Newfoundland and Labrador’s 2016 provincial budget is a prime example of something so right, that’s also so terribly wrong.I’ve been following budget announcements throughout Atlantic Canada for 18 years and this is the most draconian budget I’ve ever seen: a two per cent hike in the HST… the re-introduction of retail sales tax on insurance… an unprecedented tax on books… 50 brand new service fees… a gas tax increase of 16.5 cents per litre… a horrific Deficit Reduction Levy of up to $900 per person… on and on it goes. By my rough calculations, the cost to live in Newfoundland and Labrador just went up by approximately $3,000 per person thanks to #nlbudget2016. And it was a good thing: someone, finally, was showing the fiscal discipline this province so desperately needs.
This was not the budget that Finance Minister Cathy Bennett and her recently elected Liberal government wanted to deliver; it was a budget they say they were forced to deliver following year-over-year of PC deficits. Even when revenues were at unparalleled highs thanks to oil prices that were over $100 a barrel, the government tabled deficit budgets. Why? To fund spending sprees on the public service, infrastructure — and Muskrat Falls.
Muskrat Falls… the hydroelectric project in Labrador that was supposed to increase the province’s access to clean energy, create a physical link to the Maritimes (via subsea cable), export energy (at a profit) and essentially warn Quebec that it’s no longer the only way for Labrador power to get to market. It was expensive at its original $5 billion cost, but with continued construction delays and no-end-in-sight cost increases, its current $7.5 billion-and-ballooning price tag has become increasingly hard to swallow.
After years of government cheerleading, Bennett’s budget speech included harsh words for the provincial crown corporation charged with delivering Muskrat Falls. The Minister went so far as to charge that Nalcor’s “organizational structure, compensation and benefits packages” had grown unreasonable. Which is why, less than a week later on April 20, Nalcor CEO Ed Martin resigned his post. That same day, he was followed out the door by his board of directors who said they had no choice but to resign since they had lost the confidence of government (but not before they’d approved over a million dollars’ worth of bonus packages).
Citizens are up in arms — and they should be. At public rallies and via online rants, they’re booing the Liberals and the Conservatives with equal vigor. They want to know how things were allowed to get so bad in the first place. Why did the PCs double public sector debt since 2004, to $15 billion? Why did the Liberals, who had to know how bad the finances were, promise during their election campaign that they would repeal the PC’s HST increase? Why didn’t Finance Minister Cathy Bennett, a former chair of the Nalcor board, sound the alarm about mismanagement at Nalcor a long time ago?
More to the point, citizens don’t trust that the current fiscal code red is really a crisis. They’ve seen this same play too many times before: a change in government is followed first by monstrous cutbacks (because of the previous administration’s mismanagement), then a period of moderation, leading into a spend-spend-spend mindset heading into the next election. The result is that citizens no longer trust their government — any government. They sense that the current budget’s tax grab is just a ploy to make layoffs and cutbacks more palatable. And they wonder why they have to pay to clean up the messes made by generations of political folly.
Citizens are no longer content to ask for honest, responsible, trustworthy government: it’s a demand, one that politicians ignore at their own peril.