Provincial deficit could double in next decade: Locke
By Rebecca Cohoe
Newfoundland and Labrador has enjoyed budget surpluses six out the past seven years; however, according to noted provincial economist, Wade Locke, the province is sitting on a potential debt crisis.
The numbers may come as a surprise to many people in this province, but based on Locke's calculations, the provincial debt will rise from $8.5 billion today, to $17.2 billion in just a decade if aggressive steps aren't taken to mitigate the problem.
Locke made his prediction to a packed room of nearly 300 people at a Harris Centre Memorial Presents public policy forum at Memorial University last week.
While the current projections don't look good, as long as changes are made to improve the situation, it should be possible to avoid a worst case situation: warned Locke "it is important to appreciate what real choices we face, and plan for these possibilities."
At the core of the issue is the need to set realistic goals and expectations. "While we should hope for continued prosperity, we should plan for what is likely and adjust or priorities accordingly," said Dr. Locke. "The priorities Newfoundland and Labrador wishes to establish have to be grounded in reality. It is the base from which all policies need to emanate."
"The time has come to acknowledge that there is a problem, to consult widely on what our priorities should be and our needs are, to identify the real constraints we are facing, and then to execute a plan to diversify our economy by taking advantage of opportunities, encouraging exploration activities and expanding our capacity through education and research," Locke said.
As the lively question and answer session showed, the audience's priorities were varied: some emphasized the importance of education, while others spoke out in support of rural communities across the province.
Panelists Lana Payne, president of the Newfoundland and Labrador Federation of Labour, Bruce Pearce, community development coordinator with the St. John's Community Advisory Committee on Homelessness, and Jo Mark Zurel, chair of the St. John's Board of Trade remained cautiously optimistic, aware of the risks of the future, but with a positive sense that with planning and foresight, Newfoundland and Labrador will be able to weather the storm. All three were very clear on the need for increased provincial collaboration and creative thinking.
As Michael Clair, associate director of the Harris Centre summarized, "we have taken for granted that we are now firmly on the road to prosperity, that there is enough oil in the ground to solve most of our foreseeable problems. But, as Dr. Locke demonstrated tonight, this is not the case."
"In the long-run, we need to encourage more exploration by oil and gas companies, but more immediately, we need to have a broad-based discussion on how we spend our windfall earnings, in order to ensure a sustainable future for ourselves, as well as for our children and grandchildren," concluded Mr. Clair.
A video of the event is now available online on the Harris Centre's website, www.mun.ca/harriscentre.