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Pam Frampton: On the razor’s edge

The latest report from the auditor general reveals the bleak state of the province’s finances.
The latest report from the auditor general reveals the bleak state of the province’s finances.

 

“When blinding storm gusts fret thy shore
And wild waves lash thy strand…”

— Sir Cavendish Boyle, “Ode to Newfoundland”

I left Newfoundland in the late 1980s to find work on the mainland, the same as many people did then. Same as they did decades earlier; same as they will continue to do.

For reasons of necessity — not desire, not then — I came home in the early ’90s and barely recognized the place that I had left.

There seemed to be as many empty storefronts as occupied ones downtown. There were no tumbleweeds in the echoing streets, but they wouldn’t have seemed out of place. The houses looked defeated — drab and faded — and many commercial buildings were pocked and peeling paint. “Help wanted” signs were something you only saw on TV.

Out around the bay, weather-roughened dories were hauled up on the grass to rot, while fishing stores sagged slowly inward.

Now, 25 years later, despite a handful of intervening good years and many bright spots — an incredibly rich arts community, world-class cuisine, tech industries, ocean-based expertise, good paying (but cyclical) megaproject jobs — it’s starting to feel that way again.

There’s a line that runs through auditor general Terry Paddon’s latest report on the state of the province’s finances like a mantra; one that must be heeded: “There is a risk that the forecast revenue growth may not be achieved.”

That’s auditor-general speak for “you’ve built your house on shifting sand. It could hold fast, or it might be flattened by a crashing wave.”

Paddon is blunt about the province’s fiscal reality, but he couches it in the clinical language of auditors, as you would expect.

Deficits of this magnitude are not sustainable,” he writes.

It’s not a condemnation, just a statement of fact.

Either way, the truth is indisputable.

Can you look your children in the eye and honestly tell them they have a bright future here?

“The province is forecasting a return to a balanced budget (in 2022-23), if oil prices increase, production increases, economic activity occurs as predicted, and spending is constrained over the period,” he writes.

“If this does not occur, the province will have to look to other means to move to a balance.”

“Move to a balance” sounds like a gentle motion.

The reality will be anything but. The price of oil, as the AG warns, is subject to “inherent volatility.”

My colleague James McLeod, who covered the auditor general’s report this week, says the document describes a fiscal crisis that is looming over us like a huge wave. It hasn’t crashed down on us yet, but it’s big enough that it’s already starting to rock the boat.

The question is, what can we do to avoid being sunk by it when it hits?

Our situation is a culmination of geography, geology, demography, market forces, and far too many years of pork-barrel politics.

We’re heavily taxed and the cost of living is high. With the winding up of the construction phase of big projects like Hebron, Muskrat Falls and the Vale nickel processing plant in Long Harbour, we are expected to lose 16,800 jobs in the next four years. 

Walmart has decided that, even in St. John’s inclement climate, its tire and lube centres are no longer viable. A shop that sold second-hand books in a prime downtown location for decades has folded. In one small east-end strip mall, a Scotiabank branch and a dollar store have both closed their doors.

If a dollar store can’t survive in tough times, what can?

The Newfoundland and Labrador Employers’ Council says a survey of its members found that more people are at least considering leaving the province.

At a reception for students who made the Dean’s List at Memorial University Thursday night, I looked at all those fresh young faces and couldn’t help but wonder how many of them would still be in the province in five years.

Can you look your children in the eye and honestly tell them they have a bright future here?

The warning bells are clamouring.

I’m not sure a six-year plan premised on the price of oil can pull us out of this one.

 

Pam Frampton is The Telegram’s associate managing editor. Email pframpton@thetelegram.com. Twitter: pam_frampton

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