MUN economist points to optimism despite N.L.'s difficult fiscal update

Memorial University economist Lynn Gambin is staying optimistic despite Newfoundland and Labrador’s difficult fiscal update.

“I do think we have a lot of untapped potential in the province, but it is about having a very long-term vision, but also making smart choices about spending,” Gambin told CBC Radio's The St. John’s Morning Show on Wednesday.

Finance Minister Craig Pardy delivered his first fiscal update on Tuesday, describing the province’s financial bottom line as “deeply troubling” as the projected deficit ballooned to $948 million. In August, the previous Liberal government projected $626 million.

"There is no sugar-coating, this number is deeply troubling. These structural challenges will take time to fix," Pardy said.

Gambin said the increase between governing administrations is striking and sizable — but the former governing Liberals aren’t entirely to blame.

“Changes beyond the control of any provincial government have really impacted us and where we are,” she said.

“A change in the price of a barrel of oil, for instance, can make a big change on the bottom line for the province.”

On Tuesday, Pardy said the economy will be buoyed by higher oil and mineral production, weaker tariff rates and increased consumer spending.

Gambin said the province’s natural resources are one of its greatest strengths.

“That will attract value in markets,” she said.

The government projects Newfoundland and Labrador will lead all provinces with with 5.3 per cent real gross domestic product growth in 2025.

But some of the revenue will have to service the province’s debt, over $500 million of the $948 million deficit represents money the Liberals expected to receive from a historic tobacco settlement.

Gambin said dollars spent on debt servicing are dollars not available for investments in health care, education and skills training.

Opposition parties believe cuts may be coming, but with promises made during the election to cut taxes and invest in public safety and health care, Gambin said she's curious to see how the PC platform will hold up.

“It's going to be interesting and very important to see how they balance out the things that they may have thought about before entering office,” she said.

When asked if the fiscal outlook had changed the commitments made by the PCs during the fall general election, Pardy said the priorities remained the same and the party will “do what we can."

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