Tuesday, April 29, 2008

I Love Newfoundland and Newfoundlanders, Great For Them!

Tim says "What a great news story for these true Canadians"

Newfoundland and Labrador no longer have-not province

The Canadian PressST. JOHN’S, N.L. —

Newfoundland and Labrador, considered for generations the poor cousin of Confederation, heralded a new era of economic independence Tuesday with a budget that delivers a substantial surplus and promises for the first time to pull it off the list of `have-not’ provinces.The new economic strength of the once hard-up province is fuelled by the soaring price of oil and carries meaning that goes beyond numbers for many Newfoundlanders.There’s pride involved.“We were always the poor cousin of Confederation,” Finance Minister Tom Marshall told a news conference before tabling the budget.“Many of you, I guess like me, when you travelled the country, you would hear comments about people in this province ... being on welfare and other provinces having to provide us with revenues. Those days are over.”The news that Newfoundland is preparing to come off equalization next year for the first time since it joined Canada in 1949 came the same day that the TD Bank Financial Group predicted Ontario could receive help from the wealth-sharing equalization program in two years.The apparent reversal in fortunes is more a reflection of growing economic clout in energy-rich provinces than it is of a poor performance in Ontario, said TD chief economist Don Drummond.Still, the timing is tinged with irony because for years Newfoundlanders left their native province, lured by better economic opportunities in Canada’s largest province.No more.“We’re going to be an economic driver of this country,” Marshall said.“I think this will commence a revolution between the ears.”In Ontario, Conservative Opposition Leader Bob Runciman said that province’s slide into have-not status will result in a loss of self-esteem.“We’re sliding into the state where we have our hand out instead of providing a hand up,” Runciman said.It’s been the dream of past premiers in Newfoundland to wrestle the province off equalization.When he announced a deal 20 years ago to proceed with Hibernia, the province’s first offshore oil project, then-premier Brian Peckford was famously quoted as saying, “One day the sun will shine and have-not will be no more.”The province is poised to receive only $18 million in federal equalization payments this year, a steep drop from the $477 million it received last year.The $13.6-billion federal equalization program provides funds to poorer provinces to ensure they can provide basic government services comparable to wealthier provinces.The surplus for 2008-09 is forecast to be $544 million. Marshall also used Tuesday’s budget to revise the surplus for 2007-08 to $1.4 billion, more than five times what it projected last year.At the time, the provincial government based its projections on a US$59 barrel of oil. It has now revised that to be US$87 a barrel for the coming year.The province is using its economic transformation to trim taxes, boost education and health-care spending, while paying down some of its whopping debt.The provincial government has hiked total expenditures to $6.4 billion from $5.8 billion and intends to slash its accumulated debt to $10 billion, down from $10.3 billion the previous year.Two years ago, the debt was $11.6 billion.About $3.7 billion will be spent on education and health care, an increase of about $200 million from last year.For months, education and health-care groups have called on the government to improve the state of the province’s mouldy schools and aging hospitals.An ongoing public inquiry into botched breast-cancer tests has also highlighted the need to upgrade outdated medical equipment as well as address a glaring shortage of nurses and doctors.Cuts in personal income taxes in the budget will make Newfoundland and Labrador the province with the fourth lowest average tax rates in Canada. Two years ago, it had the highest.The surplus marks a stunning turnaround of the economic situation Williams inherited after he was first elected in 2003.At the time, the Conservative government faced a deficit close to $1 billion and the prospect of slashing public services.But now the province faces a new challenge: a decline in offshore oil production.Last year, output from its three projects dropped by 31 million barrels, and that decline is expected to continue for the next several years. So far the rising price of oil has more than offset the decline in production.

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