Some facts:
• We have almost not been able to make payroll twice since 2016 and we are poised to be in the same situation in 2021.
• We are borrowing $3 billion 2020-2021 fiscal year and the interest on this loan will cost us $1.8 billion over 20 years.
If you look at our spending this way:
• Our $1.8 billion deficit works out on a fiscal year of April to march that every dollar we spend after January 22 is unsustainable. Payroll, bandages in hospital, paper in printers all on credit.
• Even worse if you look at actual borrowing of $3 billion everything we spend after Oct 29 is borrowed.
• This does not include the PPP’s. Public Private Partnerships of $1.58 Billion which btw are like payday loans. The government can borrow money at between 1.75% and 3%. Large businesses use around 8% to 10% when costing large projects. The difference between 3% interest and 8.5% interest is $1.9 billion. At 1.75% = $2.2 Billion. This is an oversimplification but when Premier Ball said we would save 12% on construction costs he neglected to tell us it would cost between 120 and 140% more in financing costs.
• Our Health care expenses are projected to rise to between $4.7 and $6 billion in 20 years.
• Our debt servicing this year at $1.5 Billion is as much as the primary and secondary education plus Child, Seniors and Social Department combined.
• Our unfunded benefits liability went up $111 million this year
CD Howe Report:
• Our GDP would shrink between 6.5% and 10.9%
• We are spending 132% more per capita than the Canadian Average on programs and 133% more than the other Atlantic Provinces
• CD Howe also clearly state that we have to reduce program spending.
The disconnect:
• The average Public Servants earned prior to raise just signed $73000. They just received a $1400 raise and in April another $700 and the next April another $770. Now this is an average and there are many public servants who earn much less than this. If you deduct the sunshine listers the numbers drop by $10000.
• The sunshine list just grew by 40% from $819 million in 2018 to $1.2 Billion in 2019. That is 37% more of them as well from 6249-8799. Average income $126500.
• The raises that were just signed will cost $2.3 billion over next 20 years assuming no more raises.
• Bear in mind as well that we have over $8 billion in unfunded pensions and group health and life insurance benefits. This does not include MUN’s ½ billion and Nalcor’s $125 million. So as we increase compensation the pension’s increase because they are based on the best 5 years of pay.
• APEC determined that the Public service enjoyed a 12% premium on wages not including their generous pension and other benefits which is probably another 20%. That was before Covid and raises.
• This is unsustainable. Socioeconomic time bomb:
There are workers and business owners all around the province being devastated in the oil, tourism, and trades. Seeing their compensation drop dramatically and facing the possibility of losing everything they have worked their lives for is heartbreaking. Seeing their next-door neighbor receiving a raise is infuriating. After receiving raises Gerry Earle from NAPE and Debbie Forward from the nurses association complained about their members not receiving the essential workers’ top-up.
Then much of the government including our health care facilities went to summer hours with people desperately waiting for tests and treatments. Suffering needlessly.
Gerry Byrne announced a swimming pool for Corner Brook and Premier Ball announced a recreation center annex for Deer Lake. It is no wonder that the public cannot grasp our situation. Our leaders from all walks of life do not live in the real world and they sugarcoat our shared challenges.
Need a Box around our spending
We need a box around our spending. If you look at the last 10 years you could determine we have an $800 million structural deficit if you assume that the oil industry gets back online. What about:
If West White Rose GBS never gets finished and Come by Chance never reopens.
CD Howe says $7.4 Billion = $1.4 billion cut in spending.
Communities need to close
Nalcor needs to be rolled into Hydro
Compensation and overall government spending have to be reduced. As difficult as this sounds we cannot have a situation where the elite are people and businesses who are working for and selling to the government.
The world changed and we are never ever getting back to February. That gives us opportunity if we respond and a grave threat if we do not.
We cannot be guaranteed that the world’s economies will bounce back from the damage that is continuing to be done. Businesses generate the incomes and taxes that we all live on directly and indirectly whether they are government owned, charitable or privately held.
We have many challenges/ opportunities:
• Climate Change response will not help the oil industry which financed our government spending.
• The work from home revolution will impact commercial real estate which is a large part of all developed economies. This is an opportunity if we can capitalize on our position as one of the safest and most conveniently located jurisdictions in the pandemic and post-pandemic world.
• As businesses fail in NL, Canada, and the world the economic capacity will also shrink. Holding on to zombie companies and borrowing to keep them going may not be the best use for our limited fiscal capacity. The same goes for inflated public compensation.
• Muskrat Falls obviously.
Taxation:
Top 1% pay 15.5% of personal taxes
Top 5% pay 36%
Top 10% 51.4%
Top 50% 95.1%
Increasing taxes on top 2 tax brackets by 2% only raises $60 million
Companies already pay comparable taxation in NL
Selling of Assets
NLC $175 million in profit to the province plus the spin-offs into the economy in jobs. Does it make sense to sell this to a national or multinational company?
We all need to be part of the change
Nlers are incredibly resilient and have the ability to respond to almost any challenge. Our leaders need to lay out the facts then call on us to be part of the solutions.
Be just a little healthier
Don’t litter and pick up any you see
Become educated about our fiscal situation https://takeactionnl.com/
Call on your elected officials to make tough choices so our children don’t have to make tougher ones. We all need to be Heros now so they don’t have to be.