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The Canadian Taxpayers Federation (CTF) says the taxpayers of Newfoundland and Labrador simply can’t afford the current cost of the bureaucratic payroll.
Renaud Brossard, interim Atlantic director for the CTF, told SaltWire Networks the salaries and benefits for government employees have consistently been the province’s biggest expense.
At $3.9 billion, it’s 44 per cent of the province’s budget, he said, according to information the federation collected via an Access to Information request to the Department of Finance.
The information also showed that annual wage increases of two percent for 2020-21 and 2021-22 will add $140.9 million to the salary cost over those two years.
Brossard also told Saltwire that compared to other Atlantic provinces, Newfoundland and Labrador has the highest number of government-paid employees per capita.
“Based on the Atlantic Institute for Market Studies (AIMS) report of 2019, Newfoundland and Labrador has 109 public servants per 1,000 population. For comparison, New Brunswick has 85 per 1,000, Nova Scotia has 99 and Prince Edward Island has 95,” said Brossard.
Given its financial situation, with a $16.4-billion debt and a $1.8-billion deficit projected for the current fiscal year, the provincial government should cut bureaucrats’ pay.
“It’s not possible to make Newfoundland and Labrador’s budget viable without reducing its largest source of expenditures: bureaucrats’ compensation,” said Brossard. “If we’re really all in this together, bureaucrats need to show they can make the financial sacrifices Newfoundlanders and Labradorians have had to make this year.”
The bureaucrats referred to are not just people working directly for the provincial government departments at Confederation Building, Brossard added, but everyone who collects a paycheque from the province, including those who work for the school board, health-care corporations and Nalcor Energy.
To gets its financial situation in order, the federation also said the provincial government must adopt a resolution to balance the budget.
Eight of the last 10 budgets in Newfoundland and Labrador have been written in red ink, Brossard noted.
“Deficit spending has been a chronic problem for the province, even before the COVID-19 pandemic,” he said. “The current deficit and the province’s debt are not sustainable, and the government needs to put forward a solid plan to get its books back in order.”
The federation also suggests the province should scrap its plans for a $25-a-day child-care program.
The plan, which government has said it will adopt in 2021, comes with a price tag of $12 million annually.
Some might argue that lack of affordable daycare is hindering families and holding people back from employment opportunities.
In an interview with SaltWire, Brossard said the CTF is not critical of daycare programs, but the issue is whether this province can really afford it.
“The fact that the province spends $100 million more in interest payments each year than it is able to collect through personal income tax is rather alarming.”
In addition, he said, the cost of subsidized daycare programs tends to balloon rapidly.
“From 2015 to 2019 the cost of subsidized child care in Newfoundland and Labrador has risen three-fold. In Quebec, since the program was started in 1998, the cost (for government) has risen nine-fold.”
He said an alternate solution is to help help people have more disposable incomes through tax cuts, thereby providing them the financial means to pay for child care and other needs.
Adding an expensive new program at a time when the province is in financial hardship, makes it that much harder to get the budget back to balance, added Brossard.
“The government is not truly helping young Newfoundlanders and Labradorians if it is mortgaging their future,” said Brossard. “The government should scrap its plans for expensive new programs and focus instead on a responsible financial plan.”
In September the province’s new premier, Andrew Furey, announced an economic recovery committee, chaired by former Canada Post and British Royal Mail CEO Moya Green, to examine the province’s finances and come up with possible solutions to deal with the debt.
“The province of Newfoundland and Labrador is currently facing an unprecedented fiscal crisis. The budget deficit forecast for 2020-21 will exceed $1.8 billion,” reads the terms of reference for the committee. “Furthermore, the province has added over $6.3 billion to its net debt in the past six years. This is unsustainable.
“A comprehensive plan to address its ballooning debt, deficit and expenditures will be essential. Newfoundland and Labrador has the highest per capita revenue of any province in Canada. It also has the highest per capita spending. A plan is needed that will realign our expenses closer to our revenue base.”
An interim report from the committee is due on Feb. 28, 2021, with a final report due on April 30, 2021.
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