government can figure out a way to cost out $14 million in savings to the province from a better bargain with First Nations, then the matter might be resolved without further strife and with one benefit that’s been sorely missing from this whole debacle: transparency

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May 26 2015
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Economy, Health, Politics

How a fiscal leopard changes spots

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New Brunswick’s former Finance Minister Blaine Higgs, God love him, has always been a straight shooter. Except when he hasn’t.

Whilst in Tory office for all of four years, he inveighed against the provincial government’s tendency towards profligacy, calling for deep and painful cuts in the public service.

He suggested that everything “must be on the table”, and that included a serious review of his government’s tax policies – even going as far as intimating, off the script, that a prudent hike in the HST might save New Brunswick years of unnecessary fiscal pain at the hands of international bond holders who held – and continue to hold the province’s $12-billlion long-term debt in abeyance.

He talked darkly about streamlining the educational system; about cutting services to rural citizens; about rationalizing the way we pay for basic infrastructure, like roads, highways, sewer systems and pubic meeting spaces.

Apart from a few trims to the fiscal petticoat that hides a multitude of sins in this province, he largely failed and largely through no fault of his commitment or character. The political winds within his own party of silos and principalities were simply not in his favour. (Have they ever been for any sitting provincial finance minister in any province of this country)?

Still, now that the man is drifting freely in the soft winds of a durable New Brunswick spring – far from from the tethers of Cabinet discipline that once constrained him – one must wonder at the temerity of his latest proposal, a proposal that he must know has no chance of finding purchase in Canada’s only bilingual province.

Conflate New Brunswick’s two health authorities, he says, into one fully bilingual one. Why? “Because,” he told the Saint John Telegraph-Journal last week, “we don’t have a choice. In order to provide the quality of health care we need in the province, we need to look at how we can work more closely together, not further apart.”

Leaving aside, for the moment, just how breathtakingly ambitious – both politically and administratively – such a move would prove, the obvious question arises: If Mr. Higgs feels this strongly now, having prowled the perimeters of the political wilderness for seven months, why didn’t he speak up (as he did about public service cuts, education and infrastructure) just as forcefully when he had a better chance to use his position to win friends and influence people on an important matter of public policy?

Answer: Because, on this file alone, he would have been burned like a bad bagel, kicked to the backbenches and consigned to vacant seat in the “independent” section of the legislative gallery by the whips and goons of his own party. And he knows it.

Of course, on the face of it, his proposition to merge the province’s health authorities is fatally flawed, if only because it can’t work. The law stipulates in excruciating detail that health, like education, is a central plank in the Equal Opportunity platform that has guided New Brunswick politics since the late 1960s. Dismantling this apparatus would be tantamount to declaring war (real or imagined) on the rights of Francophones.

Beyond this, though, Mr. Higgs’ late-game candor conveniently ignores the real problem with health care in this province, which is not linguistic “duality” but service “duplication” and the fact that nobody in government or health authorities seems to know (or, perhaps more accurately, cares to think) about how to both profitably privatize and regulate certain elements of geriatric and long-term care and, in so doing, remove huge costs from critical-care facilities.

Methinks, politics will always win out when its erstwhile gunmen aim low and shoot from the lip.

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Jul 27 2014
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Demographics, Economy, Politics

A tale of two debt loads

Mountain of debt...maybe we grow accustomed to its face...

Mountain of debt…maybe we grow accustomed to its face…

Implementing prudent fiscal policy is, for finance ministers, like threading a needle with a tightrope. Just ask Ottawa’s Joe Oliver or Fredericton’s Blaine Higgs who are, for very different reasons, attempting to execute that particular circus trick.

In the wake of a C.D. Howe Institute report that calls for the federal government to loosen up on its avowed purpose to balance the national budget by 2015 come what may, Mr. Oliver thunders like a Calvinist preacher: “Our government will not open the taps on reckless spending. We will not go down that well-trod and irresponsible path to economic decline.”

Still, economist William Scarth is adamant. “The federal government should delay its final stage of deficit reduction by three years,” he writes in his report for C.D. Howe. “If its deficit-to-GDP ratio is held at one-half of one percentage point for three years before reducing it to zero, it is estimated that the nation’s unemployment rate would be four-tenths of one percentage point lower during this three-year period (the equivalent of 75,000 new jobs).”

He’s not alone in this thinking.

A recent Canadian Press piece quotes several noted experts – some of whom are not partisan word warriors – who point out that the Canadian economy is not, in fact, in especially good shape. Over the past 12 months, only Alberta has created any jobs –  and even there, 72,000 new positions are not enough to boost the flagging fortunes of Ontario, Quebec or, for that matter, New Brunswick.

“Balancing the budget is a political imperative not an economic one,” NDP finance critic Nathan Cullen says. “It’s like balancing the family budget and not feeding the kids.”

Meanwhile, Liberal deputy leader Ralph Goodale writes in a recent editorial, “For months on end, (the Harper government) dismiss weak employment numbers – like the ones recently reported by Statistics Canada for the month of June – as just ‘monthly volatility’.  But it keeps recurring, month after month. One might ask, at what point does that so-called ‘volatility’ become an undeniable trend in the wrong direction. Or to put it another way, when will Mr. Harper pull his head out of the sand?”

Then, there’s David Dodge, a former Bank of Canada Governor whose Spring 2014 Economic Outlook for the law firm Bennett Jones observes: “It is. . .important to realize that in the current environment of low long-term interest rates, fiscal prudence does not require bringing the annual budget balance to zero almost immediately. Small increases in borrowing requirements to finance infrastructure investment would still lead to declines in the debt-to-GDP ratio. Moreover, with low interest rates, it is the right time for governments and the private sector to invest in infrastructure.”

Finally, the CP taps Bank of Montreal chief economist Doug Porter for his views. Says he: “The market is not crying out for a tighter fiscal policy at the federal level. If the government wheeled out a significant medium-term infrastructure program, I don’t think I’d have a big problem with it – they can borrow very cheaply and there’s a pretty good case to be made that there’s lots of demand for infrastructure.”

Move eastward to New Brunswick and witness a whole different tale of woe. Here, Finance Minister Higgs would give his left pinky to own Mr. Oliver’s set of problems, i.e., to spend or not to spend.

According to the latest audited financial statements, the province finished fiscal 2013-14 with a deficit of $500 million (about $20 million more that anticipated) on a long-tern debt of $11.6 billion.

Meanwhile, New Brunswick’s population of 755,464 people continues to age, making a quick return to fiscal health about as likely as a late-July nor’easter.

Still, plucky Premier David Alward enthuses, “We are turning the corner and we see revenue projections on target or actually a bit ahead of target from what we are projecting.”

Of course, to do that, Telegraph-Journal reporter Chris Morris notes “additional revenues of $1.129 billion, a 14 per cent increase over 2014-2015, must be achieved.”

Not even on his very best day would Mr. Oliver walk that tightrope for Mr. Higgs.

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May 09 2014
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Economy, Government, Politics

Setting the fiscal stage for a political melodrama

 

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It is organizationally awkward, bureaucratically regressive and probably unworkable. 

But say this for the drafters of New Brunswick’s newest law designed to reign in public spending: When it comes to crafting high, political theatre, they hold a candle to no one; certainly, no other Canadian legislator of similarly hawkish mien.

With one merry swoop in deference to the provincial election, coming soon to a voting station near you, Finance Minister Blaine Higgs has tabled the Fiscal Transparency and Accountability Act, which he says will render New Brunswick “one of the most accountable provinces in Canada.” 

It will do this, apparently, by requiring government to reduce the deficit by at least $125 million – or, as the case may be, preserve a budgetary surplus – in any given year. The consequences of failure would, for the first time, directly hit each cabinet minister where he or she lives: in the pocketbook, and in the form of a $2,500 penalty.

The Act, its proponents claim, will also restore common sense to the administration of the province’s finances – which currently labour under a $500-million deficit and a long-term debt of almost $12 billion – by compelling political parties to put a dollar figure beside each of their election promises at the risk of losing their annual operating allowances.

In his official statement in the Assembly, Mr. Higgs struck a triumphant tone.  “New Brunswick will be the only province with this level of transparency required for election promises,” he said. “Elected representatives must be accountable for taxpayers’ dollars, not only when making commitments to voters, but also when making decisions at the cabinet table. Just as New Brunswickers must face personal consequences for not keeping up with household bills, Mr. Speaker, so must elected representatives see personal consequences for not keeping up with our province’s bills. That. . .is true accountability.”

Perhaps; still, it’s odd that the only way this government seems able to deliver “true accountability” to taxpayers is by functioning as if it were its own trustee in bankruptcy

In effect, these new schedules of penalties for non-performance and injunctions against empty promises all but concede that government is a wastrel. It’s a deadbeat dad whose awful track record with the family’s nest egg has landed the whole clan in the chicken coop. It can’t be counted upon to do the right thing on its own. 

Clearly, then, the solution should be obvious: The Tory government will regulate itself, just like before; only. . .well, better.

Astonishingly, the province’s other main parties seem all too willing to oblige Mr. Alward and company in legitimizing this fiction.

Liberal finance critic Roger Melanson made a good show of his faux opposition on Wednesday when he intoned, “To have the minister of finance present this piece of legislation and make a statement like this, it’s quite ironic in the fact that if you look at the specific results from this government and this minister of finance for the last three-and-a-half years, he has missed his financial targets over and over and over.”

A New York minute later he had this to say: “It (the Act) makes sense and I think taxpayers, New Brunswickers, are expecting any political party or any government to be accountable, to be transparent and to be financially responsible.”

But how valid is that commitment when it’s delivered under threat of self-imposed reprisals in the event that the government falls off the spending wagon once again?

Moreover, what are the new costs associated with administering a law that must involve third parties to mete out its complex brand of justice? Are there mitigating circumstances that might waive the various fines and levies? If so, when and how do they kick in?

According to the legislation, cabinet ministers are off the hook if certain “extraordinary events” such as recessions, natural calamities and other so-called acts of God cost the budget $20 million or more. Again, though, who decides what fits the definitions, and what are the mechanisms? 

One element does seem clear, much to the expected chagrin of the Canadian Taxpayers Federation. In a nicely sneaky and utilitarian way, the new legislation essentially guts the archly populist (and retrograde) Taxpayer Protection Act. 

Now, a government that faces a $400-million annual deficit in New Brunswick no longer needs to hold a referendum to obtain the public’s expressed permission to raise new taxes or hike the HST.

Here, then, witness one piece of political theatre stooping to conquer another in high style, indeed.

 

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Feb 05 2014
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Government

Countdown to ‘debt-a-geddon’ in New Brunswick

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New Brunswick’s debt clock counts down, by the millisecond, to eternity, tallying a number so vast it beggars comprehension.

Still, there it is on one of the Canadian Taxpayer Federation’s (CTF) websites. Now $11,551,675,188.79; then $11,551,675, 204.44. In a few minutes, it’ll roll over at $11,551,676,000.00 and the nauseating cycle will begin again.

Granted, the CTF is not what you might call a fun bunch. In fact, among all the deeply earnest interest groups and think tanks in Canada (and there are a lot of these taking up office space in charming cold-war-era, cinder-block edifices along the Ottawa-Gatineau corridor), it has always seemed, to me at least, the one most likely to suffer whatever passes in the institutional world for a nervous breakdown.

But sometimes Chicken Little is right; the sky really is falling. Certainly, the CTF’s online presence is the stuff of waking nightmares for the fiscally prudent.

According to the press release that accompanied the organization’s debt-clock launch this week, “In December 2013, the Department of Finance predicted the net debt of the Province would grow by $587.2 million. That means the debt is growing by $1.6 million every day, $67,031 per hour, $1,117 per minute or $18.62 every second.”

In fact, the amount the provincial government allocates annually to service the the debt (interest payments) exceeds the budgets of all but three ministerial departments. That’s a whopping $660 million down the drain each and every year till deadbeat-a-geddon arrives with its four court-appointed officers of the apocalypse: accountant, lawyer, trustee, and bailiff.

Of course, New Brunswick isn’t the only province of Canada that sets the CTF’s tongue clucking.

“The (CTF) released new documents obtained through the Freedom of Information and Protection of Privacy Act that reveal some materials purchased for the Bluenose were sold to the (Nova Scotia) government at a whopping 43 per cent mark-up,” the organization announced last month. “These big mark-ups are just the latest in a series of questionable uses of taxpayers’ money.”

Meanwhile, in Ontario, the CTF wants the provincial government to give serious thought to its myriad recommendations for producing “new revenues and savings of over $13 billion, more than enough to balance the budget in 2014. The recommendations also include a legislated debt-repayment schedule to force the government to pay down Ontario’s $272.8 billion provincial debt.”

Yet, of all the provinces, New Brunswick always seems to earn the CTF’s sharpest opprobrium. Is that because, of all the provinces, New Brunswick has, for the moment, the least going for it, economically and industrially, and the most difficulty bridling its public spending? “You can only borrow so much before you go broke,” the Federation’s Atlantic director Kevin Lacey is fond of saying.

That’s certainly correct. But it is government’s enormous borrowing powers – the ones they grant to themselves and redeem in markets all over the world – that is precisely the problem. Unlike people, private enterprises and institutions, they don’t easily go broke, a structural protection that, paradoxically, deepens the injury and prolongs the misery until, hey presto, one day you wake up and it’s Greece. Gee, now how’d that happen?

New Brunswick road back to fiscal health is hard, but clear.

On the expense side of the ledger, cut program spending wherever costly duplications and redundancies are found; consolidate essential services wherever possible; and shrink the size of the civil service and of government, itself.

On the revenue side, the options are far more limited. Still, robust commercial activity is the only durable source of legal swag for public coffers. To thrive, the private sector needs reliable infrastructure, a skilled and educated labour force, a comprehensible regulatory environment, and, naturally, a reasonable tax climate.

Oddly, enough, as New Brunswick Finance Minister Blaine Higgs struggles with his debt burden, his federal counterpart Jim Flaherty is merrily on his way to balancing the nation’s books, and then some.

In fact, he’s so confident he’s politely ignoring the International Monetary Fund’s advice to loosen up the purse strings and start investing in strategic initiatives that might make the Canadian economy more competitive for the good times that surely follow.

Thanks, but no thanks, fellas. In a year or two, we’ll be sitting on a surplus of two or three billion bucks.

And you know how vast, incomprehensible numbers blind us, here in Canada, to everything else, especially practical common sense.

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Sep 19 2013
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Demographics, Economy, Politics

Facing up to the pension challenge

In the unlikely event that New Brunswickers, en masse, get busy and jump start another baby boom to someday repopulate the ranks of the provincial civil service, we might just avoid the fiscal crisis that now looms over public pensions.

The sad truth is, though, the $1 billion in unfunded liability will not vanish so appealingly. No fancies of the imagination, no wishful thinking, no sleights of the accountant’s hand will make it go away. Someone’s going to have to pay for it. The debate that roils now is solely about who.

Will it be, to some extent, those who paid faithfully into the fund for decades –  presuming that they would receive, upon their retirement, a predictable amount on which to survive their sunset years? Or will it be, to a much larger extent, those who are still working – many in the public sector; many more in the private sector where taxes must, by necessity, cover the pension shortfall.

Such is New Brunswick’s “Sophie’s Choice”.

The David Alward government has never been clearer about its stand on any matter of public policy than it has on this one. It wants to move to a shared-risk approach, modeled after some European systems, in which pensioners assume some of the hazards of their variably performing investments directly. Gone, then, would be the traditional and fixed guarantees, including yearly CPI indexing.

In a letter to the New Brunswick Pension Coalition (obtained earlier this week by the Telegraph-Journal), provincial Finance Minister Blaine Higgs said the status quo is unacceptable. So are the quick fixes contemplated to postpone the inevitable. “It would be impossible for the province to consider ‘Band-Aid‘ solutions,” he wrote. “Nor could we accept changes to the proposed model which would be unfair to our current and future employees or to New Brunswick taxpayers.”

It is around this issue of fairness than members of the Coalition also rally. Is it fair, they ask, for the provincial government to unilaterally claw back pension guarantees? Is it fair to force a retiree, with few economic options available to him, to accept a level of risk shrouding his income he was never led to expect until now? When, in essence, is breaking a deal ever fair?

Who’s right? In a way, everyone is. Still, and lamentably, for the current cohort of pensioners, there is no moral equivalency between these opposed positions. The ground on which the government stands is higher if only because most people in the province do not enjoy the arrangements at issue. Absent any reform, they would, however, have to pay for them.

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The disputants may blame each other until all the clauses in the Public Service Superannuation Act sunset. But the real enemy is demographics. And the cold, if somewhat comforting, fact is New Brunswick is not alone.

Just about everywhere in Canada, public pensions are in trouble. They were crafted at a time in the nation’s history when the future looked much more munificent than it does today. The pay-it-forward model – in which the existing generation of public workers essentially contributes to the retirement well being of future ones as it relies on the beneficence of past ones – is, for all practical purposes, broken.

Today, the population is increasingly geriatric and that – according to public policy experts William Robson and Alexandre Laurin, writing in the Globe and Mail this week – means “there are fewer active employees to support the pensions of retired beneficiaries. People are living longer, which means pensions need to be paid out for longer periods.”

In fact, as they discuss pension reforms underway in Alberta, they single out New Brunswick’s proposed changes as “ambitious” and “far-reaching,” suggesting that the “new shared-risk model. . .protects future generations by permitting reductions of base benefits already accrued, in extreme situations.”

For most New Brunswickers, the choice, though unhappy, is clear. In the interests of fairness, and for the sake of what’s left of the system, pension reform is necessary.

In fact, wishful thinking to the contrary, it’s unavoidable.

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