One of the most puzzling statements in the 2012-13 territorial budget address was this:
First of all, Moody's does not measure nor comment on a borrower's management style, only on its credit risk. So that was a non sequitur. I'm sure anyone who's ever tried to get services from the GNWT snorted coffee out their nose when they read that.
Second, Miltenberger forgot to mention the two actual reasons our credit rating is high: on the one hand, we have a strict borrowing limit, and on the other, our government is bankrolled by the Government of Canada. The chance of us not meeting our debt servicing obligations is therefore practically nil, and it's none of the GNWT's doing. If anything, I have to wonder why we only got Moody's second best rating. Canada is rated Aaa and is sure to bail us out if the need arose. In fact, if you look at how puny we are compared to Canada, we have essentially infinite money to pay our debt, give or take some administrative hurdles. I'd say our debt should be safer than Canada's. So if Moody's is ranking us lower, they must really not think much of Miltenberger's management.
Third and most importantly, let's look at our deficit as a percentage of GDP. The latest numbers I have are for 2010 and look like this:
How bad is that? Really bad. But wait! The expenditure-based GDP, of course, includes the GNWT's own expenditures, which are massive. And did I mention, bankrolled by the Government of Canada? So I always like to subtract the GNWT's expenditures from the GDP, to see what we'd look like without that gorilla. Thusly:
Now that's really bad. Consider the following:
Excel charts formatting isn't as smooth as The Economist, but hey, I'm on a budget. Of $0. Anyway. As you can see, these are 2010 deficits as percentage of GDP. In yellow we have the Eurozone, in blue the rest of the European Union (data from the ECB for both), in purple, Canada (data from the OECD via Global Finance) in orange, the Northwest Territories including GNWT expenditures, and in red, the Northwest Territories with my adjusted GDP (data as referenced above).
Spain, Portugal, Greece and Ireland are all getting bailed out, and Italy is wobbly. The European Union currently has a deficit target of 3% of GDP for its members, which will go to 0% when the Fiscal Compact comes into effect. Ireland has made huge progress since this 2010 statistic, but the other countries are missing their deficit-reduction targets on a regular basis. But while all this is going down in Europe, the GNWT has been on perma-bailout for... ever, I think, and has no deficit-reduction plans. In fact, the planned deficit is up 11% from 2010, and somehow I don't think we can say the same of the GDP.
Wake up, Mr. Miltenberger.
We remain one of the best managed jurisdictions in Canada. Our Aa1 credit rating is the second-highest rating obtainable from Moody’s Investors Service with only Alberta and British Columbia receiving higher ratings in Canada. Our debt servicing costs are only 1 per cent of revenues, and we have one of the lowest debt to GDP ratios in the country. And we intend to keep it that way.
First of all, Moody's does not measure nor comment on a borrower's management style, only on its credit risk. So that was a non sequitur. I'm sure anyone who's ever tried to get services from the GNWT snorted coffee out their nose when they read that.
Second, Miltenberger forgot to mention the two actual reasons our credit rating is high: on the one hand, we have a strict borrowing limit, and on the other, our government is bankrolled by the Government of Canada. The chance of us not meeting our debt servicing obligations is therefore practically nil, and it's none of the GNWT's doing. If anything, I have to wonder why we only got Moody's second best rating. Canada is rated Aaa and is sure to bail us out if the need arose. In fact, if you look at how puny we are compared to Canada, we have essentially infinite money to pay our debt, give or take some administrative hurdles. I'd say our debt should be safer than Canada's. So if Moody's is ranking us lower, they must really not think much of Miltenberger's management.
Third and most importantly, let's look at our deficit as a percentage of GDP. The latest numbers I have are for 2010 and look like this:
| Expenditure-based GDP (Statistics Canada) | 4,696,000 | |
| GNWT's deficit per 2010 audited F/S | 14,472 | |
| Grant received from the Government of Canada | 864,161 | |
| Transfer payment from the Government of Canada | 102,358 | |
| Total deficit | 980,991 | |
| Deficit as percentage of GDP | 20.9% |
How bad is that? Really bad. But wait! The expenditure-based GDP, of course, includes the GNWT's own expenditures, which are massive. And did I mention, bankrolled by the Government of Canada? So I always like to subtract the GNWT's expenditures from the GDP, to see what we'd look like without that gorilla. Thusly:
| Expenditure-based GDP (Statistics Canada) | 4,696,000 | |
| Less GNWT's expenses | 1,446,672 | |
| Adjusted GDP | 3,249,328 | |
| GNWT's deficit per 2010 audited F/S | 14,472 | |
| Grant received from the Government of Canada | 864,161 | |
| Transfer payment from the Government of Canada | 102,358 | |
| Total deficit | 980,991 | |
| Deficit as percentage of GDP | 30.2% |
Now that's really bad. Consider the following:
Excel charts formatting isn't as smooth as The Economist, but hey, I'm on a budget. Of $0. Anyway. As you can see, these are 2010 deficits as percentage of GDP. In yellow we have the Eurozone, in blue the rest of the European Union (data from the ECB for both), in purple, Canada (data from the OECD via Global Finance) in orange, the Northwest Territories including GNWT expenditures, and in red, the Northwest Territories with my adjusted GDP (data as referenced above).
Spain, Portugal, Greece and Ireland are all getting bailed out, and Italy is wobbly. The European Union currently has a deficit target of 3% of GDP for its members, which will go to 0% when the Fiscal Compact comes into effect. Ireland has made huge progress since this 2010 statistic, but the other countries are missing their deficit-reduction targets on a regular basis. But while all this is going down in Europe, the GNWT has been on perma-bailout for... ever, I think, and has no deficit-reduction plans. In fact, the planned deficit is up 11% from 2010, and somehow I don't think we can say the same of the GDP.
Wake up, Mr. Miltenberger.
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