Conservatives bring austerity to Newfoundland and Labrador

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Confederation Building in St. John's. (Photo: Mark Plummer)

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The government of Newfoundland and Labrador has continued to decline in popularity over the past few months and its latest budget faces low approval, recent polling suggests.

A Harris Decima poll commissioned by the Newfoundland and Labrador Association of Public and Private Employees (NAPE) found that 71 per cent of those surveyed opposed the budget, while at least two polls this year continued to show significantly lower levels of support for the governing Progressive Conservatives than those achieved in the 2011 election. Premier Kathy Dunderdale's personal popularity has also declined, primarily to the benefit of provincial NDP leader Lorraine Michael.

Austerity and declining support for the government 

The austerity measures of the budget, which included layoffs, fee increases, program cuts and school board consolidation, have been an ongoing focus for opposition criticism, though the government has also come under fire for its sweeping restrictions on access to information; implementation of the Muskrat Falls hydro project; an exposed effort by PC MHAs to manipulate online polls; and a number of communications problems that have left the government perceived by some as "remarkably tone deaf."

Despite significant cuts, the 2013 budget does increase funding in many areas and included enhancements to spending on home care, long term care, drug therapy coverage, and planning for a variety of new health infrastructure.

Since coming to power in 2003, Newfoundland and Labrador's Progressive Conservatives have overseen unprecedented economic growth and government spending, and some improvement in the province's chronically high unemployment rate, fueled in large part by an oil boom.

Former Premier Danny Williams enjoyed remarkable popularity and commanded massive majorities in the legislature, especially following a 2007 landslide re-election. Since taking over from Williams, Kathy Dunderdale led her party to victory in 2011, but they have bled support since then to become statistically tied with the NDP.

Cuts and layoffs

The Dunderdale government's budget included about 1200 position eliminations, including 485 layoffs within the core public service and 450 from boards and agencies. Cuts to education and library services famously included the removal of the only librarian from a new library in Corner Brook, Newfoundland's second largest city, and were the subject of a leaked memo from school administrators, who warned that the quality of services would suffer as a result of the cuts, which include the targeting of up to 160 positions.

 Other contentious cuts have included the privatization of the province's adult basic education program and significant cuts to the justice department, some of which were reviewed and reversed following public denunciation by Crown attorneys. However, the justice system cuts did include the elimination of the province's family violence intervention court, despite news that the province still plans to set up a specialized drug court. Newfoundland's five regional school boards will be collapsed into two (Anglophone and Francophone), while some programs in rural communities will be eliminated by the province's public college system. 

Tourism operators have expressed concern over the impact of reduced funding for the province's award-winning marketing campaign, and an NDP MHA has warned that funding reductions to the provincial human rights commission will make it unable to fulfill its mandate.

In addition to local concern that the adult education program's privatization could impact health, direct cuts to health services have taken effect in the form of per person caps on services provided by a new dental program for low income adults. The province's dental association president, Jason Noel, expressed that the caps may increase long-term costs, highlighting how delaying dental care can cause serious, expensive-to-treat infections. 

A hiring freeze within the public service and the elimination of funding to nonprofits' employment assistance services were also announced around the time of the budget, though the freeze has since been formally lifted and the services' money is to be reinvested in skills development training and related programs. 

Newfoundland's cultural economic development program will also no longer accept applications from individuals or fund costs associated with touring, market access or web site development. Taxes on tobacco, historic site admission fees, and rates for the ferries that serve Newfoundland's isolated communities have also increased.

Opposition criticism has included concern that the government has been producing inaccurate deficit projections, though the province's revenues are unusually dependent on royalties from mining and offshore oil projects, and therefore the volatile price of oil itself. As well, the previous year's budget was also initially billed as containing austerity measures, but contained only a few dozen job cuts and less than $40 million in savings. 

Combined with unprecedented spending levels under the Williams government, perceived fiscal mismanagement has been a large part of the popular critique of the government's record. Along with lowering of personal and small business income tax, the province's revenues were also reduced by changes to equalization payments. The move by the federal government caused an unusual public rift between the federal Conservatives and the provincial PCs, and caused Newfoundland's Liberal MPs to break ranks against their party's conditional support for the 2009 federal budget.

More austerity looming 

Currently pursued by many governments around the world, austerity refers to efforts to reduce budget deficits during poor economic conditions. Despite evidence that austerity typically increases unemployment and therefore safety net spending, the programs are often implemented to satisfy creditors, maintain credit ratings, or with the belief that the cuts will actually result in economic growth (expansionary austerity).

According to many current advocates of austerity policies, eliminating budget deficits will increase confidence and free private sector resources to enable growth, while critics tend to believe focusing on short-term debt reduction will keep the economy weak by suppressing demand.

A significant portion of Newfoundland and Labrador's public debt exists in the form of unfunded pension liabilities, significantly raising expectations of difficult contract talks in the years ahead. The 2013 budget, titled 'A Sound Plan, A Secure Our Future', also stated future intentions to find efficiencies in health authorities and Memorial University of Newfoundland.

Following the vacancy left by former MHA and provincial Liberal leader Yvonne Jones, who defeated Peter Penashue in Labrador last week, a by-election will be held in her former district of Cartwright-L'Anse au Clair.

While traditionally a safe seat for the Liberals, Jones first won her seat as an independent against a Liberal incumbent, and the district was briefly represented by the Labrador Party in the 1970s. If won by the NDP, they would be tied with the Liberals in their their number of seats and perhaps be a contender for Official Opposition status. A date for the by-election has not yet been set.


Cory Collins holds a social work degree from Memorial University of Newfoundland and has written for, and

Photo: Mark Plummer

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