No plans for job cuts, despite 'tremendous' impact on cash, Ball says
Premier plans to 'hold the course' and hopes for a financial lifeline from Ottawa
Even with an unprecedented drop in oil prices and a collapse in other provincial revenues due to the global pandemic, Newfoundland and Labrador Premier Dwight Ball said Tuesday there are no plans to introduce sweeping cost-cutting measures.
Instead, Ball remains hopeful that the federal government will throw a financial lifeline to the province, and said there are "good discussions" ongoing with Ottawa about "programs that could actually reflect the current needs of our province, given the collapse in oil prices."
Ball told reporters during the daily COVID-19 update with reporters that his plan is to "hold the course" on government spending, struggle through the coronavirus health crisis and "make sure we're prepared when we come out of this to deal with the economic crisis."
Ball won't get any disagreement from his political opponents, with PC Leader Ches Crosbie saying Tuesday there should not be any public sector layoffs.
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Oil plunges to 18-year low
The historic crash in the worldwide oil market is delivering almost daily body blows to the provincial economy, ranging from an oil refinery shutdown and major project delays to large-scale layoffs and cuts by oil companies to capital and operational spending.
With demand for oil practically drying up, prices have sunk like a stone, with Brent crude plunging to an 18-year low on Tuesday, trading at just under $20 US per barrel.
Brent is the international standard for oil, and is the benchmark used to market crude from Newfoundland and Labrador's offshore.
The provincial government forecasted the price for Brent at north of $60 US in its most recent budget, and was predicting the price would actually trend upwards in the coming years.
But that strategy has been shredded by the pandemic, and an oil glut that is quickly overwhelming worldwide storage capacity.
That all adds up to a financial dagger for Newfoundland and Labrador, which was facing a financial crisis before the pandemic hit, with net debt in excess of $15 billion, a string of billion-dollar deficits, and a disastrous Muskrat Falls project that is threatening to send electricity rates into the stratosphere.
Crisis is 'urgent'
Ball has made a desperate call for help from the federal government, including a letter last month to Prime Minister Trudeau about what Ball described as an "urgent financial crisis."
With the province struggling to borrow money in order to pay for critical services such as health care, the Bank of Canada stepped in to help the province with its short-term borrowing needs.
But Ball and Finance Minister Tom Osborne have urged Ottawa to do more.
"We're not asking for a bailout. We're asking to be treated the same as other provinces," Osborne told CBC News April 6.
"We're not asking for any more. We're asking to be treated equal."
There have been hints that the federal government will soon announce an aid package to keep the offshore oil industry competitive and encourage more exploration.
The province's representative in the federal cabinet, Natural Resources Minister Seamus O'Regan, revealed on Twitter Tuesday that he plans to meet his provincial counterpart, Siobhan Coady, and leaders in the oil and gas industry later this week.
"Our province's light, sweet crude is key to energy transition," O'Regan tweeted. "But with unprecedented instability in global oil markets, we must work together to keep Canada's offshore internationally competitive."
The province relies heavily on royalties from the oil industry, which has averaged more than $1 billion annually over the past decade.
Oil royalties were 30 per cent of the province's royalties in 2012, but dropped to 15 per cent by 2019.
While there are no firm numbers yet on how the collapse in oil prices will affect the province's bottom line, Ball has put the number in the hundreds of millions.
On Tuesday, he said the situation is having a "tremendous impact" on the province.