Wednesday, February 17, 2016

BRACE FOR IMPACT

There were not too many voices questioning the Progressive Conservative approach to reducing taxes, raising salaries and doubling the size of the civil service. 

A few of us questioned the long term sustainability of it all but no one listened. A few of my readers would suggest that I was being negative and fear mongering because there was much more untapped oil offshore to fill the coffers for generations to come.

Even as a civil servant, I questioned the significant increases in salaries. Not because a higher income was not desired but because the long term unsustainability of our spending was evident. 

Successive Auditor Generals preached fiscal conservatism but most of the province was enjoying a lower HST, lower personal income taxes and government has to compete with those oil industry salaries.

We paid no heed to those negative bean counters. What did they know?

Most people felt that as a have-province we should all share in the benefits that our government was so eager to provide.  Even in 2007,  as the storm clouds of the great recession approached, instead of retrenchment, we kept on increasing expenditures to unprecedented and unsustainable levels. We gave the government a blank cheque to spend, spend, spend and they did.

2008 should have been the wake-up call that our oil dependent economy could not survive a long term downturn in oil prices. That little Newfoundland and Labrador, proud and determined, was not an island in the global economic sense. Our future was very connected to the export of our non-renewable natural resources. However, with the aid of the Atlantic Accord, we weathered the storm with hardly a scrape and government got right back to growing the size of government and reducing our tax bills.

Not only that, we seemed to forget that with every ounce of ore or barrel of oil we produced, there was one less in the ground for future development. Government, addicted to windfall royalties allowed oil companies to increase production to make even larger profits, depleting resources over a shorter period. Greed was fine as long as we all received our cut.

In fact, the province was not tot unlike these migratory workers to Alberta's oilpatch who built huge homes, bought huge trucks, took exotic vacations and bought all the toys expecting that the good times would never end. Today the giant incomes have dried up and they can no longer sustain themselves. They can not make the payments on those toys and trucks on E.I., let alone the mortgage. In droves they are lining up for credit protection and declaring bankruptcy.

It has been clear for years that the Alberta Oil Boom had done more to support rural parts of this province than the provincial government. Now the double whammy, Alberta is bust and the government of Newfoundland and Labrador is over spending by $2 Billion a year.

Like the big lotto winners who blow their finite winnings, we voted for an unsustainable course.

There is no safety net, there is no savings, only hard, hard times.

It is time to cut the garment to fit the cloth.  

Brace for impact. 

We did it to ourselves.




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