Federal briefing paints grim picture of N.L. fiscal woes
Province’s economic outlook ‘has deteriorated significantly,’ document prepared in March advises
Briefing materials prepared for federal Finance Minister Bill Morneau in March help crystallize the dire financial situation facing the Newfoundland and Labrador government.
CBC News obtained the 13-page document through access to information.
The briefing is titled "Newfoundland and Labrador's Economic and Fiscal Situation."
And the situation is not good.
The sharp drop in commodity prices is further exacerbating the province's economic difficulties by dampening prospects for future projects.- Federal briefing note on N.L.'s financial situation
Newfoundland and Labrador's fiscal outlook "has deteriorated significantly, largely due to the fall in oil prices," the document notes.
The commodities crash has been particularly unkind to "by far the least diversified" economy of all provinces.
"With construction winding down at a number of major projects, declines in capital expenditures and real GDP growth had already been anticipated for the province prior to the decline in commodity prices," the briefing document advised.
"The sharp drop in commodity prices is further exacerbating the province's economic difficulties by dampening prospects for future projects."
While the commodities crisis has directly pummelled the province's finances, its effects out west have been a type of double whammy for the local economy.
"The labour market is coming under additional stress as a result of layoffs in Alberta of (N.L.'s) itinerant (i.e. 'fly-in, fly-out') workforce," the document read.
"In fact, the total number of the province's residents that are employed in Alberta, either working directly in the energy sector or in positions strongly tied to it, is nearly double the number of (N.L.) resident workers employed in the energy and mining sector in the province itself."
Ottawa estimates that, in 2013, nearly six per cent of all employment income reported in Newfoundland and Labrador was actually earned in Alberta.
Bad-news numbers abound
Roughly half of the document has been redacted to avoid harming federal-provincial relations, or because it contained advice for Morneau.
But the portions of the document that haven't been redacted contain a cavalcade of numbers and figures that show weakness in the province's economic foundation.
- The ratio of net debt to GDP is expected to nearly double to 60 per cent within five years;
- The 2015 unemployment rate was 12.8 per cent, the worst in the country, and 2.5 percentage points higher than June 2014;
- Newfoundland and Labrador had the lowest ratings of any province in the country among the three major credit ratings agencies.
The briefing note was written on March 10, a month before the Ball administration's inaugural provincial budget jacked up an array of taxes and fees in an attempt to stanch the flow of red ink.
- N.L. budget: $1.83B deficit, across-the-board tax hikes and layoffs
- HST, gasoline and income taxes all jump in N.L. budget
Even with all of those new revenue grabs, Newfoundland and Labrador's projected deficit is still expected to come in at $1.83 billion.
The province has signalled that a series of cost-cutting measures could follow later this year.