Article Throwback:Pre-Budget Meeting
With CUPE PEI being in the news lately I thought I would share this article I wrote in 2013. It was summarizing my experience attending a meeting asking for public input regarding the upcoming budget. One of the union members that attended was the CUPE President and she stated she would not mind seeing tax increases so the government would not cut any union positions. I don’t know what CUPE’s attitude is today, but hopefully it’s changed from what I experienced. If PEI is going to have a turnaround, we can’t sacrifice the private sector to keep the public sector going as is. Everybody is going to have to be more reasonable.
Reading this article again, I seriously downplayed the unions reaction to my speech. One guy looked at me like he was ready to kill me, while the others had their jaw on the floor, stunned that I could even say such things. Good, I feel shock and awe is exactly what’s needed.
Budget Meeting
Recently on the first of February I decided to attend one of the Finance Minister’s pre-budget meetings that was open to the public here in Summerside. I’ve never taken part in a government consultation with the public so I did not quite know what to expect. I imagined it would be concerned citizens like myself raising questions about the high level of taxes we experience here on this Island along with spending levels that are abnormally high. In fact, it turned out to be quite different from that. Apart from the government officials, there were 3 individuals from different unions, and 2 individuals representing the NDP with one of them being the leader Mike Redmond. Besides myself there was also one other regular taxpayer like myself.
Seeing who was around the table I’ll admit I became a little distressed, I figured that now instead of being a meeting between regular people, it would turn out to be a meeting of various interest groups lobbying for more spending and benefits to reward their members. And that is how it turned out to be.
The meeting began with everybody introducing themselves and stating general ideas of what they would like to see happen with the budget and also give suggestions on how to balance the budget either via tax increases or spending cuts. I and the other lady not representing any group were the last to go. Basically everyone from the unions and NDP made the same broad points which were (I) that they would not like to see any austerity measures take place any time soon, that no cuts to the public sector should be made so that people in that sector would not lose their jobs and essential services would continue to be provided. (II) The recent EI changes were also mentioned as a reason not to cut any spending since certain people and industries would face hardships, and (III) Government should provide energy needs to Island by purchasing parts of Maritime Electric and so essentially take over more of the economy.
I’ve always wondered in the back of my mind how things could get the way they are here in PEI, but after listening to all the points made by these union members I began to understand. Each one of them most likely represent a couple of thousand votes, while I by myself represented just one, so from the Minister’s perspective he is receiving a lot of pressure to cater to these groups in order to retain his job. If I had not been present at that meeting no opposing opinion would have even been recorded. Let’s look at the PEI fiscal situation a little closer so we can understand more fully what I mean.
1.) Current forecasted deficit for the 2012-2013 budget is 80 million. Subtract the 25 million received from the federal government for the HST transition that will not be implemented in this budget and the true deficit is estimated at 105 million. That is almost a -7% deficit when compared to estimated revenues.
2.) When examining the fully audited statements for the 2011-2012 year, the full debt level is $2,430 million. Take away the short term payable debt and long-term debt of the province is 2,063 million. With this debt level the debt to nominal GDP ratio is 38%. This means that to pay off the debt in one year 38 cents of every dollar spent in PEI would have to go towards the debt.
3.) 40% of revenues come from the federal government. This makes the province vulnerable should the federal government decide that it needs to cut back. As the fiscal pressure grows on every government this is a big risk to take.
4.) PEI has one of the highest personal income tax rates, lowest exceptions for taxes, and one of the lowest working wage averages. All this means the standard of living is below average when compared to other provinces.
In spite of all this everybody at the table was calling for no spending cuts, which left me in an incredulous state. When it came my turn to speak it was an awkward moment to say the least. I repeated many of the same points frequent readers are accustomed to on this blog. That in order to achieve real sustainable growth and prosperity spending cuts need to be made, government needs to shrink, and that subsidies and grants to certain PEI industries need to be phased out. This would allow the government to lower taxes and give the taxpayers of PEI some much needed relief. It would also allow the market to achieve its true state of equilibrium, achieve better more efficient production, and therefore pay higher wages. This would most likely mean that unionized sectors would have to face some changes which judging by the meeting they are obviously not willing to do.
As I was speaking I could tell I was leaving a lot of people stunned. After some back and forth with a few people and the Minister the meeting was concluded. Despite the opposition I faced to my ideas, after the meeting was over the other lady who did not represent any group approached me and told how she agreed with everything I had said. I truly believe the message of liberty can appeal to anyone, however; it’s always a surprise that despite the entrenched interest groups in PEI that call for bigger more wasteful government, people who hear the message tend respond well to it.