Newfoundland and Labrador is facing a bleak financial forecast for 2020, but Premier Dwight Ball is asking residents to trust that his government’s approach will get the province back on track.
The province’s finance minister and auditor general both described the situation as challenging this month, following a fiscal update that saw revenue fall $392 million short of projections, largely due to a shutdown of oil production after consecutive spills.
Auditor General Julia Mullaley reported the province’s net debt is now higher than it’s ever been, and cautioned in her annual financial audit that government “is not living within its means.” She reported that the government’s financial targets, including a goal to return to surplus by 2023, appear increasingly difficult to hit.
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More pressingly for residents, a plan has yet to materialize on how to mitigate electricity rates, which are expected to skyrocket once the over-budget Muskrat Falls hydro dam starts providing full power to the island. A rough plan released by provincial government in the spring predicted an annual need for $200 million from Ottawa, but details are still being negotiated.
Ball said he understands the stress this uncertainty causes, but insists the situation is nothing the province hasn’t weathered before.
“This province is not going bankrupt. But it is facing some serious financial challenges, which is not new for people in our province,” Ball told The Canadian Press in an interview.
“We’ve made significant progress already, but it’s going to take a lot more work as we continue to diversify the economy, create jobs and continue to see increases in populations.”
Ball has repeatedly pointed to the rough financial situation his Liberal government first inherited in 2015, and the strides made since then in bringing the Progressive Conservative-sanctioned Muskrat Falls project closer to completion. He said exploration for offshore oil reserves and mining developments could bring benefits from the province’s “full basket of untapped potential.”
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He said measures to curb spending won’t come with higher taxes or cuts to essential services like health care, pointing to partnerships and collaboration with other governments as potential sources of relief.
Ball, whose government was reduced to a minority in a spring election, said federal and provincial officials are meeting “weekly” to find a solution to the looming electricity-rate problem, which he calls “the big priority” of the moment for him as a leader.
“It impacts everyone,” he said.
Details of the long-promised plan are expected early next year, with Ball suggesting the difference will be made up by changing the payment structure for the project that has been partially financed with loans from Ottawa.
Ball is asking residents to keep the faith following a year when trust in government and its use of public money was tested in Newfoundland and Labrador.
The Muskrat Falls inquiry, called to determine how the $12.7 billion “boondoggle” fell so far behind schedule and above cost, saw a parade of past and present officials testify that they were in the dark about the true financial picture. Some suggested information about cost was intentionally suppressed.
More recently, Ball’s government came under fire when a cabinet minister was formally reprimanded and suspended without pay for his role in a patronage scandal.
A report tabled this month found Christopher Mitchelmore broke conduct obligations when he directed a former Liberal staffer’s hiring at a lucrative public service job and signed off on a salary increase for the role.
Ball has called the move an executive transfer and denies allegations in the Office of the Citizens’ Representative’s report that he personally offered the job in question to Carla Foote. But the premier said he’s otherwise accepted the report’s findings and intends to change how things are done.
“I understand why people would be disappointed,” Ball said of the incident. “That was not a direction that came for me. Not at all. What I have made a commitment to do, though, is to fix it.”
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As he prepares to chair the council of Atlantic Canadian premiers this year, Ball said he plans to bring Newfoundland and Labrador’s hydroelectric resources to the table as a way to help other provinces transition off reliance on coal power, though there are transmission issues to sort out.
“There’s no better replacement for coal-fired power than hydroelectricity, and we have abundance of that in Newfoundland and Labrador, so these are the types of discussions that we’re having,” he said.
Ball, one of the last Liberal premiers in the country, will face a leadership review next year, but said he’s confident the challenges he’s weathered have made him a stronger leader.
This report by The Canadian Press was first published Dec. 22, 2019.
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