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A new report from the People’s Recovery NL grassroots coalition has laid out a policy approach to the province’s economic and fiscal crisis that its authors say can achieve what the Premier’s Economic Recovery Team (PERT) has proposed—but with less harm to people and communities in the process.
Like the PERT’s “The Big Reset,” the coalition proposes similar fiscal measures to address the structural deficit but relies more heavily on generating new revenues than cuts. It argues this avenue is more sensitive to economic and other structural inequities in the province.
But unlike the PERT—headed by Moya Greene and the small team hand-picked by Premier Andrew Furey—the People’s Recovery project featured input from diverse groups and demographics within the province.
The Greene Report calls for massive cuts to post-secondary institutions, privatization of public assets, deregulation in various sectors to attract investment, the merging of health care authorities, and further development of fossil fuel resources as part of the province’s effort to address the climate crisis.
According to the People’s Recovery, reducing access to education, health care and other public services in an effort to save money will increase inequality and fail to address the climate crisis, structural unemployment, racism, colonialism, poverty, and the province’s demographic crunch.
“Major spending cuts would have a tremendously negative impact on children and students, parents, patients, seniors, and workers (especially women, who make up the majority of teachers and health professionals—71% and 80% respectively),” the report says.
“Major cuts would put people out of work, and raise demand for social programs—and their associated costs to the provincial treasury. It would hurt businesses that provide governments with goods and services, and it would hurt those businesses’ workers, and their families, and so on, throughout the economy. Cuts would reduce the stabilizing effect that government provides to counteract the economic ups and downs.”
Green Transition VS. Greene Transition
“The People’s Recovery approach is one where you start by looking at people’s situation and their needs, and the needs of rural communities, and all communities really,” Dave Thompson, an economist with PolicyLink Research and Consulting who helped the coalition in developing their report, told The Independent. “You build your vision for the recovery, and the post-recovery, in accordance with that.”
“The way it’s organized and structured, the report looks at what we have to do about equity, what do we have to do about communities and environment and that sort of thing. And along the way it finds sources of revenue and it makes recommendations for spending.”
The People’s Recovery proposes to raise additional revenues through a tax regime that would see the highest income earners taxed at marginal rates on par with other provinces in the Atlantic region, a new wealth tax on the rich, a large-inheritance tax, and a luxury tax. It also suggests raising the corporate income tax rate, creating a new tax rate for the largest corporations, extending the capital tax, and working with other governments to eliminate tax competition and the use of tax havens.
Like the PERT report, the People’s Recovery also maps a transition to a low-carbon economy—though one that doesn’t involve further expansion of fossil fuels. The report suggests the province “redirect fiscal supports for oil exploration and production toward boosting job creation in low-carbon sectors (transit, energy efficiency, and clean energy), and providing training and transition support for workers to find employment in those sectors.”
Where the PERT report proposes the province “[p]ackage the Churchill River resources as a single opportunity, including Muskrat Falls, Gull Island, and the 2041 contract on the Upper Churchill,” and also to “[d]evelop an inventory of other hydro opportunities on the Island and in Labrador,” the People’s Recovery warns against further hydro development.
Though its policy proposals weren’t developed with Indigenous groups, the People’s Recovery states as its first principle that the province should “respect the sovereignty and inherent rights of Indigenous peoples by adopting the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and [take] concrete action towards reconciliation.”
In her report, Greene promotes “partnerships” with Indigenous governments but doesn’t acknowledge Indigenous peoples’ inherent rights or UNDRIP. This is despite the province’s previous commitments to implementing the Truth and Reconciliation Commission’s calls to action, which includes UNDRIP as a framework for reconciliation. Federal UNDRIP legislation is currently being pre-studied by the Senate; if passed, Bill C-15 would purportedly compel Canada to align its laws with the declaration, including the necessity of seeking Indigenous Peoples’ free, prior and informed consent instead of just engaging in consultations.
“The federal government has some responsibility”
Thompson says the province’s healthy relationship with the Trudeau government also bodes well for Newfoundland and Labrador, but that the province will need to be smart about how it seeks federal assistance. Canada helped finance Muskrat Falls despite warnings from economists and against the advice of the province’s Public Utilities Board, Thompson said.
Now that “the province is in a position of need, the federal government has some responsibility,” he continued. He added that by leveraging its Bank of Canada lending rates, Canada can help the province reduce its debt.
Thompson noted that as the province “closes out old bonds at higher interest rates, it can replace them with newer bonds at lower rates and pay less interest as it goes. And in five, six, seven years out, as it pays down debt, it’s going to reduce the total owing there.”
The People’s Recovery says the province should be “seeking improved federal support including through programs such as universal early learning and child care, pharmacare, dental care, and optical care, as well as income supports and access to low-interest borrowing.” But, it adds that “making the case for improved federal support will require that the province fully access its own revenue options.”
“If you go in there and your tax rates are lower than your Atlantic neighbours—for corporations and for rich people, basically—and if you’re going in there and saying, every time you raise the carbon tax we’re going to drop the gasoline tax—if you do stuff like that it’s almost like you’re trolling,” Thompson laughed.
“It’s almost like you’re sort of saying, hey, we need this money but we’re not going to collect our own money — and it kind of undermines the whole case for support. So I think it’s really important for the province to go into their discussions with a credible story about need.”
Public Engagement Only For PERT Recommendations
Furey and provincial Finance Minister Siobhan Coady have repeatedly said that, through public engagement efforts, the government will consider all opinions on the province’s economic recovery. But it won’t give the ideas presented in the People’s Recovery report equal consideration to those in the PERT report.
Critics say the Greene Report is fundamentally flawed in part because it did not at the outset apply gender and anti-racism approaches to developing its policy proposals. In a statement to The Independent earlier this month, Minister Responsible for Women and Gender Equality Pam Parsons said the government will “undertake a detailed review” of the PERT report “with the same GBA+ lens we would use for policies, programs, services, and other initiatives considered by government.”
St. John’s Status of Women Council Executive Director Laura Winters said at the time the PERT “really needed to consider the economic circumstances of women and people of other marginalized genders from the outset of this work to be able to develop recommendations that could address that issue.” Sobia Shaikh of the Anti-Racism Coalition NL, who teaches social policy at Memorial University, said policy lenses “make sense at the beginning, before policy is made. Not after the fact.”
In an emailed statement, NDP Leader Allison Coffin said the People’s Recovery document represents “the kind of report the province should have set out to develop but instead they chose a secretive, closed door approach led by a group of mostly elite, business people.”
Coffin says the report is “hopeful, it’s realistic, it acknowledges fiscal challenges, proposes solutions but also foregrounds people and communities—the very people who will be harmed by Moya Greene’s austerity approach.”
PC Shadow Minister of Finance Tony Wakeham says his party will review the People’s Recover proposals alongside the Greene Report, but noted in a written statement to The Independent that “[w]hile revenue options are welcome, we’ve seen what happens when government only addresses the revenue question and ignores the expenditures of government.”
“A balanced approach that carefully measures the impact of both revenue and expenditure options is needed, with careful thought given to how tax increases and spending cuts will each affect the people of the province, particularly in rural Newfoundland and Labrador,” he said.
Austerity Is Not Inevitable: Thompson
People’s Recovery facilitator and spokesperson Jessica McCormick said “there are two paths that our province can take—the austerity route that has been proven time and again to fail, not only economically but socially, or we can be forward-thinking and take a measured and balanced approach to economic recovery that safeguards and enhances the well-being of the people of the province.”
Thompson said austerity is not inevitable, even in challenging times.
“Governments have control over the tax rates, they have control over the spending—and you can balance this budget either way,” he said. “You can increase taxes, or you can cut. And either one of them takes you to the same budget balance. So you have a choice—it’s not like government’s hands are tied.”
Coady said in a written statement that government is now accepting input by e-mail, snail mail, and by phone (1-833-607-2639). Registration is also open for further engagement through the province’s online portal EngageNL. “We will also be holding virtual town halls for communities and sessions for stakeholders,” she said. “Budget 2021 and further discussion regarding the PERT report are important as we all look to transform our province, improve our way of life, and leave behind our financial concerns.”
Thompson says beyond its policy proposals, the People’s Recovery demonstrated a better approach to public engagement.
“I think there’s a lot to say about bringing everybody along and having a group effort where we work together and everybody pulls in the same direction, and we don’t victimize any particular group,” he said. “I think that’s probably more important to most people than the sort of technical discussions of numbers. I think both of those pieces are going to be important: the adding up, the arithmetic, and the impact on people.”
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