Newfoundland and Labrador is not prepared for the sea change that comes with a much lower price for a barrel of oil. Our government has become dependent on high oil prices to fuel it's addiction to spending on new programs, delivering services, building and maintaining new infrastructure. Our means expanded, as did our spending.
Newfoundland and Labrador is not alone in falling behind on it's fiscal targets this year. None of the oil producing provinces build a budget on $60 a barrel oil. Lower energy prices and a lower Canadian dollar are creating challenges across the country - and the world.
Alberta is still officially expecting a surplus this year, though a smaller one than previously forecast. The oil rich province is expecting to loose SEVEN BILLION IN REVENUE.. Manitoba, revised its projected deficit to $402-million from $357-million earlier this year. Four are unchanged. Saskatchewan, has said its finances are unchanged, but that it will take a hit next year if the price of oil stays low.
The offshore oil industry, directly and indirectly, employs a lot of people in the province. The Alberta oil industry employs a lot more. With reports that more and more migratory workers are receiving pink slips as large projects are scrubbed - or put on hold, a chill is setting in.
People, like the government, are not sure what to do? The next paycheck is going to be a lot less than accustomed to. Suddenly, the mortgage, they toys, the cars might seem excessive. The priority is providing the basics. Government, like the average household, is caught. All unnecessary spending has to be cut. It is not a matter of choice, it is reality.
Half-a-billion dollars in anticipated revenue has vanished but the commitment to spend has not.
Something has to give.