Not just the money
Financial plan for Newfoundland and Labrador calls for tough decisions around taboo subjects, says adviser
A good financial plan, according to Larry Short, is not just about money. It takes into account a number other factors.
And where a good financial planner has the client plan ahead for the rest of their life, a great one takes the client to the end of their life and has them look back.
“That’s a completely different series of conversations that we often have,” says Short, portfolio manager and executive director for Holliswealth in St. Johns.
“Evidence of mortality and what you’re going to leave behind causes a different focus and looks at life in a different lens.”
That’s the approach Short took when creating a financial plan for the province that he presented in partnership with the MUN department of economics Friday evening. Titled “Draft One,” Short says its purpose is largely to encourage and explore different options and choices and gather information.
In order to address the current and long-term economic woes plaguing Newfoundland and Labrador, Short says uncomfortable topics that have long been considered taboo need to be discussed and tough decisions around them need to be made in order to correct the course.
Resettlement, closing medical facilties, scale down the size of the public service provincially and municipally, reduces government services, amalgamate municipalities and institute service level agreements.
“We need to let the politicians have this conversation,” Short says. “We need to give them the freedom to debate and disagree without being threatened, without being told that if you discuss resettlement, you’re going to lose this district. If you close this hospital, you’ll lose this district.”
At the root of all the current and future problems is a provincial net deficit in the neighbourhood of $15 billion and growing thanks largely to spending more per capita than anywhere else in Canada.
A major part of the spending problem is that the province’s population is shrinking and growing at the same time. Forecast figures produced before the drop in oil prices shows that by 2038 the province’s population would dip below 450,000 and that 34.5 per cent of the people the province would be 65 years or older.
Factor in that we already spend more per capita on heath care than anywhere in Canada while leading the country in diabetes, high blood pressure, heavy drinking and obesity among adults and the outlook is bleaker still.
“All of these indicators are showing that if we don’t make fundamental changes in our society that moving forward we have more than a problem of a deficit, we have things that are going to get significantly worse,” says Short.
“If we move forward and our economic position worsens, you can expect that these numbers will get worse.”
Short says the province is very much on the brink of a debt crisis and if it happens the only option will be going to Ottawa in search of aid and that will come at a steep cost.
“He who writes the cheque, whether it’s the federal government or it’s the mainland bankers, they will determine what we do here. If they turn around and demand that we make immediate cuts to services in the province, it’s going to be an ugly period of time,” says Short, who warns not even government pensions may be safe.
Short says there is time to act, but it comes back to those difficult decisions.
“We can either make them together as a province over time and adjust to a the circumstances over a number of years or we can hit that wall and suddenly be forced to make those decisions.”
The alternative, he says, is a boondoggle bigger than Muskrat Falls.
“You can look back over the last number of years and say ‘you know what? We had this called a boondoggle over Muskrat Falls because there was not enough debate.”
“We’re facing a larger problem now, so how do we get this discussion and this debate happening.”
“We need to let the politicians have this conversation … We need to give them the freedom to debate and disagree without being threatened, without being told that if you discuss resettlement, you’re going to lose this district. If you close this hospital, you’ll lose this district.” Larry Short