‘Big reset’ called for indebted NL with release of shocking economic report – fr

‘Big reset’ called for indebted NL with release of shocking economic report – fr

A boundless report that outlines a five to six year plan to reimagine Newfoundland and Labrador to avoid a “perilous situation” and prepare for the future was revealed Thursday in St. John’s.

As expected, Moya Greene, chair of the Prime Minister’s Economic Stimulus Team, presented a groundbreaking plan – proposing everything from tax hikes and deep spending cuts to a streamlining of the civil service and putting the focus on transitioning to a green economy – to reverse one that threatens to send the province into insolvency.

She described the province’s debt and spending practices as a “financial crisis” and said “immediate changes are needed.”

“What happens when we can no longer borrow? What if interest rates go up? What if we have to quickly and chaotically shut down services? What is the future in these circumstances? “

These sobering questions were asked by Greene as she described the contents of her report to the media.

Post-secondary cuts

In order to contain growing public debt and end the long trend of deficit spending, Greene recommended a 5% cut in core government spending and that operating grants from Memorial University and the College of the North Atlantic are reduced by 30%. , at a rate of 5% per year.

She also proposed that operating grants to the province’s four regional health authorities be reduced and that the province develop new ways of providing “high quality health care.”

Referring to the 180 healthcare facilities across the province, Greene said the province “needs to reduce our footprint.”

Some of his sharpest points concerned the health care system, which accounts for 37 percent of public spending.

She said the province spends 24 percent more per capita on health than the Canadian average, but despite this, Newfoundland and Labrador’s health indicators are “among the worst in Canada.”

But she didn’t stop there.

Abolir Nalcor

She also recommended the abolition of Nalcor, the province’s energy company and the entity that oversees the controversial Muskrat Falls project.

“Nalcor’s current operating model is expensive and includes duplications in many areas,” she said. “The size and complexity of the organization does not reflect the small size of this province. “

Moya Greene presents the long-awaited final report of the Newfoundland and Labrador Economic Recovery Team on Thursday, May 6, 2021. (Government of Newfoundland and Labrador)

And since the province has one of the largest public sectors in the country on a per capita basis, she recommended that the province reconsider its relations with unions.

“The compensation and benefits paid to many public sector employees are higher than those received by people in the same jobs in the private sector workforce,” she said.

Education change

But Greene doesn’t recommend cutting spending for the K-12 education system.

In fact, she said the system needs to be overhauled so that today’s generation can be better prepared for a new economy built on low-carbon technology and industries.

According to her, the province has the highest number of teachers per student in the country, “but structures seem unable to adapt” to the changing needs of students.

“Our children must be prepared to contribute more than the previous generation,” she said, referring to a birth rate which is the lowest in the country.

On the revenue side, Greene recommended “modest” tax increases, including taxes on wealth and second homes.

She also called for the creation of a future fund, with perhaps 50 percent of oil and gas revenue and carbon tax revenue going to the fund. She said the fund should be used exclusively for the transition to a green economy and to pay off the province’s huge debt.

Greene said his plan, titled “The Big Reset,” is a gradual and deliberate strategy for a province that has the highest income, spending, deficit and net debt per capita of any province in Canada.

According to Green’s report, the province also has the oldest population, the highest unemployment rate, the highest per capita health spending and the worst health outcomes in the country.

Cultural change is needed

She said the current culture of governance – one that sees budgets as “notional” and deficits as something that “doesn’t matter” – must end.

She said the belief that the federal government will save the province is also misplaced.

“If the province needs outside help, we’re concerned that the federal government will have to put in place measures and force changes; not the ones we would do, but would be imposed on us by the bond rating agencies, ”she said.

When the full range of the province’s liabilities and obligations are tabulated, Greene said the aggregate debt stands at over $ 47 billion, for a province of just over 500,000 people.

When Nalcor’s costs are factored in, she said the debt service charge, what it costs to pay off that debt, now exceeds $ 1.5 billion a year, double the amount spent. for Kindergarten to Grade 12 education.

She said the province risked not being able to pay salaries, operate hospitals and other public services, or even pay pensions to public sector retirees.

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