Debt, snow and COVID-19: Why N.L.'s premier says the province is desperate for help
‘Newfoundland and Labrador, if they could take a mulligan on 2020, they would do it’
Newfoundland and Labrador Premier Dwight Ball says it's been a rough year for the province, and it needs all the help it can get — preferably in the form of federal transfer payments.
The cost of shutting down the economy to fight COVID-19, along with a collapse in demand for oil and gas, have hammered the already debt-ridden province.
On March 20, Ball wrote a desperate letter to Prime Minister Justin Trudeau warning that Newfoundland and Labrador was about to go under and would be unable to pay its public servants. Since then, the Bank of Canada offered a lifeline with its plan to buy short-term provincial bonds.
Still, Ball says Newfoundland and Labrador needs something more long-term and sustainable — like regular payments under the federal equalization program designed to address fiscal disparity across the country.
Here is part of his conversation with As It Happens guest host Piya Chattopadhyay.
How badly has COVID-19 hit the finances of your province?
I've said many times I think Newfoundland and Labrador, if they could take a mulligan on 2020, they would do it. We started with a huge snowstorm that hit the province and shut it down for nearly two weeks. And then we had to deal with this pandemic.
Every operational cost that we have is gone up. And every revenue generator that we've had in the province has just simply collapsed. So it's been a difficult time for Newfoundland and Labrador.
And so in a word or two, how would you describe the finances?
We're in tough shape right now. You know, we were at a stage when we couldn't borrow. We got some support from the Bank of Canada, which helped us out, but it's been very tough. If I had to describe the scene in one word, it would be tragic.
The Bank of Canada announced it's going to buy billions worth of provincial debt. How much room is that going to buy for Newfoundland and Labrador?
It means that we can continue to borrow and we've been able to do that. But the issue for us is not can we borrow or will we borrow. We will do that. The concern we have is once this is over, we will have a significant amount of debt on a per capita basis in a very small province.
There's not another province in this confederation that would even remotely compare to where we are with the level of debt that we're carrying, and the impact there is on our debt servicing.
We're actually taking away services from people in our province that rightfully deserve them, simply because we're paying debt servicing.
And most people don't realize that Newfoundland and Labrador still does not receive equalization from the federal government. And so most provinces in our situation, they receive, you know, billions of dollars in many cases, of transfer payments that we are not receiving.
You say that people are going without services. What kind of services have been lost?
When you compare even to the programs that other provinces are able to put in place to support the residents in this pandemic, these are situations and programs that we simply can't do given the financial situation that we're into. And any program that will come up federally that requires a provincial portion to be paid in order to participate ... that, again, will be very difficult.
All we ever asked for is treat us fair, and we need to have something in place like equalization or some other program that reflects where provinces like Newfoundland and Labrador [are] today, or where some other province could be in the future. This will happen to some other provinces. There's no question about that. We're just the first province.
You wrote to the prime minister asking for help with what you're talking about … What specifically did you ask of the prime minister?
I knew we were into the pandemic and I knew then that the federal budget was something that would be in jeopardy given what was happening around the world.
We had been working with the federal government for quite some time leading into this period when we were expecting a program like the fiscal stabilization fund that would be able to help Newfoundland and Labrador, which would also help Alberta [and] Saskatchewan as well.
But when we became aware that the budget would not happen, this program would not be available to us, it was very clear that we had very little room, you know, on our finances. And we were struggling with receiving borrowing. And then the Bank of Canada stepped in.
So what do you say to people who say, look, Canada's oil-dependent provinces, Newfoundland and Labrador being one of them, are facing a problem of their own making, that you should have taxed and saved more of that oil wealth when the going was good?
We are in the middle of the pack where most other provinces are [when it comes to taxation]. But we have a large geographical footprint and we have a very sparse population. We have an aging demographic. We have lots of chronic diseases here that we see in other provinces, but not at the same prevalence that we would see in Newfoundland and Labrador. So we face other challenges.
It wasn't about taxation. It wasn't really about services, because it is more expensive to deliver services, you know, to the Canadians that live in Newfoundland and Labrador.
We're part of this confederation and we're residents of Canada. So we expect and deserve the same level of service, the same types of services, that other provinces will get.
As you know, the prime minister is going to be calling you and your provincial counterparts [on Thursday]. What are you hoping to hear from Justin Trudeau tomorrow?
We want to contribute and we will contribute to the Canadian fabric, and we have a lot of opportunities to do it. We just need a little boost.
And if that boost doesn't come, you said when you wrote a letter to the prime minister that the public payroll isn't very good. Are you looking at job cuts like the ones we've heard in Alberta, should you not get the help from the federal government that you want?
I think this is not a matter of if for us. It's when.
Written by Sheena Goodyear with files from CBC News and The Canadian Press. Q&A has been edited for length and clarity.
