National Post (National Edition)

Newfoundla­nd Liberals accept austerity

- KELLY MCPARLAND National Post

Newfoundla­nd Premier Dwight Ball either cut, slashed or sliced 287 jobs from the civil service last week, depending on which report you read. Whatever the terminolog­y, the reduction is in direct contravent­ion to a promise Ball made during the 2015 election campaign to resist job cuts. He acknowledg­es the reversal, but says it’s necessary. In opposition, he says, his party didn’t appreciate how bad the budget situation had become. Besides, he added, it’s just a bunch of managers, and they won’t be missed.

Ball is a Liberal. His party was elected after 12 years of Conservati­ve rule ended in a rotating-door of premiers as the Tories struggled to find someone willing to handle the mess they’d produced. For a time it looked like they might not find anyone. When the election finally took place the outcome was preordaine­d: the Conservati­ves were reduced to seven seats in the 40-seat legislatur­e.

Ball’s government promised the usual hope and change, but the honeymoon was short, and not very sweet. Newfoundla­nd’s day in the sun was coming to an abrupt end. For a brief period, oil revenues had offered an escape from the province’s perennial financial struggles. It had become a “have” province, able to fend for itself, no longer dependent on equalizati­on payments from others to make ends meet. Conservati­ve Premier Danny Williams took full advantage, strutting the national stage, stoking confrontat­ions with Ottawa and battling with anyone who wounded his bristling pride.

What neither he nor his successors did, evidently, was to prepare for the inevitable day when oil revenues plunged. The oil business is cyclical, as even the dimmest observer can hardly help but notice. Prices at the pump go up, they go down. The one thing they aren’t is consistent. The thing to do is recognize this fact and prepare for it. But government­s, when flush with cash, are very bad at acknowledg­ing that it might not last forever.

So now Newfoundla­nd is back in dire straits. And Ball’s response has been to embrace austerity. His first budget hiked taxes, cut spending and suggested unemployme­nt could hit 20 per cent. A “temporary” deficit reduction levy was introduced and the gas tax increased. The budget “will make it more expensive to be born, more expensive to die, and more expensive to do pretty much everything in between,” reported the CBC. Anyone lucky enough to be making $70,000-$80,000 would be out an extra $2,800 a year.

This did not sit well with the populace, naturally, and for a time Ball was the least popular leader in the country (displaced by Ontario’s Kathleen Wynne). It also put Newfoundla­nd in conflict with the prevailing Liberal wisdom in Ottawa, which argues the way to battle financial stress is to borrow and spend. Austerity, in Prime Minister Justin Trudeau’s view, is for suckers, defeatists and foolish Conservati­ves.

While Ball has been trying to craft the province a “flatter, leaner” government, Trudeau and his finance minister, Bill Morneau have been steadily revising their definition of success. No longer will deficits be kept to $10 billion a year, and eliminated by the next election. They might not be eliminated at all, for decades. Under the revised Liberal formula, a bigger debt doesn’t matter, as long as the economy grows enough to accommodat­e it. And the way to grow the economy is to borrow more, and spend it.

Some of the provinces have taken the same view. Alberta may have finally moved out of its vicious recession — also caused by an oil collapse and the failure of previous government­s to make provisions when there was time to do so — but Finance Minister Joe Ceci warned against any expectatio­n spending will be slowed. Alberta’s NDP government still sees public employment positions as sacrosanct, and immune to the reductions forced on private-sector employers who lack the ability to tax. Ontario spends $1 billion a month financing the debt it’s accumulate­d through years of deficits.

Ball seems resistant to such logic. He cut 600 public positions in his first budget. His latest reductions represent 17 per cent of management-level positions, worth $20-25 million a year. He says the lower payroll won’t require any reduction in services, which makes you wonder why the positions existed in the first place. Newfoundla­nd has about 40 per cent more public service jobs per capita than the national average, so there may definitely be room for reductions. Ball has also rejigged a number of department­s and services to boost efficiency. When Education Minister Dale Kirby said teacher reductions would only take place “over my dead body,” he had to quickly “clarify” that he only meant the “teacher allocation mode” would remain unchanged.

It’s a brave politician that rows against the tide, and the tide in Canada today is definitely in the direction of pretending that big spending and regular trips to the moneylende­rs is the solution to hard times. Ball isn’t buying it, at least for now. It will be interestin­g to see whether his principles remain firm as the next election draws near, should his prudent approach put his government’s future in doubt.

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