Premier Dwight Ball says a report by the Newfoundland and Labrador Employers' Council that calls for significant tax and spending cuts is nothing more than a "paper exercise" that would send the economy into a freefall.
"It would mean thousands of cuts in health care services, cuts in education, and so on," Ball said in response to Thursday's release of "Another Way Forward," which was prepared by the employers' council in conjunction with the Conference Board of Canada.
The title is a play on words of the Liberal government's "The Way Forward" strategy, but that's about the only thing the two strategies have in common.
It proposes a dramatic — even radical — overhaul of the way government generates and spends its money, which could ultimately lead to some uncomfortable changes in the way public services are provided.
"The issues we have in this province are beyond politics," said Richard Alexander, executive director of the organization.
The group unveiled options to reduce spending by $1.1 billion — and ultimately offer relief for taxpayers but with cuts to public services — at an event at the Capital Hotel in St. John's Thursday.
At the top of the "Another Way Forward" list is close to $600 million in tax cuts.
The employers council says that can be achieved if government:
- eliminates the controversial deficit reduction levy
- eliminates the temporary gas tax increases in next year's budget
- reduces personal income taxes and insurance taxes
- removes corporate capital taxes and payroll taxes
That's a big cut to government revenue, Alexander acknowledged, but he thinks its possible.
"It's time to do things differently," he said.
Alexander said the province faces the possibility of losing control, and possibly turning to Ottawa for a bailout, unless some serious changes are made.
He said the government needs to heed repeated warnings from experts — including one this week from Auditor General Terry Paddon — that say the province's spending and debt load is unsustainable.
"The recommendations we are making are reasonable, and we believe are achievable," Alexander said, adding that such measures could put the province on track to become the most attractive place to live, work and do business in Atlantic Canada.
"It is a plan, we believe, that would stop people from thinking about leaving the province, and provide an incentive or advantage for people to move here, and make us attractive for business investment."
Spending more on sick leave than road construction
The strategy takes aim at the size of the public sector workforce in Newfoundland and Labrador, and the level of health and education spending.
Government could roll back or freeze wages for core government employees by more than $75 million and this province would still have the highest paid employees in Atlantic Canada, according to the report.
The report also highlights the high cost of employee benefits such as severance and sick leave.
"The government spends more on sick leave than on road construction," said Alexander.
Alexander said one of the main reasons for overspending within health care is the cost of operating hospitals.
"Spending on hospitals and institutions could be reduced by $197 million and we would still spend more ... per person of all Atlantic Canadian provinces," he said.
Alexander said he is well aware of the bold measures and it's the type of plan that could face stiff opposition from some sectors.
But he has a message for Premier Dwight Ball and his team.
"We need a government that's courageous," he said.
"It's not like we have a choice to fix our spending problem. We can't afford what we have now."
Ball warns of setting 'economy in a downfall'
The premier said he welcomes any and all suggestions, but said his government will stick to a balanced, disciplined and longer-term approach to dealing with what he admits is a tough situation.
"Just taking a report and ... some weekend gathering and suggesting that if you do this — within a year, we would set this economy in a downfall, and that would not be good for the employers' council, their members as well," said Ball.