Posted on 02/03/2021 6:22:01 AM PST by george76
ST. JOHN’S, N.L. - When Saskatchewan nearly went bankrupt in the 1990s, there was a joke told repeatedly in the province, according to economist Jason Childs: “What do you get your kids for graduation? Luggage.”
The financial problems of the prairie province in the early 1990s are playing out today in Newfoundland and Labrador, but experts say the issue is not getting enough attention during the election campaign, which is almost halfway done.
Ottawa eventually bailed out Saskatchewan — after that province dropped an austerity budget that included rural hospital closures and service cuts, leading to some small towns emptying out and disappearing. Newfoundland and Labrador will likely have to take similar measures, Childs, professor at University of Regina, said in an interview Monday.
The Atlantic province of about 520,000 people is on the brink of insolvency, with a net debt of $16.4 billion. The province spends more on debt servicing than on any government service other than health care.
“It is going to hurt a lot,” Childs said, about the sacrifices the province will have to make to course correct. “Is it doable? Yes. Is it pleasant? Absolutely not.” The government should begin by shoring up mental health services because people are going to need them, Childs added.
Saskatchewan’s brush with insolvency comes up frequently in discussions about Newfoundland and Labrador’s finances, but there are stark differences between the two provinces’ situations, say both Childs and Russell Williams, a political scientist at Memorial University in St. John’s.
Saskatchewan’s economy began to rebound shortly after Ottawa stepped in. Newfoundland and Labrador’s economy, by contrast, shows no signs of rebounding, Williams said in an interview Monday. The province’s offshore oil industry is still in trouble, he added, despite recent cash injections from the federal government.
Any decision to further support the oil and gas industry would need Ottawa’s backing because Newfoundland and Labrador doesn’t have any more money to distribute. “We don’t have the ability to make direct policy interventions without help from the federal government on a case-by-case basis,” he said.
Williams said he likens Newfoundland and Labrador’s situation to a kind of receivership, where the lenders are the ones with the real power to make decisions. And with voting day on Feb. 13, only Progressive Conservative Leader Ches Crosbie has brought up in any significant way the possibility the province is going bankrupt, he added.
Though Williams doesn’t agree with Crosbie’s claims he’d be able to strong-arm Ottawa into an arrangement that suits the province, he said he’s glad at least someone is talking about it.
Williams said he doesn’t think Ottawa would let the province go bankrupt. Instead, he said, the province will have to ask the federal government to pay off its creditors. “What kind of system is going to be in place to help give Newfoundland and Labrador some debt relief? What requirements is the federal government going to attach to that debt relief? And how much debt relief is coming?”
Williams said he worries that discussion and answers to those questions will be kept behind closed doors. Liberal Leader and incumbent Premier Andrew Furey assembled an economic recovery team in the fall, but after a dramatic resignation by a provincial labour leader, it was revealed that members had to sign a non-disclosure agreement. Voters will not see a first draft of the team’s findings or its recommendations before the election.
As for Ottawa, Childs said there’s likely not much appetite to provide the same type of relief given to Saskatchewan. There are a few provinces in trouble because of the COVID-19 pandemic, Childs said, noting that Ontario’s debt-to-GDP ratio is only slightly lower than Newfoundland and Labrador’s. “Is there going to be a lot of support for bailing out Newfoundland (and Labrador) at the federal level, when Ontario is in arguably as much trouble?” he asked.
That reality leaves Newfoundland and Labrador in a difficult place, Childs said, adding, “It’s gonna be ugly.” But there are some lessons to take from Saskatchewan’s experience, he said.
Childs said that In 1993, then-Saskatchewan premier Roy Romanow identified a few key services government wanted to protect: kindergarten to grade 12 education as well as health care and social services. Romanow put everything else on the chopping block and did his best to communicate with citizens, Childs said.
“He said: ‘Here are the books. What do we do?’ and had that conversation in a meaningful way,” Childs said. “And he got re-elected.”
Socialism works until you run out of other peoples’ money...................Margaret Thatcher...........
Let it go into insolvency then sell it for pennies on the debt dollar.
Trump can buy it and then annex Greenland.
Voila!
Trumptopia is born.
Well there’s always that ace in the hole for Newfoundland -— the Oak Island treasure
I didn’t know there was gas and oil off the coast of Labrador. There must literally an endless supply all around the world.
Easy enough to fix....
Raise taxes on the rich...and institute a 15 loonie/hour minimum wage.
Roy Romanow? Who knew the Romanovs controlled Saskatchewan? (Yes, he descended from Soviet exiles... No, not those ones.)
Look for this same thing to happen with Democrat states in the years to come.
Nova Scotia can’t be that far behind...
FREE CORN!...........TODAY!....................
Childs said that In 1993, then-Saskatchewan premier Roy Romanow identified a few key services government wanted to protect: kindergarten to grade 12 education as well as health care and social services. Romanow put everything else on the chopping block and did his best to communicate with citizens, Childs said.
“He said: ‘Here are the books. What do we do?’ and had that conversation in a meaningful way,” Childs said. “And he got re-elected.”
this is the success story. Thoughts?
1) a little concerned by the words “government want to keep” I will trust that that was also the people’s want.
2) Keep education, health and social services.
3) success is defined by the fact that he got reelected? would like to see other criteria. I might think he played ball and submitted to the central govet and the others
asserted some power and freedom.
4) Keep you eyes on this in Canada. The federal government is the economy here. We have some tough times coming folks.
5) When I worked with business going bankrupt, even if they made perfect decisions from then on, they could not overcome all the bad decisions.
Nova Scotia can’t be that far behind...
Anne of Green Gables worked out in the end. Why cay that region?
it was revealed that members had to sign a non-disclosure agreement. Voters will not see a first draft of the team’s findings or its recommendations before the election.
this explains why the Canadians are so concerned about the key stone pipe line.
“It is going to hurt a lot,” Childs said, about the sacrifices the province will have to make to course correct. “Is it doable? Yes. Is it pleasant? Absolutely not.” The government should begin by shoring up mental health services because people are going to need them, Childs added.
I think that Trumps response would be to take away the regulations not mental health.
My mother is from Newfoundland. So sad to see what’s happened to this beautiful province the last 50 years. Once the waterways were opened to international fishing, the province’s economy was decimated. The fish are gone, and along with it the primary source of income and livelihood for the good people of NFLD.
My mother is from a large bay coastal town, and when I was a girl in the late 1960’s-early 70’s, we would go fish off the docks. We’d cut the head off the first catch, throw it back, and in no time, there would be hundreds of cod and trout swimming about. Then, looking to do the same thing some 20 years later, all gone. There were no fish in the bay.
Fishing was the lifeblood of the Newfoundland people and it was given away by greed. It not only destroyed their livelihood, but the culture as well. So many people living on welfare, conditioned to depend on handouts, has led to major crime, drug and alcohol abuse/addiction. We learned to play a fun card game they play that involved a little pocket change. When one of the locals won, they’d say: “pay of taxpayers” because the joke was that’s where the coin came from...those able to work and pay taxes.
Sad. Very sad.
Oak Island is in Nova Scotia, but you knew that.
Liberal Governments ,D’oh
Newfoundland/Labrador is a whole different story. It does have resource wealth, but is far removed from civilization, has no major cities that serve as centers of commerce, and has a hostile climate that chases many of its native residents away. It's basically Scotland on the other side of the Atlantic Ocean.
Give it time, and it may eventually get small enough to be "de-listed" as a province and demoted to territorial status.
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