Nfld. & Labrador

'We're asking to be treated equal' by Ottawa, says N.L. finance minister

Newfoundland and Labrador's finance minister says it isn't fair his province is stuck in a financial quagmire, worsened by the COVID-19 crisis, while others receive equalization payments.

Province came close to not making payroll this month

The numbers delivered by Finance Minister Tom Osborne Wednesday are more grim than earlier projections. (Patrick Butler/CBC)

Newfoundland and Labrador's finance minister says it isn't fair his province is stuck in a financial quagmire, worsened by the COVID-19 crisis, while others receive equalization payments.

While Tom Osborne downplayed the seriousness of a dire letter written by Premier Dwight Ball to the prime minister last month, he acknowledged the best way out of the mess is through annual federal payments.

"We're not asking for a bailout. We're asking to be treated the same as other provinces," Osborne told CBC News. "We're not asking for any more. We're asking to be treated equal."

In the letter to Justin Trudeau, Ball wrote that the province was "out of time" and would have trouble keeping the operations of government going without help.

We are the province that requires equalization the most at the moment.​​- Tom Osborne

Osborne said issues with the bond market led to difficulty securing short- and long-term borrowing. As CBC News reported, nobody wanted to buy Newfoundland and Labrador's bonds.

Ultimately, the federal government and Bank of Canada intervened with a plan to buy short-term provincial bonds.

On Monday morning, Osborne said the letter reflected "a snapshot in time," and said the province is in a better place just 17 days after it was sent.

How much would equalization help?

Six provinces will receive more than $20.5 billion in federal equalization payments this year.

The largest recipient is Quebec at $13.25 billion, while the lowest is Prince Edward Island at $454 million.

Manitoba, New Brunswick and Nova Scotia each sit between $2 billion and $2.5 billion.

Newfoundland and Labrador, at the last update in December, was running a deficit of $943 million, with a total debt just shy of $14 billion.

The formula for equalization has been a debated subject by Canadian premiers, led by the leaders of oil-based economies in Newfoundland and Labrador, Alberta and Saskatchewan. (Jonathan Hayward/The Canadian Press)

The province relies heavily on offshore oil revenues, which have gone off the deep end since the COVID-19 pandemic and a Saudi-Russian price war began.

Osborne hypothesized what would happen if New Brunswick or Nova Scotia suddenly lost its equalization payments.

"Their fiscal situation would be no different than ours," he said. "We are the province that requires equalization the most at the moment."

The province has long had a spending problem, which Osborne attributes largely to an aging population spread out across a large geographic area. The combination of demography and geography make things like health care more expensive per capita than any other province in the country.

Newfoundland and Labrador also spends as much on coastal ferries as it does on provincial highways.

Osborne said it is essential to ensure Newfoundlanders and Labradorians can continue to receive services that are up to Canadian standards without having to bear the burden on their own.

"It's naturally more expensive," he said.

"There's nobody in this country who could argue our services are comparable and our taxation is comparable to other areas that are receiving equalization."

Taking on new roles

During the interview Monday, Osborne also touched on his new expanded portfolio.

After former Service NL minister Sherry Gambin-Walsh was removed from her portfolio due to an ongoing police investigation into breach of trust allegations, Osborne was given her duties.

From left, Sherry Gambin-Walsh, Tom Osborne, Siobhan Coady and Premier Dwight Ball attend a cabinet shuffle announcement at Government House in St. John's on July 31, 2017. (John Pike/CBC)

On top of being minister of finance and services, he is also president of the treasury board, minister responsible for the human resource secretariat, minister responsible for the public service commission, minister responsible for the chief information officer, minister responsible for the Newfoundland and Labrador Liquor Corporation, minister responsible for the public procurement agency and minister responsible for Workplace NL.

His long list of job titles is the largest among any minister in government.

Osborne says he can handle it, with help from his new staff at Service NL.

"It's important to keep in mind we have several officials at Service NL, the deputy minister and assistant deputy minister. They're going to help guide the department and guide me as we get through some unprecedented times."

Read more from CBC Newfoundland and Labrador

With files from The St. John's Morning Show


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