In crafting its disastrous budget targeted at the poor and lower middle class, the members of the Newfoundland and Labrador Government appear to be oblivious about what is happening in the world around them and unaware, even after a lengthy consultation process, of the true state of their own province.
This province has an aging population, an employment market devastated by declining resource jobs and a diminished industrial base. It is further being impacted by returning unemployed workers from Alberta, as that province’s economy declines. People are hurting.
Globally there is growing backlash on all governments who have pushed austerity, cut back social programs and taxed the middle class and poor, while at the same time providing tax exemptions for the rich. The Conservative government of Canada was turfed for these very same reasons.
People everywhere are angry and protesting against rising poverty, inequality and austerity targeted at those with the least.
The Liberal government in this province, facing a severe economic crisis, decided to use an unbearable and unpopular approach in its own first budget, an approach that has failed in other places. They are attempting to address a major economic collapse by loading more taxes and levies on the backs of those already overburdened.
I read that a manager at Eastern Health said that to do their part they would no longer provide treats or stickers for children in their mental health program. It made me wonder how an educated professional could imagine that such a budget deficit could be addressed by such miniscule measures.
Obviously this thinking is endemic among government managers, as they cut school supplies for classrooms, over-size and double up classes, and heaven knows what else. This is in addition to overtaxing everything that moves or is useful and levying fees on every activity that a person or family needs just to live.
Adding insult to injury, the government imposed a deficit tax, to which even children will have to contribute by forfeiting their recess money so their parents are able to pay it. The wealthy are shielded from this tax as it is capped at $900 based on income.
It is suggested that the total cost to “ordinary families” will be in excess of $3000 (some suggest $6000). This doesn’t include the added burden of businesses raising prices to cover the increased cost of doing business.
The real source this large deficit is not just the price of oil, but the most ill advised and worst managed project in the history of the province; Muskrat Falls. Many wise people have addressed the irresponsibility of carrying out this project.
The reality of this situation was most evident in a study of major infrastructure projects in 2013 by Flyvberg and AtifAnsar. This study found that of 245 large hydro dam projects in 65 countries, the cost escalated on average by 90% between final budget approval and the completed project. There was no improvement in budget accuracy over 75 years of data that the study covered.
Whether in fact it can even be finished, given the fiscal state of the province, is a bigger question that needs answering before everyone is driven to the poor house. Is it possible for this government to borrow the 7-10 billion dollars it appears it will take to finish this project, given our fiscal state and the technical issues surrounding the project?
So why not cut the risk and moth ball the project, as many knowledgeable people have suggested, until times are better and the technical issues are understood?
How could a budget be prepared without considering issues such as this project and the size and expense of the top heavy bureaucracies throughout this government?
It is not possible to pay off a 2.4 billion dollar deficit by taking nickels and dimes and treats from children and putting taxes on everything required for people with the least resources to live. This is evident from the fact that with all these taxes, levies and cutbacks, the budget deficit will still be 1.8 billion dollars.
Those who are most affected by this budget will face bankruptcy and despair, while those most prosperous will still have full pockets.
This appears to be a budget prepared by cynical bean counters unable to address core issues and whose vision is limited by the insular view of “their own world.”
Where is the balanced approach to addressing the major provincial issues, with an economic and social program designed for progress and not more regression? Where is the investment that builds a future for youth, rather than stealing their treats and denying them what they need to be decently educated, ultimately driving them to some other part of the world?
Written by Bill Pardy
April 17th, 2016