Picture of Provincial Debt: Part 11, Newfoundland & Labrador
The picture of debt in Newfoundland and Labrador, like so many other provinces, is a conflicted one. Due to a steady decline in fishing and forestry industries in the early 2000s, Newfoundland & Labrador was often thought of as a “have-not” province. It never saw the huge influx of its populations as provinces out West, and those who did reside there often left the province for weeks or months at a time to work in the Territories – or out West, with just about everyone else it seemed.
But things started to turn around for this far Eastern province, and for many years the provincial government actually recorded a surplus – for three years in a row. While this might not be that amazing all on its own, when you take into consideration that the province saw the biggest surplus the same year the recession hit, it becomes more impressive.
The year following that big surplus the province saw a small decline, going into deficit territory; but not before long when the 2010-2011 fiscal year saw another surplus. And this time it lasted for another two years.
This year the net debt of Newfoundland and Labrador climbed to $8.5 billion with that deficit. That’s up from the $7.8 billion seen in deficit the year before. But even with an increasing net debt load, the province still has one of the lowest debt to GDP is still one of the lowest in the country. And while the province will continue to see a deficit for the continuation of the 2012-2013 fiscal year, it’s also expected to run a surplus once again in 2014-2015.
What might be even more fortunate for the residents of Newfoundland & Labrador, aside from the fact that their province will be getting out of debt, is that the provincial government isn’t going to heavily tax them in order to make that surplus. Instead, it will be an abundance of other resources, mainly in the form of oil.
The province won’t be without its problems though, when it comes to achieving that surplus in fiscal year 2014-2015. That’s because this will be the first time in several years that the province won’t be eligible for the Atlantic Accord payment – payments given to provinces that were heavily taxed due to offshore resources. Because Newfoundland & Labrador has been doing so well, and is expected to continue to do well, they will not be eligible for this support. And that will be an obstacle when it comes to getting the province back into black.
Still, out of all the Canadian provinces, there are six that have a higher debt to GDP ratio than Newfoundland & Labrador, and things are only predicted to get better. Pretty impressive for a province that not so long ago was considered a ‘have not.’
The five biggest cities in Newfoundland and Labrador are:
Conception Bay South
A little later we’ll take a look at each of these cities, and how they contribute to the province’s overall debt picture.