Plan B Costs Affect Essential Services
The Government tells us that the provincial costs for Plan B have been budgeted for. What they are really saying, however, is that they have budgeted to borrow 12 million dollars (likely to be higher) and will budget the added carrying costs within their annual operating budget.
At first blush this does not sound like a lot. However, if we assume the government can lock in the 12 million dollar loan at 3.8% for 25 years, and plans to pay back the $12 million over 25 years (very much like a mortgage), the added cost to the government is $746,000 each year.
What is particularly troubling is that the government will have to borrow the $746,000 every year it continues to run a deficit, which, given the government’s current track record, looks like forever. This means that, thanks to the miracle of compounding interest, the $746,000 per year will grow to over one million dollars in less than eight years and reach $1.8 million per year at the end of the 25 year amortization.
This means that the government will have at least $746,000 less, each and every year, to spend on doctors, nurses, ambulances, drugs, dialysis, reduced medical wait times, police to monitor speed limits, and road maintenance, any or all of which would save lives and improve the quality of life on PEI.
The government has made its choice and in a time of restraint when they are cutting services across the board, their choice further jeopardizes essential services available to Islanders.