Siobhan's Dog
An imaginary deficit is larger or smaller than reported.
Siobhan Coady can go down in history as the finance minister who is both right and wrong at the same time.
Since Siobhan likes her Labs, let’s call this condition Coady’s Dog. Like Schrödinger’s Cat, of a sort, who was both alive and dead at the same time in the idea that everyone knows about thanks to the Big Bang Theory. Even network television can be educational.
In Siobhan’s case, she is both right and wrong about the way the government reported a cash settlement from the tobacco companies to settle a lawsuit that has been going on now for almost 30 years.
Coady told the House on Tuesday that the government booked the $520 million it is supposed to get over the next 20 years all in one lump (less lawyers’ fees) - and apparently never disclosed it when she announced the budget - because that’s the way the crowd in the Confederation Building do things.
That’s true if we are talking about reporting cash when it was earned and not when it was received. That has to do with the difference between accrual accounting, which is what they use for the budget speech, versus cash accounting which is what most of us use day-to-day and the provincial government here uses for a document called the Estimates. All governments in Canada started using accrual accounting about 30 or more years ago but thankfully here they still report the budget both ways so people can see what is really going on.
That’s also true in the bit about not telling us what they are doing. A couple of years ago, there was a one-time cash dump from Ottawa, which Siobhan and her budget elves dropped into the budget and never mentioned the extra cash until some enterprising reporter, alerted to the issue, forced her to come clean.
Sure enough that’s what Shiobhan has done this time on both counts so on that much, she’s right.
But it’s where Siobhan and the budget officials are wrong that matters.
…Dogs and cats living together… MASS HYSTERIA.
Fight the crazy. Become a paying subscriber.
They were wrong to book the whole amount since in this particular case, the money isn’t guaranteed to come and they will receive none of the $320 million this year. Booking it all is clearly out of step with what other provinces are doing and so while it is consistent with past practice in Newfoundland and Labrador, it’s the wrong thing to do in this case.
You can tell it’s the wrong thing to do and that Coady knows it’s the wrong thing to do wrong because she hasn’t offered an explanation for the decision, let alone a good one. She’s fallen back on the claim that booking it all this year is what accounting standards dictate, although clearly they don’t if other provinces are hung up over it. She’s also tried the completely irrelevant statement on Wednesday that when it comes to making a budget you “make your decisions based on the information that you have: what revenue you have, what expenses you have, what programs and services you would like to introduce.”
It’s the wrong thing to do because - using Coady’s own excuses - this is not revenue the government has this year. None of it comes this year. Not at all. It is future money. Maybe. The financial deal is not settled. After 30 years, it might take most of this year to actually finish the deal. Adding the tobacco settlement money in this year’s budget as revenue was clearly a choice by Coady and the rest of the Furey Brain Trust (including the new Premier John Hogan) to misrepresent what is going on.
Had they merely been following the dictates of some accounting technical requirement, they’d have flagged this up front and explained it on budget day to reporters so this CBC story never could have appeared. That’s the simplest explanation based on facts and it is also the best political decision. But Coady and the rest of the single-cellers keep making the same stupid political mistakes over and over and getting caught.
They tried to hide it. The only reason you’d keep it secret is because you wanted to misrepresent the government’s financial state. After all, settling up a 30 year old lawsuit is a big political deal. Any normal government would be crowing about it. British Columbia’s justice minister announced the money on March 6 this year. Here? Crickets, if we had any. But knowing BC did and others would deal with it as well makes the decision by the Furey/Hogan crowd all the more inept. Clumsy. Stunned. It’s a lie by omission they’d get caught in at some point.
You can tell this is fishy because while Coady refers to the Estimates in her first defence of this controversy on Tuesday there is no mention of it in the Estimates, which are prepared using different accounting principles than the ones used for the budget speech. The Estimates are done on a cash basis, meaning cash you will actually get or expect to get. Coady booked the extra money in the budget speech which uses accrual accounting, which generally speaking books cash when it’s earned, not received. She knows the difference so even her Tuesday answers were not truthful.
You can tell Coady is wrong because she uses the 2019 Atlantic Accord money as an example of doing the same thing as they’ve done with this cash. There are some key differences and one huge similarity, which is that we are in an election year in both cases.
The big differences count:
In 2019, we knew about the cash lump.
People asked about the decision at the time.
The government gave us a figure for the accrual deficit without the big imaginary lump of cash in 2019.
This time around, not only did they hide the cash but Coady is running furey-iously from the actual deficit size like Andrew Furey ran from the Risley controversy with two lies and one blurt of the truth later on.
This is more like the couple of hundred million in extra cash received another year, since 2019, which the government didn’t mention and which allowed them to spend more and borrow slightly less. They hid it under some other federal transfer. But it was in the cash accounts because it was cash received in the year.
This is like the year the finance department bought up one of their own first issue bonds and never disclosed it to anyone.
The is the like all the money from Churchill Falls flowing to the treasury under the give-away deal starting this year.
Another lie in other words.
The consistency that is so troublesome is not booking the cash in a lump. It’s hiding it and lying about it whether by not pointing it out publicly or by not being simply truthful once the story came out this week.
Of course, as readers know, the deficit the Pea Seas are trying to get Coady to admit is much higher than reported is also irrelevant. Imaginary, really, so the whole political fuss in the House this week is whether an imaginary number should be what the government claimed it was or larger.
They are arguing about nothing.
Coady is getting huffy and indignant about nothing.
And she lied about nothing.
This is the foolish essence of politics and government in Newfoundland and Labrador since 2003.
The real deficit is in the Estimates, the cash accounting that shows real money in or likely to be in and real money out. And this year, the deficit is not the $350 million official admitted using accrual accounting or the $700 million and change if they didn’t book the cash in a lump.
It’s officially $2.5 billion but since Coady and her crowd were too lazy to change their ridiculous oil assumptions in the wake of Donald Trump’s tariff insanity, the cash deficit by the end of the year will be more like $3.0 billion. Roughly a quarter of the money Siobhan Coady plans to spend, one dollar in four this year, will be new debt, which adds to the total public debt that is already roughly the size of the provincial economy.
We are broke. Flat busted. One financial crisis away from a 1934 kind of collapse.
At the very least, next year we will have to find more money to pay the interest on the debt, which means we have less to spend on things that matter.
Now think of the money Coady hid.
$320 million or so after the lawyers get their cut.
Over 20 years.
$16 million a year.
We would need 188 times that much to balance the books this year.
*Just* this year.
Even if we had all of it we’d need another 10 cash dumps just like to cover the deficit this year.
*Just* this year.
$16 million.
A wee bit more than the sugar tax would have brought in.
A wee bit less than cannabis brings in.
Less than we spend on the low income tax credit or the movie production credit.
More than the Labrador Affairs department or the Public Service Commission costs.
Over six times more than we spend on the Indigenous affairs ghetto ministry and more than triple what we spend for the women’s ghetto ministry.
It is a trivial amount of money and those ghetto ministries are trivial wastes of money that do nothing for women, Indigenous people, LGBTQ, or all of Labrador. It just gives a few politicians extra money.
Why lie about it?
Maybe that’s why they lied.
Because it is so small and petty an amount after 30 years, then better, they though, in the enshittification of government, that the whole money go to cover some idiotic political scam to cook the books than admit it is so embarrassingly small an amount that will come each year, maybe.
Siobhan’s Dog is a basenji, as it turns out.
Doesn’t bark.
Just yelps about nothing.
