A tale of two industries

Russell
Russell Wangersky
Send to a friend

Send this article to a friend.

Last month, despite all the cutbacks and belt-tightening in the provincial budget, the cabinet quietly let Corner Brook Pulp and Paper off the hook for $6 million in taxes over the next five years. Recognizing the extreme difficulties in the pulp and paper industry, the cabinet decided to waive the managed land tax for the company — just another step in aid to an industry where everyone is scrambling to make their operations as cheap as possible.

The move brings government aid to the mill to a minimum of $46 million — it’s hard to quantify how much help the mill has gotten from the taxpayer in total, because no one wants to talk about government support in an international industry where trade sanctions might cost customers.

And there may be more money yet. The provincial government is sitting on $90 million in business funding that it has flatly refused to talk about — although, if you look at the tea leaves of past comments by cabinet ministers, there has been plenty of support for the idea of helping the Corner Brook mill with environmental issues, and both the mill and Deer Lake power operation with infrastructure improvements.

All that spending hasn’t met much opposition; there’s a general feeling that the operation’s direct and indirect spending is critical to the west coast, so helping an industry in trouble — especially one that, unlike oil or iron ore, is potentially renewable — is a good thing.

But renewable or not, all industries are not created alike.

You only have to look as far as this province’s founding natural resource, the fishery, to see that no matter how crucial an industry is, government support can disappear.

The province’s Fisheries Department was hit particlarly hard this year, which may seem like an unusual step for the province’s largest sustainable and renewable industry, which had an estimated landed value of $575 million in 2012. The total value of the industry was around $1 billion.

Last year’s budget for Fisheries and Aquaculture was $49.68 million, while this year’s is $32.85 million. The  $17 million reduction represents a cut of 34 per cent. Even aquaculture, the provincial government’s current darling (the subject of some 15 news releases in 2012 alone, touting the value of the industry’s “1,000 jobs”) saw its budget cut by 37 per cent.

And even when there is money budgeted, it isn’t necessarily spent: last year, the provincial government set aside $5.5 million for seafood marketing, but by the time the end of the year rolled around, it had only spent $1.7 million.

If you want to look at that number more closely, it gets even more striking: if you knock out the fixed costs, like salaries and benefits for those who were working in that division, and focus just on the money spent on marketing, the province had planned to spend $4.1 million but actually spent barely a tenth of that, some $450,000.

That budget is also shrinking: the $5.5 million from 2012-13 is now set at $2.6 million, a drop of more than 50 per cent.

Compare that to the forestry sector, where the budget dropped from $42.8 million to $39.9 million. That $2.9-million reduction is only a six per cent drop in funding.

Put it this way: the Fisheries Department used to be one of the province’s main portfolios, and it was far and away the biggest loser in the entire budget.

If you look at the loss of 34 per cent of its budget and compare it to other departments, the next two closest were Environment and Conservation, losing 24 per cent, and Natural Resources, losing some 18 per cent.

Everyone else’s percentages was less than a third of what Fisheries was losing, often well less, and four departments — Finance, Transportation and Works, Innovation Business and Rural Development and Municipal Affairs — are actually, in this year of cutbacks, spending more than last year.

It’s a dramatic change to a once-prominent ministry. You could question whether the government actually recognizes the value of its largest employer, and the source of a billion dollars a year.

In reality, though, it’s not about whether one industry is more valuable than another, it’s about concentration.

If the fishery’s thousands of workers were located in three or four provincial districts — particularly if they were districts held by government members — chances are, they’d get the same kind of attention the Corner Brook mill is getting.

But they’re not, so they don’t.

The fishery puts the most money into the most hands in this province. You’d think that for a provincial government, that would make it the most important of industries.

But what happens in Corner Brook will happen in one fell swoop; it will be a very squeaky wheel, so watch for it to get well greased.

The fishery, on the other hand, is  death by 1,000 cuts, each one affecting one or two or 10 people at a time.

It will be every bit as painful — it just won’t be as obvious.

 

Russell Wangersky is The Telegram’s

editorial page editor. He can be reached by email at rwanger@thetelegram.com.

Organizations: Fisheries Department, Rural Development

Geographic location: Corner Brook, Deer Lake

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • leo quilty
    April 14, 2013 - 20:43

    wasent it a former mha who went on to become preimer who said in the house of asembely that only for pureity crackers the public service st johns would have nothing on the other hand there were three paper mills working twenty four seven the fishery was flourshing as were the mineing industry all pumping money into the capatil how the worm has turned who was it said let the bastards freeze in the dark seems someone wants to pratice that famous gentlemans philospy

  • Jay
    April 14, 2013 - 11:43

    You're absolutely right. Also, the fishery has been able to renew itself despite the crisis it has endured and has found new markets with new products. On the other hand, the pulp and paper industry is moving towards obsolescence with little hope of finding new markets. Provincial government spending will not change this, as it is a worldwide issue. Considering that this provincial government wants the small rural, fishing, communities to die in favor of larger towns, this is not surprising. Also ,consider that the headquarters for the College of the North Atlantic are in Stephenville and note the increased spending for Grenfell in Corner Brook and you can see which towns this government wants to prosper. When your key cabinet ministers (Marshall and Shea) are from the west coast, clearly more money and emphasis will go to that area. This is an easy example of how the provincial government's myth about making tough decisions for the good of all is trumped by partisan politics.

  • Corporate Psycho
    April 13, 2013 - 21:03

    46 million. Unreal. Stop the madness.

  • Winston Fiander
    April 13, 2013 - 12:49

    Show me your budget and I'll tell you what your priorities are. Russel Wangersky makes a very important point in today's editorial. I hope others will note it, especially our Minister of Fisheries and Aquaculture and our Premier. Perhaps they will awaken to the point that "the fishery puts the most money into the most hands" and give it the respect it deserves. We need to delve into how the $1 billion benefit we derive from our fishery is distributed. It is my belief that if we were to shift the emphasis from largely foreign owned offshore factory freezer trawlers to the locally owned small scale inshore fishery and lifted the restrictions we now place on harvesting , processing and sale of fish products, more of the benefits would stay right here. We could then put more money into more hands and consequently more tax money into government coffers.

  • Maurice E. Adams
    April 13, 2013 - 07:53

    Excellent and informative article. Shows very well how government objectives and policies are wrong headed, and to a very large extent, how they are not tied to the real needs of the province and the people.