Nfld. & Labrador

Government's problem is spending, not revenue, says board of trade

A key business group thinks Newfoundland and Labrador's new freeze on hiring and spending is long overdue.
Sharon Horan is chair of the St. John's Board of Trade. (CBC)

A key business group thinks Newfoundland and Labrador's new freeze on hiring and spending is long overdue.

The St. John's Board of Trade is welcoming a recent announcement from Premier Paul Davis, who last week imposed a freeze on discretionary spending and added an extra layer of approval on all hiring.

Sharon Horan, who chairs the St. John's Board of Trade, thinks the government is finally clewing in to what they have been saying for years. 

"We've been talking about needing to curtail spending for some time," she said.

"We knew we were spending beyond our means."

Horan thinks the government was aware of the need to limit expenditures years ago, and brought attention to the core mandate analysis that Tom Marshall presented in 2012 while he was finance minister.

Horan said that at that time, the report was something the board welcomed. However, she thinks government didn't follow through on the plan.

"It's one thing to have a vision of what needs to be done — now we need to see some execution." 

Facing reality

Horan thinks that with oil prices declining, government is finally being forced to live up to those promises of sustainable spending.

"It brought the issue right to the forefront," she said.

"But we actually think the discipline should have happened a few years ago."

Horan said while there may be less money going in government coffers as a result of oil prices, she said it's unchecked government spending that is the issue.

"We really think there's more of a spending problem than there is a revenue problem," she said.

"Over the last number of years we had increased our spending dramatically. Health care, education, infrastructure — it grew 150 to 300 per cent."

Offering solutions

Horan said that there are ways to solve the government's budgeting problems which do not necessarily include raising corporate taxes.

"We have about 18 per cent of residents responsible for 70 per cent of taxes collected," she said.

"We can't have manufacturing plants shut down and move to Ontario because it's cheaper."

Horan said one of the options the board is suggesting is increasing partnerships between the public and private sectors for construction and other projects.

"There's great examples of this happening in other provinces in Canada," she said.

"We've got to look at ways we can redo spending and look at more efficient ways to look at good service delivery."


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