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Thursday, March 27, 2008

Newfoundland and Labrador Balancing Act

This week Newfoundland and Labrador’s battle hardened Auditor General (they don’t call him a General without reason), released yet another direct and accurate report. This one focused on the financial situation in the province and it shone a bright light on an issue that screams to be addressed.

Fiscal Responsibility

According to the General, John Noseworthy, it’s time to take stock of where the province is and what the future will hold.

It should come as no surprise that his report identifies a record per capita debt (well over 20,000 per person) or that the province has become dependent on free flowing oil revenues. Those are points most people in Newfoundland and Labrador are painfully aware of, unless they’ve been living under a rock instead of on top of one.

What's most interesting is Noseworthy's belief that the province should introduce some method of ensuring that all future governments are obligated to table balanced budgets.

This is not a new idea but...

According to one party insider, the idea of introducing balanced budget legislation is something that has been floated (to put it mildly) inside the PC party in the past. It's also an idea that the decision makers have refused to move forward on.

The debt Newfoundland and Labrador is struggling to manage is, by and large, a result of decades of deficit producing budgets. Budgets that saw the province borrow to pay the light bill, so to speak. Yes, times are good now, with the oil revenues rolling in, but what about the future?

What will happen once the oil is gone, or even sooner, should oil prices drop to more familiar levels than they are at today? What will the provincial budget look like then?

How will the budget look when money is tight and a party or premier, who is not fiscally responsible, is in power? Will the province’s massive debt sink the island and force Labrador to disown the place altogether? (they’re almost there now)

Many other parts of Canada have already enacted balanced budget legislation. A step Newfoundland and Labrador, the most debt ridden of them all, has not done.

This is not about starving people when times are hard. With properly enacted legislation a province can potentially still run a deficit, but the governing party would be forced to stand in front of the House, face the opposition parties and the media, and convince the public that the deficit is justified.

If nothing else at least the legislation would force financial accountability and ensure that the sort of shenanigans that led Newfoundland and Labrador to where it is today don’t happen again.

The current Finance Minister, Tom Marshall, has said his government is working to reduce the debt and to be fiscally responsible. That may be so, but even if it is, it simply isn’t enough.

Oil doesn’t last forever.

Good times fade into memory.

Governments change, and so do Finance Ministers.

Newfoundland and Labrador’s debt is the single biggest stumbling block to the bright future the province’s people crave. Now that the opportunity exists, it is a moral crime for a sitting government to refuse to ensure the viability of that future and ongoing fiscal responsibility.

2 comments:

Anonymous said...

I would say that balanced budget legislation should be accompanied with belt-tightening serious reforms.

As long as Newfoundland keeps sending away educated and ambitious young people while demanding nothing from those on government incomes, such as social assistance, balanced budget legislation will only support the unsustainable.

Calvin said...

Myles,............who was that gentleman out in Alberta that everybody hated for cutting Governement spending and getting rid of all thier debt.

Klien ,Clain ,or something like that.All I have to say is look at the powerhouse that is Alberta today Sir.

As Newfoundlander's and Labradorian's there still is something that we can learn from Canada believe it or not.Even if they caused the present situation.

As always Myles ,great story.