Province can resolve to do right thing with coming oil wealth

Lana Payne
Send to a friend

Send this article to a friend.

It's that time of year again - a time of resolutions and predictions.
And for our province, this year's predictions are all about the oil.
Stubbornly high oil prices coupled with the Atlantic Accord deal will push the province from its have-not status before we know it.
And if top bank economists have it right - as reported recently in The Toronto Star - oil prices will average between $75US and $100US a barrel this year, which means unprecedented revenues from oil royalties. This is also a substantial hike over what the province budgeted in 2007, when it based its economic performance on $58.60US a barrel.
Although at the time of last year's budget, practically everyone knew the province was underestimating the price of oil, which ended up averaging out at $75US a barrel and resulted in an almost $900-million surplus for this fiscal year, several times over what had been estimated.
No doubt the government would say it was being conservative or cautious in its projections and that this is prudent given the unpredictability of commodity prices and the soaring Canadian dollar.
Many finance departments have taken a similar route. Former federal finance minister Paul Martin was famous for it - grossly underestimating revenues and surpluses so he could dampen expectations and then do what he wanted with the all the cash, which usually took the form of handing out massive corporate tax cuts and paying down huge amounts on the debt, while social needs went unmet. Stephen Harper's henchman, Jim Flaherty, has followed the same path.
The result has been less money for provinces, even less for municipalities, too little for social infrastructure and an increasingly ineffective federal government.

Tricky tactics
In the case of Newfoundland and Labrador, there may be room for some forgiveness, since finance officials are not used to counting on the black side of the ledger. But if the erroneous accounting continues, one will have to wonder if the same tactics are at play - an attempt to temper expectations.
Because in anyone's book a projected $261-million surplus for 2007-08 that turned into an $881.8-million surplus is an astounding miscalculation.
There is little doubt about it. Newfoundland and Labrador is entering a new era - an era of prosperity, and for many it is going to take some getting used to.
What is starting to become increasingly obvious, though, is that plenty has its challenges and can be just as problematic as not having enough.
The problems of plenty, though, are certainly welcomed as long as they are tackled with good public-policy decisions. If the wrong course is chosen, the province could end up just being little more than an eastern Alberta, and that would be disastrous.
Economic growth at all costs, without proper and adequate social and environmental development and supports for that growth, may wrench us from have-not status in terms of macro-economic measures, but it will also likely create a bigger divide within our own province.
And this is what we must guard against: a province of haves and have nots - where many citizens are left behind and many others are placed at risk.
Economic growth and prosperity by itself is not the great equalizer. Understanding and planning for the growing gap, and preventing it, will be critical.
Otherwise, those who work for low pay, those with no work or limited skills, those in the so-called middle class wanting to buy a home in a market where housing prices are soaring, those working in industries that are hurt by the same factors that are pumping cash into provincial coffers at an exceedingly fast pace, will all pay a price - the price of being left out in the cold.
And for many, the deciding factor will be housing. We have only to look to Alberta or British Columbia to see that uncontrolled housing prices are making it impossible for many families to get ahead and are contributing to an overall feeling of insecurity.
Comedian Ron James, during his New Year's Eve CBC-TV special, explained it this way when he joked - well, sort of joked - that Alberta is the only place in Canada where someone can make $47 an hour and still be homeless.
And for a society like ours that has prided itself on affordable home ownership, this could indeed be a change none of us are comfortable with, except, of course, those who will profit from the speculation.
If we are not careful, those other characteristics that have defined our society, our culture, for generations will be lost.
This is our challenge: how do we share the wealth so that our culture of community and caring for each other is not the very thing that is sacrificed on the altar of economic prosperity?
There are, of course, many ways to protect this culture - but they all involve action, planning, good public policy and programs, and a commitment.
Leaving it up to the marketplace will merely ensure that some will do just fine, while too many will struggle as never before. That is always the outcome of trickle-down economics.
It would be a real shame if that is the outcome of being a have province, when we can be a shining example to the rest of Canada of how to get it right - even if getting it right means greed takes a back seat to decent things like sharing.
But this kind of thinking means doing things differently. And as the Williams government starts its second term, this will be its test. The paths are clearly defined - both are paved in black oil - but only one ends in greatness.

Lana Payne is a former journalist who is active in the labour movement. Her column returns Jan. 20.

Geographic location: Newfoundland and Labrador, Alberta, Canada British Columbia

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page