The New Newfoundland

Newfoundland has long been the basket case of Canadian provincial economies. The fish disappeared and they're so far from markets that transportation costs are a killer. A few years ago, hope dawned in the form of offshore oil and gas. Then this recession hit, and the price of oil went from flirting with $147 a barrel at its height to over/under $50. Ouch, imagine the kind of hit your revenues take when your major export's price drops by two thirds.

Last week, Newfoundland came out with their provincial budget and the deficits are back, they're predicting $750 million in red ink next year. That sounds pretty bad.

But wait a minute, isn't New Brunswick forecasting in the order of an $800 million deficit? What gives? How can we be doing even worse than Newfoundland? Has there been a drop of anything we export in the order of the precipitous fall in oil prices?

The answer is no, despite some laughable spin we'll get into another time. So what does this mean? There's an essential difference in our deficit and Newfoundland's: there's can be largely explained by market changes, ours cannot. Theirs is a direct result of a fall in energy prices. Ours is a direct result of government mismanagement.

Move over, Newfoundland, there's a new King of the Hobos in town. In three budgets, we've taken over the title of Confederation's poor cousin. Even more disgustingly, we've done this while spinning a bunch of PR BS about self-sufficiency. We're going the wrong way, both in absolute terms and relative to our neighbour provinces.

It's true that this recession is kicking everyone, but even in a situation like this, it makes a difference how you manage. Shame Graham is quick to note that $300 million of our deficit is due to hits in the pension fund. It sounds good, until you realize the deficit is $800 million. What Graham is really saying is: EVEN IF THE ECONOMY HAD STAYED STRONG, THE LIBERAL GOVERNMENT HAS MANAGED SO POORLY THAT WE'D BE A HALF A BILLION IN THE HOLE.

Quick question: if there was a forest fire approaching a village, which house do you think is most likely to come out intact: the one with a built-in sprinkler system, or the one which has already been set on fire by the owner before the main fire even arrives?