The Higgs doctrine

This MRI controversy in Saint John is a small but instructive example of what is coming.  I guess people have short memories so I will point out again that McKenna kept program expenditure growth at an average of 1 percent for six straight budgets.  For the mathematically impaired, that means a negative growth rate in real terms for six budgets.

This is what we can expect – maybe not quite as draconian because I think the government would likely debt debt to GDP rise to levels not seen since the 1990s in the wake of political realities – but even at that they will have to restrain spending in a big way for an extended period of time.

So, pick your battles folks.  You want to cut down shale gas, deduct $100 million.  You want to stop potash development in Millstream, deduct $25 million.  You don’t like the mine near Sisson Brook?  Deduct $10 million.  Looking to stop mining in northern NB?  Deduct $200 million.    You want to reduce the allowable cut on Crown land?  Deduct $25 million.

How about taxes?  The Tories already eliminated the cut on the top earners.  Now it’s your turn (and mine).  So far, the Tories are taking a death by a thousand cuts approach and looking to raise a host of smaller taxes and fees but soon they will likely realize this ain’t enough.

How about those spending cuts?    Swanky MRIs in Saint John – just the start.

Don’t look to the feds.  They have already said they were reining in health care transfers, looking to raise the age for OAS, considering EI reforms that would impact NB more than most, cutting their employment level in New Brunswick by hundreds and don’t forget the looming changes to equalization.

I like Blaine Higgs.  I think he will run a tight ship – the Higgs doctrine – every program in government will be framed in a new context of accountability and measurement.   Unless raw politics intrudes, the NB government is about to get a whole lot more efficient.

But, again, efficiency only gets you a few points.

The cyclical deficit will be fought with spending cuts and tax increases.

The structural deficit will need an economic agenda.

Giddyup.

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5 Responses to The Higgs doctrine

  1. Richard Quigley says:

    I enjoy your comments and analysis of the NB economy and wondered if you knew of any one doing a similar thing in NS?

  2. Brett says:

    Great post! Sometimes I feel that some people don’t understand what pays for the services they enjoy.

  3. > You want to cut down shale gas, deduct $100 million

    Fair point, and I totally get the reasoning… but….

    If this is the revenue, where are the guarantees? Do we *know* we – the population of NB – will see this benefit? And will residents be compendated for harm done? If this amount is pretty much locked in stone, the guarantees should be easily forthcoming, no?

    > The Tories already eliminated the cut on the top earners.

    Really? That’s all they can do? BC just raised corporate rates. And why can’t we increase the tax a bit on the top earners, as has been recently proposed?

  4. Will says:

    People don’t connect the services they get with the revenues. Say no to everything and expect all the same benefits. Fear everything but don’t do the research – folks it’s more than watching Gasland and quoting a Cornell study that has already been discredited due to its assumptions. We need to educate the unwashed masses around here. We’re not a ‘have not’ province, we’re an ‘allow not’ province.

  5. Richard Reeleder says:

    “Unless raw politics intrudes, the NB government is about to get a whole lot more efficient.”

    I see no reason to make that assumption. It is one thing to reduce an expenditure; it’s another to have the same or better outcome with that reduced spending. Given some of the statements Higgs has made, I am very doubtful if we will see more efficiency – we will just see reduced expenditure. Given the large role of govt spending in the GDP, I expect that will be economically depressive.

    What has been completely lacking is a plan to re-invigorate the economy. Is Higgs/Alward (Alward/Higgs? Big&Awkward?) really betting on shale gas and a couple of mines? That’s it?

    As you said in a earlier post, we need another LJR. Instead we have Scrooge and Marley but w/o the profit. Tight-fisted and short-sighted.

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