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Editorial: Dire straits

The latest report from the auditor general reveals the bleak state of the province’s finances.
The latest report from the auditor general reveals the bleak state of the province’s finances.

 

There’s no way to sugarcoat it.

Auditor general Terry Paddon presented his final report on the province’s finances on Tuesday, and it might as well have been titled “Hard Times.”

What Paddon has found is that although the Liberal government has managed to reduce the deficit for 2016-17 to almost half of what it was a year ago, it’s still far too high to be manageable, at $1.1 billion.

As seen as a percentage of the province’s gross domestic product, the deficit is the highest in Canada and much higher than the burden carried by most other provinces.

Here are some of the more telling details:

• The province’s net debt as of March 31, 2017 — $13.6 billion — is the highest in the history of the province. It’s going to go up.

• The province spends $1.1 billion a year more than it receives in revenue.

• The province hopes to reach a surplus by 2022-2023 but that is highly dependent on an increase in oil prices — a highly volatile commodity, as we know from past experience.

• Each year the province has to spend more and more in interest on the money it has borrowed; funds that are not available for programs and services.

• Newfoundland and Labrador generates more money per person for the provincial treasury than every other province, because we have a heavier tax burden than most other provinces. But this province also spends substantially more money per person than any other province.

• If the only way to eliminate this year’s deficit of $1.1 billion was to raise fees and taxes, they would have to increase by 28 per cent.

The numbers and facts are staggering, and sobering. Depressing, too.

But the AG’s report should be recommended reading in this province, as it strips away any illusion that we will be returning to prosperity any time soon.

The simple realities of this province have put us in a virtual no-win situation. We have a sparse population that can only generate so much money for the provincial coffers. We are spread over a vast area, which means it costs more to provide programs and services to far-flung corners, coves and islets. We have three times the number of kilometres of road to service, per person, than anywhere else in Canada. Our population is aging fast, with almost 20 per cent now 64 years old and older — an age bracket that generally has more need of health and other services.

The only way this province can change course financially is to make deep cuts — cuts that will directly affect people and their quality of life.

It’s time to have a frank conversation in this province about priorities and what we can afford.

As the AG warns, there are “hard choices” ahead.

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