It’s holiday time, and the provincial government is preparing its 2018 budget. Once again, we’re hearing the steady drumbeat of fiscal doom in Newfoundland and Labrador. It hasn’t been this loud since 2015 when global oil prices plummeted.
Did the sky fall, as predicted? No.
Will it fall, as being predicted again? No.
Yes, the provincial government faces a significant deficit. Nobody is happy about the costs of Muskrat Falls. But these challenges can be managed.
The deficit is not crippling. The government is forecasting a balanced budget by 2022, and gross domestic product (GDP) growth sooner. The debt-to-GDP ratio will soon be heading in the right direction, down.
When government is establishing the provincial budget, the future is where it needs to focus. Of course, the Grinches are calling for layoffs and austerity-level spending cuts. They like to focus on previous years of deficits, not the future, as it doesn’t fit with their narrative.
Nor does Muskrat Falls cost overrun mean that the apocalypse is coming. It would result in electricity rates of $0.22 to $0.23 per kilowatt hour, an increase, but not the highest in North America. Rates are going up faster than inflation across Canada; Newfoundland and Labrador is not alone.
The government is considering electricity “rate mitigation,” reducing rates by putting public dollars into Nalcor. Bringing rates down to $0.17, the target when Muskrat Falls was approved, would cost less than the revenues from the federally-required carbon tax.
What about provincial spending? Is it really “out of control”? Sorry, but no.
It’s high if you look at per capita spending per person. What the province can afford is indicated by the size of the economy (GDP), not the size of the population. The province’s spending per GDP is second-lowest in Atlantic Canada.
What about “all those” public sector workers? We actually have the lowest number of public employees per GDP in Atlantic Canada; the second-lowest when measured on a per capita basis.
None of this fits with the narrative of “it’s-a-disaster-we-have-to-cut-cut-cut.” The reality is we are in a recession, we need to keep a steady hand on the tiller and avoid rash cuts that would send the economy into a tailspin.
We need to stop exaggerated doom-and-gloom talk, and start giving realistic and balanced signals that will encourage businesses and working-age people to stay in this province. That kind of talk is a self-fulfilling prophesy and totally irresponsible.
We need to be talking about building a jobs-rich economy, fairness and sustainability, and how our budget decisions can lead us closer to those goals.
We can build an economy with more and better jobs. By next year, unemployment will top 16 per cent. If you count people who’ve given up on finding work, such as involuntary part-timers, we will be over 20 per cent; one in five — that’s a true crisis.
We cannot afford to cut jobs. We need to create more, by diversifying away from reliance on raw resource extraction, and getting more jobs and local economic activity, when we do sell our publicly owned resources.
We need to stop exaggerated doom-and-gloom talk, and start giving realistic and balanced signals that will encourage businesses and working-age people to stay in this province. That kind of talk is a self-fulfilling prophesy and totally irresponsible.
Poverty levels are rising. This is the most unequal province in Atlantic Canada. We need more fairness, starting at the top, with those who can afford it paying a little more. Right now, this province’s top tax bracket is the lowest in Atlantic Canada. Big corporations — particularly large multinationals — can afford to chip in more. We need to adopt a $15 minimum wage as the first step toward a living wage. We need to legislate pay equity, as agreed in the House on March 8.
Finally, we can get on top of our climate change emissions. The federally required carbon price will be a great start; we can accelerate our investments in energy efficiency and sustainable transportation — creating good, green jobs while we reduce emissions.
A mix of revenue and spending measures are available for the government. It can identify a positive future, and start us down that road in the 2018 budget.
This will mean ignoring the doomers, but they’ve had more than their say. We need to get on with building a better future.
Happy holidays!
Mary Shortall, president
Newfoundland and Labrador Federation of Labour
