“The Big Reset”: Newfoundland and Labrador braces for austerity, fightback

The long-awaited report of the Provincial Economic Recovery Team (PERT) was publicly released on May 6, just weeks before Newfoundland and Labrador’s Liberal government revealed its budget for 2021. The PERT, chaired by Dame Moya Greene, was widely expected to make strong demands on the provincial government to make deep public spending cuts. Greene’s previous work includes privatizing and “rationalizing” large public entities in Canada and the UK in the last few decades.

The PERT has branded its 338-page report “The Big Reset,” owing to its purported vision of being “a transformational plan for Newfoundland and Labrador that attempts to tie all aspects of the economy and society together to meet some of the biggest challenges and opportunities ever faced by the Province.” Ostensibly this plan is to be anchored on a reorientation of the province towards a green economy in addition to creating a “solid fiscal plan.” What we can expect is made very clear by Dame Greene’s introductory words, which effectively label the provincial government and public sector as bloated, unresponsive and wasteful. She notes that people need to “expect less” from government for job creation and proposes a new social compact that prepares the youth of the province to contribute more than any previous generation.

The rationalizations and restructuring proposed by the “Big Reset” are many. Some particularly noteworthy recommendations are: balanced budget legislation that makes such budgets mandatory for all departments and public institutions; a “future fund” derived from oil and gas revenue; public education campaigns to make people aware of service costs; renegotiate public sector union contracts to move all pensions to collective defined contribution plans and reduce payroll through wage freezes and four-day work weeks. The report also calls for the province to eliminate Nalcor (the provincial energy corporation), merge its components into NL Hydro and then privatize it; implement a green transition plan that would rely on the hydro potential in Labrador and on “low-emission” oil and gas activity as well as “low-carbon” mining; promote electric vehicles through private investment and tax rebates; provide tax incentives for technology companies; and promote fisheries investment and rural area secondary processing. Greene further proposes eliminating the two school districts, ensuring school administrators are not members of the teacher’s union, enforcing an eight-hour day for teachers and merging all health authorities into one entity.

Some of the report’s comments about improving transparency and accountability and reducing bureaucracy might be considered positive at first read. However, the obvious end goal is to place limits on the ability of the public sector to play a leading role and, instead, to promote private investment, public-private partnerships and privatization. Many recommendations are clearly an insult to public sector workers. The “eight-hour day” language is nonsense to the province’s 5,000 teachers, who are already expected to work after class hours creating lessons, grading material and leading extra-curricular activities. For all its talk of a “green economy” and addressing climate change, the report does not imagine a future without oil and gas, and weaselly suggests that the province’s fossil fuel industry is “low emission.” Agriculture is surprisingly not mentioned, despite the transformative role it could play if developed to a higher level. The report also doubles down on hydro power development, despite the intense criticism of such projects as a result of Muskrat Falls. Lip service is given to consultation with Indigenous communities on development projects, but one wonders how seriously that can be taken given the other priorities and proposals.

The report naturally includes recommendations about actual funding. To avoid the “austerity” label, the PERT recommends a 1 percent increase to all personal income tax brackets, a 2 percent increase to corporate tax, a 1 percent HST increase among a number of taxed items and a wealth of tax of 1 percent over $10 million. Some items, such as the HST, are clearly regressive taxes. The corporate tax, even increased by 2 percent, is still laughably low. As for income tax, it needs to be reformed to put the burden on those best able to pay. Many of the recommended reductions are also shocking, most notably cutting operating grants to health by 25 percent and to Memorial University and College of the North Atlantic by 30 percent. The report also proposes reducing grants to NL Housing by 2 percent, despite a continued lack of affordable housing in the province.

Naturally, the report has been met with disgust from public sector unions, students and environmental and social activists. They are promoting a “People’s Recovery” report which proposes alternatives to the PERT’s large cuts.

With the “Big Reset” released and the PERT chaired by their hand-picked person, to what extent will the provincial Liberals even bother listening to feedback? They do want to avoid the mass protests that followed the 2016 budget, an incident Moya Greene derisively refers to as governments not doing what needs to be done out of fear of losing in the next election cycle.

Given the high stakes of the PERT report and the need to at least put on a show of public consultation, the Liberals’ May 31 budget did not entirely throw the government into fully implementing the “Big Reset.” The budget struck a positive note with revenue for the year being higher than last year due to a boost in oil and gas royalties and federal transfer payments. It also slightly increases income tax on higher earners ($135,973 and up) starting in 2022. That year will also see a new regressive tax of 20 cents/litre on “sugar sweetened beverages,” and this has already created a storm of anger from poorer folks who will feel this financial penalty hardest.

The budget appears to be setting the tone for further work towards the PERT recommendations: it commits to balanced budget legislation and a promises a “future fund.” The province’s longstanding tuition freeze is also being eliminated over the next five years as the government moves to make MUN in particular more “autonomous.” Some of the centralization recommendations are also being implemented, such as eliminating the English School District and merging it into the department of education. Regardless of any commitment to a “green” economy, the government is continuing to look to oil and mining to drive economic growth with additional funding being set aside to support projects in those sectors.

The “People’s Recovery” initiative shows that the people of this province are not automatically going to roll over on command. Public sector workers and their unions will also resist efforts to diminish the quality of their work and the vital services they provide daily. The debate over the PERT report creates an opportunity to build a serious public resistance to neoliberal austerity and privatization. Ultimately resistance must extend beyond simply the government de jure and towards capitalism, a system built for the exploitation of the environment and people’s labour in the name of profit. History has demonstrated that austerity does not work; the only “reset” here will be of the cyclical disaster of capitalism.

Capitalism is in decay and we know a better future, a better way is possible and necessary!

Photo: Budget protest in 2016

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