Alberta isn't the only province caught between a rock and a hard place. Newfoundland is in the same boat -- and for the same reasons. Alan Freeman writes:
We’ve all heard about that special connection between Newfoundland and Alberta — stories of hard-working labourers from the island province flying out to Fort McMurray to make their fortunes in the oilsands.
Unfortunately, the east-west linkages went deeper. When politicians in Newfoundland hit their own gusher in offshore oilfields like Hibernia, they looked to Alberta for guidance. What to do with the billions in windfall royalty revenues that in 2008 turned Newfoundland and Labrador into a “have” province for the first time after decades of equalization payments from Ottawa?
Sock it away for a rainy day like those boring Norwegians? Hell no. We’ll have a big party like our buddies in Alberta.
And now that the price of oil has tanked, there is hell to pay -- literally:
Taxes have been raised across the board; the HST has been hiked to 15 per cent from 13 per cent, the gasoline tax is up 16.5 cents per litre and the province is introducing a highly regressive “deficit reduction” income tax levy that will cost $300 for a taxpayer earning $25,000 a year. Public servants will be laid off. Half the province’s libraries will close. Those $1,000 baby bonuses are long gone.
It's a repeat of the Alberta saga. There were other ways to deal with the boom. But they were paths less -- in fact, they are seldom -- taken. There is a very old lesson here.