Comparing Report Cards - Harper vs. Williams

This week Prime Minister Stephen Harper delivered his “report card” on the status of the federal stimulus spending. Ironically, Mr. Harper waxed poetic about how much money has been earmarked for specific projects, municipal leaders across the Country sat in stunned silence wondering where the money was.

Always one to turn a phrase to his advantage, during his address Stephen Harper was quite skillful in saying that money has identified for the many projects while knowing full well that approval and delivery are not the same thing.

What Mr. Harper intentionally failed to admit was that most cheques have not been cut and most tenders for development have not been issued because the money is still somewhere in the bowels of the Finance department tangled in red tape. Stimulus funding is wonderful stuff when it’s needed but it isn’t much good if the money doesn’t flow.

As much as the Prime Minister dislikes the place, perhaps Mr. Harper would do well to look toward the province of Newfoundland and Labrador if he wants to see how stimulus funding really works.

On the same day the Prime Minister delivered his report card to the Professor Ignatieff and the rest of Canada Newfoundland and Labrador Premier, Danny Williams, and several of his Ministers delivered an update of their own.

The Provincial infrastructure stimulus package included in the 2009/10 budget was set at $800 million dollars and just yesterday that amount doubled to $1.6 billion and the program extended to include the 2010/11 fiscal year as well.

The biggest difference between the Newfoundland and Labrador package and the one touted by Ottawa isn’t in the numbers or the duration but in the delivery.

Perhaps Provincial Transportation and Works Minister, Trevor Taylor, put it best when he said at yesterday’s press conference, “It's one thing to make unprecedented commitments but it's quite another to get this money flowing and projects tendered quickly and that's just what our government is doing."

"Right now our Tendering and Contracts Division is the busiest it has ever been. On average, at any given time, the Provincial Government has between 20 to 30 tenders in circulation. We currently have 107 tenders out, which is a record for this province."

"We are issuing and awarding our tenders earlier than ever before and we plan to maintain this aggressive tender schedule as long as the commodity and labour prices hold and the industry has the capacity to do the work. Also, we are duplicating the designs of many of our new schools and health care facilities which expedites the process and makes it more cost-efficient,” said Taylor.

While there is no doubt the economic downturn is affecting the Province, as it is the rest of Canada, with increased unemployment and a lower GDP there are some positive indications for improvement over the coming months.

Finance Minister, Jerome Kennedy noted that, "At a recent meeting of finance ministers across the country, the Federal Government indicated that Newfoundland and Labrador is now leading the rest of the country with stimulus flowing to the economy in 2009 and 2010 relative to our GDP."

"In addition, thus far this year, our province is leading the country in a number of economic indicators, including investment intentions, retail sales, labour income and urban housing starts," said Kennedy.

Perhaps one of the best features of the Newfoundland and Labrador stimulus package is that isn’t overly dependent on Ottawa to provide a share of the funding. 85% of the program’s funding will come from provincial coffers with the remaining 15% being shared by federal and municipal governments.

It’s a good thing there isn’t too much dependence on Ottawa. We all know where that has led the Province in the past. In this particular situation and at the speed federal infrastructure funding is flowing the recession is likely to be a distant memory by the time the first cheques go in the mail.

It’s really too bad Stephen Harper and Danny Williams aren’t on speaking terms or the PM might have picked up a few pointers on how to handle an economic crisis.

Federal Budget Will Do Litttle for NL Economy

With less than a week to go before the Harper government brings down its much anticipated budget, speculation about what it will contain is rampant.

Across Canada Provincial Premiers, Mayors, lobby groups, business interests and individuals have spent weeks pushing for their piece of the pie. With just a few days left to go the question is which line items will actually appear in the Harper stimulus package and how will it be distributed across the land.

The most likely outcome of next week's budget will see the Harper Conservatives deliver a two pronged approach with support for ailing industry sectors and individuals across Canada as well as a pot of money for infrastructure spending in specific regions.

Unfortunately, even if this broad approach is taken, it will mean very little for Newfoundland and Labrador and here’s why.

Industry Specific Support:

The sectors being most often discussed and touted as needing federal support are manufacturing and forestry. Neither of which are prevalent in Newfoundland and Labrador, with the exception of the Corner Brook paper mill. Abitibi has already decided to close its doors in the Province and nothing is going to change that.

The fishing industry needs massive support. Not necessarily direct cash injections but with the collapse of the Icelandic banking sector, which has provided cash flow to the industry for years, loan guarantees or some other form of funding needs to be made available before the new season begins or the industry will be in dire straits.

Unfortunately the fishing industry has never been more than an afterthought during Ottawa’s discussions about industry stimulus and as a result will likely find little, if any, support in the new budget.

Individual Support:

When it comes to assisting individuals the federal direction seems to be focused on middle class tax cuts and the EI system.

Liberal leader, Michael Ignatieff (Iggy to his friends) has already said he won’t support across the board tax cuts. I can’t say I blame him on that point however since a small tax break that adds an extra $5 or $10 to an individual’s paycheck isn’t likely to make them rush out and gleefully spend the economy out of recession.

As for changes to the EI program that’s an entirely different kettle of fish but...

The EI fund has been so mismanaged and abused by Ottawa over the years that there may not be enough left in the pot to support the massive numbers of unemployed about to enter the current system, let alone one that has undergone an overhaul.

Even with an influx of new funds from Ottawa the most likely changes possible will be to shorten the waiting period by a week, extend the benefit period and lower the number of weeks required to qualify in certain areas.

Currently anyone living in places like Toronto, for example, requires more weeks to qualify and they are eligible to receive benefits for a shorter period of time than someone say in Newfoundland and Labrador.

The reasoning behind the existing approach is simple. Ontario has an unemployment rate of just over 6% while Newfoundland and Labrador has a rate of over 13%. As a result, under normal conditions, it ought to be much easier to find a new job in Toronto, in a shorter period of time, than it would be in Newfoundland and Labrador, but these aren't normal conditions.

With the economy the way it is these days finding a job, even in Toronto, may not be quite as easy as it once was. With this in mind any extension of benefits or lowering of requirements will likely bring places like Toronto in line with places like Newfoundland and Labrador. There’s nothing wrong with that under the circumstances but once again, it does nothing to help the economy in Canada’s Far East.

Regional Infrastructure Spending:

The third prong of a likely Stephen Harper stimulus package is infrastructure spending. Once again there will likely be very little benefit here for the Province of Newfoundland and Labrador.

It's not that the Province doesn't have any infrastructure needs, far from it. There are projects that have been on hold for years and are more than ready to go. The Trans Labrador highway immediately springs to mind as does rural broadband, bridge repairs and many other initiatives.

The problem for Newfoundland and Labrador is that the Premier’s of vote rich provinces like Ontario, Quebec, Alberta and BC have been lobbying hard to have their infrastructure needs met and they contend that the best way to distribute funding is on a per capita basis.

This would mean that Ontario and Quebec, for example, with more than 60% of Canada’s population would capture an equivalent amount of the funding.

Newfoundland and Labrador on the other hand would get somewhere in the order of 1.5% of federal infrastucture funds intended to get people working, even though the Province has the highest unemployment rate in the Country and when Canada's newest so called "Have" province is facing the potential of upcoming deficits.

Indeed there is likely to be very little in the way of stimulus for the Newfoundland and Labrador economy at a time when mills are closing, mining giants are cutting production and black gold has lost more than two thirds of its value.

On January 27th all across Canada, from Vancouver Island to Halifax the masses will gather around their T.V. sets in an effort to parse every word dripping from Jim Flaherty's lips only to wonder what it all will mean for them and theirs.

Author’s Note – Usually I’m the first person to jump on my soap box when a statement like “…across Canada, from Vancouver Island to Halifax” is made but in this case the term was intentional rather than bred from ignorance or neglect.

When you consider the likely outcome of the federal budget, what reason is there for anyone in Newfoundland and Labrador to bother tuning in on that day unless they're so desperate for help they want to be the first to discover the value of whatever table scraps are once again tossed their way?