Impacting Local Community
NL Quarterly Pop Est
NL Payroll Employment
NL Weekly Wages
NL CPI
NL Unemp. Rate
Median Age NL
NL Retail Sales
NL Life Satisfaction (Satisfied/Very Satisfied)
NL Housing Starts
Population peaked at 580,000 (just before moratorium) before declining to 506,000 in 2008 and increasing to 510,000 in 2010.
8 of last 10 quarters had positive in-migration, in last 3 years there has been a net improvement of 1,600 people
The relative growth in NL GDP per capita started after 1997 (start of production of Hibernia) and exceeded the national average by 2005.
Definitely an improvement in personal income per capita, but not as dramatic as GDP per capita.
The noticeable bump in 2005-06 is due to the payment of the advanced payment from the 2005 Atlantic Accord on the teachers’ unfunded pension liability
Oil is the largest contributor to provincial economic activity, but it contributes less than the fishery in terms of employment.
However, when development is ongoing, employment share from oil can increase by more than double.
After years of decline, housing starts growing again
Housing prices are strong and are a reflection the confidence that people have in the economy
Improvement occurring throughout Canada, but NL improving relative to Canada in most recent years.
Since 2000 when NL rate was 244% of CDN rate, it has improved to 180% of CDN rate in 2010.
Hourly wages in NL have been increasing relative to Cdn average: 80.9% in July 2006 to 92.8% in April 2011. The most recent data show the average hourly wage in Canada as $23.06 and it is $21.40 in NL.
With increased investment expected in NL, wage inflation should continue.
This does not include 500 bbls of NGLs.
This does not include Mizzen or Ballicatters.
This does not include 11 TCF of natural gas, which is almost 4 times the reserves that were estimated fro the Sable Island Project.
Production from existing fields expected to fall off.
For a short period of time, Hebron will offset decreased production in other fields.
Ballicatters and Mizzen are likely future projects, but the are probably 10 years away.
Expenditure growth rates in recent years are unsustainable, especially given the debt levels and the implication of an aging population for Health Care.
Expenditure (4.6% per annum) and revenue (4.7% per annum) growth have kept pace, both have doubled in 15 years.
With the exception of the recession, there have been budget surpluses in six of last seven years.
This is the first time in our history.
Surplus expected to be larger by $150 to $200 M for 2011-12
In 2008-09, $1.2 B record for 2005 Accord advanced payment (no new revenue).
Significant improvement after 2005 Accord advanced payment paid on teachers’ unfunded pension liability.
(Note: $8.7 B in Budget 2011-12, but announcement by Minister that additional revenues expected and will go to debt reduction)
While things are improving, NL has the second highest debt per capita and net provincial debt is starting to trend upward.
Oil revenue is biggest source of revenue for the provincial government.
It should stay that way for at least the next 10 years.
Atlantic Accord monies cease after 2011-12, this is currently bigger than federal health transfers to the province.
The price assumed in the 2011-12 budget was $108 US/bbl Brent Crude for 2011-12 fiscal year.
The budget estimate is utilized for 2011-12 and GLJ’s forecast was utilized thereafter in this analysis.
About eight years of high level royalties remaining – averaging $2.4 B per year for a total of $18.9 B over next eight years, including 2011-12.
We have collected $10 billion in royalties to date, with another $37 B to come and between $2 and $3 B in equity.
With decreasing production, we expect the contribution to the treasury to be lower, falling from $2.4 B in the next 5 years to less than $1 B in 25 years
Starting next year, revenues will fall short of expenditures (even assuming no real growth in expenditures).
It is a new reality, unless something changes.
For next 5 years, NL could be running annual deficits in the range of $345 M per annum. Within 10 years, NL could be running annual deficits in excess of $1.9 B.
For next 5 years, NL could be running annual deficits in the range of $345 M per annum. Within 10 years, NL could be running annual deficits in excess of $1.9 B.
The prices assumed in Budget 2011-12 were $108.21 (2011-12), $109.16 (2012-13), $111.95 (2013-14) and $114.45 (2014-15). To extend the analysis, these prices beyond 2014-15 are assumed to grow at 2%. The specific prices beyond 2014-15 are not publicly available.
About 15 years of high level royalties (> $1.5 B) remaining – averaging $2.2 B per year for a total of $33 B over next 15 years, including 2011-12.
This represents $5.5 B more over the same 15 years or about $370 M more per annum
While the deficit situation is better with higher prices and a 2.5% decline in real expenditure in year 3 and beyond, the problem still exists.
With higher prices and lower expenditures after 2 years, things are a little better. However, debt will double in 15 years, instead of 10 years.
Change is never easy, especially when perceived entitlements, bolster by elevated expectations, get built into the system.
Whether one wishes to characterize the situation as manageable, desperate or a full blow crisis, it needs to be dealt with, sooner rather than later.
Hiding our head in the sand or throwing our hands up in frustration are not sustainable options
Whether we have 5 or 10 years in which to deal with the fiscal circumstances that we are expecting, we do have to plan for them.
While the oil sector had transformed the NL economy, its ability to do so in the future will be lessened with declining production and low levels of exploration
The fiscal indicators have been going in the right direction and despite expecting $2.4 B per year in royalties in the next five years, the fiscal circumstances will be challenged in the short and medium term
We need to address the level of expenditures that have now been built into the system and we need to get our debt down to a manageable level ($5 B)
There will be difficulties in meeting the demand for labour in the future, especially given the aging work force and the projects that are expected in the near and medium term
With substantial energy resources, NL should leverage its energy resources for economic development and the benefit of future generations of Newfoundlanders and Labradorians
Need to stimulate exploration, facilitate the development of natural gas and build on our energy warehouse to diversify and grow the economy
We need to plan for the future; recognize the constraints that we are facing; deal with them realistically; and capitalize on the economic opportunities before us
Read Commentary September 29, 2021
Status quo in NB: no growth, aging population, stalled resource development, de-industrialization, and high and growing public debt.
Author: Herb Emery
Read Paper May 08, 2021
Having accumulated nearly $50 billion in debt for a population of slightly more than one-half a million people, the status quo is no longer sustainable.
Author: Wade Locke and Doug May
Read Paper #4 Apr 12, 2021
Our provincial government is on an unsustainable fiscal trajectory. We argue a strategy can be concocted using the principles and strategies that we have already agreed to or have accepted in the past. We don’t need to reinvent the Wheel.
Author: Doug May and Wade Locke
Read Paper #3 Apr 12, 2021
Paradigm shifts needed in public sector governance and in the analytical policy-making framework should occur in:
Author: Doug May, and Wade Locke
Read Paper #2 Updated Apr 04, 2021
Author: Doug May, Patti Powers, Alton Hollett, and Wade Locke
Read Commentary Jan 31, 2020
Canadian, US, and British governments are fixated on the “prosperity of the middle class”. The US and Britain are also focused on the “Top 1%” and growing inequality. The political story: middle class has been “hollowed out” increasingly struggle to make ends meet; top 1% is grabbing most of the wealth. Does this story correspond to the facts?