'Party had to end' for major projects in N.L., says APEC
Province could be hit with nearly 25-per cent drop in investment over next two years
An official with the Atlantic Canada Economic Council (APEC) says the "party had to end" for Newfoundland and Labrador as it relates to major project investments in the province.
Spending on major projects is expected to drop by nine per cent this year, and another 14 per cent next year as work on the massive Hebron oil platform begins to wind down, and the Muskrat Falls hydroelectric project reaches peak employment.
The two projects have a combined investment of some $21 billion, and currently employ roughly 8,400 workers.
And that's not the only sign of a downturn. Oil and mining companies have dramatically realigned their capital investment plans in the face of a serious slump in prices, and this has taken an economic toll on oil-producing provinces like Newfoundland and Labrador and Alberta.
Patrick Brannon, APEC's director of major projects, said the chances of other projects filling the gap is "not looking so good" in the short-term. He said the situation in 2016 could get worse if mining projects in Labrador proposed by Vale and Alderon fail to get underway.
N.L. continuing to lead the way
APEC released the results of its 32nd major projects inventory during a gathering in St. John's Monday morning, and it paints a picture of marginally increased spending in the three Maritime projects, driven by shipbuilding, liquid natural gas projects and offshore exploration.
But the picture is not so bright in Newfoundland and Labrador, though Canada's most easterly province continues to hold a huge lead in terms of overall spending this year.
Of the $13.3 billion that is projected to be spent on major projects in Atlantic Canda in 2015, more than $8 billion of that will occur in Newfoundland and Labrador, with more than one-third of that on offshore oil projects.
However, the "path is downward," said Elizabeth Beale, president and CEO of APEC.
Beale said there is a huge glut of energy products on the world marketplace, and "these low prices will not be resolved quickly."
She said that's significant for Newfoundland and Labrador because investments into energy projects have driven "rollicking increases" in this province's gross domestic product, or GDP, over the past decade.
"It's a serious challenge," she said.
"We have to assume we're moving toward a lower growth scenario for a number of years."
The slowdown has already been felt in the provincial economy, with higher unemployment and massive government deficits.
A role for the federal government
This year's inventory includes a list of some 408 projects in Atlantic Canada, each with an investment value of more than $25 million.
These projects are either ongoing or proposed, and represent an estimated $129 billion in potential spending, with about 40 per cent of that earmarked for Newfoundland and Labrador.
The combined value of these projects is up about five per cent over last year, but it's no longer major projects in Newfoundland and Labrador that are driving the increase.
The growth is largely attributed to liquid natural gas proposals in Nova Scotia and New Brunswick, but they are at an early stage of development.
APEC is projecting that economic growth will be sluggish in the coming years, and Brannon said it may be time for the federal government to step up with an enhanced infrastructure spending program to fill the gap.
"Without increased federal support, Atlantic Canada is likely to see further declines in major project spending over the next few years," said Brannon.