Concern, surprise after economic update paints grim picture for province
A national think-tank says COVID-19 appears to have had a startling impact on Newfoundland and Labrador in the last fiscal year, and bigger issues may lie ahead.
Pedro Antunes, chief economist with the Conference Board of Canada, said he was surprised to see, in Thursday's fiscal update from the provincial government, just how deep the cuts to revenue were, "with essentially just a few weeks of shutdown with respect to COVID-19 in March."
"I know there's other problems that the economy suffered in terms of the big winter storm that occurred this year, et cetera. But with respect to all of that, even accounting for all of that, it was surprising."
On Thursday, Finance Minister Tom Osborne updated the numbers for the fiscal year that ended March 31.
The news was not great. Revenues were down by $690 million compared with initial estimates. The sharp pandemic-related drop in oil prices played a role in worsening the picture at the end of the fiscal year.
Despite all of that, the province posted a big surplus — but that's because years and even decades of future Atlantic Accord payments all hit the books at the same time.
"The point is that if you really look — aside from the Atlantic Accord — Newfoundland and Labrador is essentially running a billion-dollar deficit, more or less in that ballpark, for this past fiscal," Antunes said.
"We think that's going to be worse next fiscal."
However, he says there may be a brighter silver lining to all of the dark economic clouds.
Canada could be set to emerge from the worst of the COVID-19-related recession, in the second half of the year — something he's hopeful will happen in Newfoundland and Labrador as well.
Pledge to work with opposition
Osborne said the Liberal minority government hopes to table a budget for 2020-21 by the end of September, and wants to work with the opposition parties on how to address the challenges ahead.
PC Opposition leader Ches Crosbie said his party is willing to do that, but needs a free flow of information — something he said hasn't always happened.
According to Crosbie, the premier didn't tell opposition parties when he wrote a letter to Prime Minister Justin Trudeau in March, saying the province had run out of time — and was about to run out of cash.
"So they keep us in the dark where they think they want to keep us in the dark," Crosbie said.
"What we're saying to the government is, if you want collaboration on the colossal economic and financial issues we are now facing — and they admit we are facing — you've got to open the books."
NDP Leader Alison Coffin said the picture would have looked even worse if pandemic-gripped April and May were included in Thursday's financial update.
"If we had captured the past two months, the situation would be very disturbing for many people, and I have some concerns about how we are going to get out of it," Coffin said.
"I am very, very concerned about what is to come."
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