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St John’s – At a time when deficits are plaguing resource rich economies in Canada and global oil fluctuations are putting fuel on the fire, a report by the Canadian Centre for Policy Alternatives (CCPA) lays out options for long term economic stability and fairness for Newfoundland and Labrador.
Newfoundland and Labrador: Options for a Strong Economy, by Diana Gibson and Greg Flanagan, presents evidence showing that NL’s economy is strong across a range of metrics and spending is on par with where it should be but, revenue shortfalls are a serious concern.
“The challenge for the government is not spending but maximizing revenues,” says political economist Greg Flanagan. “If the province’s concern is a quick resolution to deficit, it could consider the $500 million in revenues lost to a tax cut agenda that disproportionately benefited the wealthy.”
Among the report’s key findings:
- Compared to other provinces, Newfoundland/Labrador is not a big spender: public spending is about 18 per cent of GDP, middle of the pack for the provinces, and down from 30 per cent in the 1990s.
- The province has done a laudable job in reducing its debt. Debt has been brought down to the current low of less than 25 per cent of GDP. A remarkable turnaround that left the province in a strong position to weather the economic turmoil of the recession and oil price volatility.
- The province’s revenue streams are healthier than most Canadian provinces, and additional revenue options exist.
- The province isn’t capturing the level of tax revenues from corporate gains that it could. A higher share of the economy is going to corporate profits than in other provinces and a high portion of those profits is foreign owned.
- The public sector is an important vehicle for generating quality employment and sharing the wealth. Oil and gas creates the lowest number of jobs per dollar spent of any industry. A dollar public of spending can create up to 20 times more jobs and public spending can generate twice as many jobs as a tax cut.
“The public sector is critical to economic stability in NL,” says report author Diana Gibson. “With its legacy of higher unemployment, higher poverty, an older and more rural population, an infrastructure deficit and the highest pre-tax market income inequality in the nation, NL can ill afford spending cuts.”
The report is being launched with a speech by Diana Gibson at the Newfoundland and Labrador annual convention on November 24, at 2:00 p.m. in St. Johns, Newfoundland.
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Newfoundland and Labrador: Options for a Strong Economy is available on the CCPA website.
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