NL Alliance
Working Together for Change.
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Guiding Principle Three

Guiding Principle Three

We believe in protecting the long term economic interests of all Newfoundlanders and Labradorians by being fiscally responsible with the people’s money.

To ensure a sustainable and healthy future for Newfoundland and Labrador, we must work hard to keep the province’s economy stable, through being fiscally responsible with our resources and reviewing all government spending practices. NL Alliance will address the province's fiscal reality by working with all stakeholders to explore solutions to help alleviate the financial burden the people of this province are facing. This is a very complex issue, but one we cannot ignore. We need policy that will sustain us through the high and low times, and when it comes to the province’s finances, there are a number of areas we must address.

Net Debt

Under current government practices, the financial statements of Newfoundland and Labrador do not include the debt of crown corporations, of which Nalcor is responsible for the majority (approximately $13 billion dollars, as of September 30, 2018). As such, we feel the numbers normally presented by Government as net debt per capita is understated by approximately $25,000. Our total estimated net debt per capita is actually, approximately, $57,000.

As a result, a considerable amount of revenue collected by government currently goes to servicing that existing debt. Anyone who manages finances, such as in your household, knows what happens if debt gets out of hand and a person is no longer able to service it. Consider Government to work in a similar way. That is why it is crucial that we stop the bleeding and address the debt crisis in this province.

Over the past seven years our total debt, including Muskrat Falls, has almost tripled from $14.4 billion in March 2012 to an estimated $35.2 billion in March 2019. Any financial plan must ensure a smart, effective plan to pay down the debt for the sake of future generations.

We will explore all options and collaborate with key stakeholders on how to tackle the province’s debt. Including analyzing Government’s current portfolio of assets, refinancing higher interest debt, and paying down more debt as part of the budgetary process.

Revenue

Like any budget, in order to spend money, one must find ways to make money. Government is no different. To be successful, we need to look at the revenue streams our province has, to ensure we are obtaining the fair share of our resources. Based on past instances, revenue appears to have not been an issue for our Governments. With taxes being a key source of revenue, many administrations have placed a significant reliance on the people of our great province to provide a substantial portion of the revenue needed to operate. This hasn’t worked, and will never work in the current economic climate.

We need to look at stimulating and diversifying our economy, while also addressing the issues we are dealing with. It is time, as a people, we capitalize on everything this great province has to offer and grow our economy in ways that will sustain our communities for generations to come. Governments of the past have failed to appreciate the opportunities that exist all throughout our province. Through mismanagement of our resources, many of our rural communities have been neglected and need renewed hope. If we are to survive as a province we have to rethink the way it is managed. We shouldn’t look to just the urban areas, but also to our rural communities to help grow our economy.

Our fishery is still a vital piece of our province’s future, and we have to find ways to allow it to be sustainable. We will talk to the experts, the fisherpeople, and plan for a future whereby the fishery will always be there for us. Our waters hold valuable renewable resources and we need to have more “say” in the management of it. With true collaboration, we can turn the tide and bring a vibrant fishery back to revive our rural communities.

Agriculture is also a major job provider in our province. With the proper management, development, and supports, it has potential to grow our economy even further. Another key component of agriculture is its role in our food sustainability. Here in Newfoundland and Labrador, we are only producing a small portion of the produce that we consume, and we must do more. With proper consultation with industry representatives and investments, this will be achieved.

Tourism is an increasingly growing and important industry in our province. We must do everything we can to work with tourism operators to ensure they meet compliance regulations and have strong, sustainable businesses all year long. We have so much potential in this province, and we harvest the opportunities in every way we can. From boat building, to handicrafts, to talented Aboriginal artists producing world renowned soap carvings, Newfoundland and Labrador has it all. We must capitalize on the richness of our land and cultures.

We feel the Arts Community is an integral part of Newfoundland and Labrador’s culture. Some of the most talented individuals hail from our beautiful province. We need to support and foster this talent as it shapes the very core of our society. This will not only enhance our province’s culture, but also positively impact our tourism industry.

Cultivating entrepreneurship is key to generating new economic growth and the creation of jobs. If we are to survive as a vibrant province, it will be by investing in our people and their talents and skills while attracting new people and companies to our province. We need to be innovative in bringing new and emerging business sectors into our province. We must get rid of the bureaucracy that prevents businesses from starting up or coming to our province. We must be promoters of new innovations and not a hindrance. Personal agendas and biases must not interfere with a potential new business from starting or growing.

Another aspect of revenue is through the Equalization formula as agreed to with the Federal Government. The Formula has recently been renewed for another four years, which did not include any funds flowing to the province. We will work diligently to ensure an open conversation for all future changes to maximize the benefits to Newfoundland and Labrador.

Spending

For the past several years, the Auditor General has reported that our Government does not have a revenue problem, but rather a spending problem. This has been clearly evident in the spending announcements since November, over $700 million, and in the recent budget. Changing that problem needs to be a top priority. The average citizen has always felt the most effect when it comes to spending cuts, as they often end up happening at the front lines. NL Alliance believes front line workers are essential and should be the last place we look when addressing our fiscal situation. With this in mind, a review needs to start at the top, to ensure government is operating as effectively and efficiently as possible in providing services to the public.

In recent years, the number of management positions in Government, have gone up an exorbitant amount. We realize management requires administrative support; however, since the mid 2000s we have seen a significant increase at this level, as well. NL went from a public service of 25,000 people to 45,000 people, over a 10-year period. Salaries are the biggest expenditure for Government, by far. Leaving our public service reductions to attrition is just not working and we can no longer support this high number of public workers. We must develop a plan, in consultation with stakeholders, to ensure the public service is effective and sustainable.

Even though it cannot be done overnight, we must also address the many different spending practices which have been developed inside Government, over decades. NL Alliance will commit to true budgeting, and eliminate the practice of excessive spending in the month of March. Before the fiscal year ends, departments feel they must spend their entire remaining budget in order to not see a reduction in funds the following year. As a result, departments always budget high to ensure enough monies are available to cover discretionary costs, and spend these funds, often, no matter what.This practice must change given our fiscal realities and our commitment to being good stewards of the people’s money.

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In no other situation is overspending encouraged the way it is in Government. We believe these spending practices are wastage, in many cases. It will be a priority to turn this trend around.

Health Care represents 39% of our spending and is increasing with our aging population. In delivering health care, front lines have been cut to the bone. While we have suspicions there are significant savings to be found in delivery of the service, consultation directly with those involved is very important and would provide much more detail for consideration. We believe we can reduce overall cost and still deliver an efficient and effective health care system without reducing the number of front line workers. We also believe that the most recent budget missed the mark when addressing the Insulin Pump issue. Choosing a cut off age and deciding that those over 25 years of age, who are already using insulin pumps, cannot get government funding, is an insult to many Newfoundlanders and Labradorians who have to live with the consequences. If we invest in healthcare at early stages, we would be better off financially as a province in the long-run, as people get their health issues under control earlier and require less intervention as they get older. There are many aspects of our healthcare system that need revisiting, one of which is the location of the new mental health care facility being planned on a known flood plain in St. John’s. We need to be listening to the experts and making smarter decisions for the benefit of all involved.

Education also represents a significant portion of our spending. Between Education, Early Childhood Development and Advanced Education Skills and Labour, we spend almost $2 billion dollars a year. We recognize the positive initiatives taken as a result of the Premier’s Task Force, however, it unfortunately appears as though cuts to the Student Assistant’s allocation were made in order to fund the Teaching Learning Assistant positions. Now, in many cases, we have teachers, administrators, and guidance counsellors filling the gaps and doing the work of Student Assistants. We need consultations and discussions with those that deliver education to our children, our future leaders, to determine what is needed to deliver an effective and efficient program. It is through meaningful consultations, we intend to find ways to continue to improve the delivery and results of education. NL Alliance believes the key to ensuring a strong and healthy economy is ensuring our students, at all levels of schooling, receive quality education. Our post-secondary students need to feel the support of their government through programs designed to make it easier for them to stay in NL after graduation, including bridging programs from school to the workforce, as well as more job opportunities focused on hiring graduates from our post-secondary institutions.

As we all know, with the debt of Muskrat Falls tied to all ratepayers in our province, each and every one of us attached to the electrical grid have a responsibility to the financial institutions of Muskrat Falls debt, as Nalcor has signed documents to that effect. We will collaborate to find solutions to this burden. One obvious solution is to keep the lines of communication open with the Federal Government to assist in the rate mitigation. A clear opportunity was lost in negotiating with the Federal Government in the recent Atlantic accord and subsequent rate mitigation meeting with the Minister of Finance, Mr. Morneau. There are no easy answers and anyone who tells you so, is merely trying to appeal to your fears. Any talks with the Federal Government need to involve the people of Newfoundland and Labrador. No more secrecy, no more behind closed doors meetings with no chance of questions by the media. NL Alliance commits to keeping the public informed of every step we are taking to mitigate the horrendous rate hikes that are expected when Muskrat Falls comes on line. Together we have to figure out a solution that best suits the debt holders and the rate payers.

We need to revisit the creation of the various Boards, Commission and Crown Corporations. Each and every one of these boards need a detailed review to determine the effectiveness and efficiency of their existence. For example, does Nalcor, as it is today, need to exist?

Nalcor and its subsidiaries total 12 different corporations and one partnership. The PUB currently reviewing rate mitigation commissioned a study from Liberty Consulting. Their preliminary report suggested consolidation of the Nalcor group to reduce operations and labour costs, suggesting just a 5% cut would save $15 million per year.

As of December 2017, the Nalcor sunshine list included 787 employees. This includes Churchill Falls and Newfoundland and Labrador Hydro employees, which are absolutely required. The number in Nalcor alone is 167 on the sunshine list, totaling almost 25 million dollars. When we take into account the cost of administration and those who are not on the sunshine list, our costs extend well beyond the 25 million mark. The main question we ask is, “Would the private industry undertake the work that our crown corporation is doing, at their own cost for things like oil exploration?” We believe they would, we believe Nalcor can be dismantled in part and we are willing to do this review and make the necessary cuts where they are needed.

NL Alliance believes our environment needs to be protected. Our Environmental Policies are lacking in comparison to other parts of the world. Our investments in environmentally sensitive projects must be scrutinized with due care and integrity to ensure the least impact on our environment. We need to revisit all current environmental policies to sustain a greener and cleaner province. Both previous and current governments have relied almost entirely on the oil and gas industry for energy production. While we acknowledge the importance of this industry, NL Alliance will look at implementing strategies that diversify our energy sector to both bolster our overall economy and to move towards a more environmentally-sustainable future.

NL Alliance believes in being fiscally responsible, while managing and making our resources work for us. Forming partnerships, and being strategic in our planning and actioning will make Newfoundland and Labrador a more affordable place to call home and one we can pass down to our children and grandchildren. With a renewed sense of community and a healthy economy, we might just see many people come back home, thus attracting many others to move to our beautiful province.