Tax hikes, salaries, a single health board and other ways the Greene report might change N.L.
A new wealth tax — which would be the first of its kind in Canada — is on a long list
The premier's economic recovery team was expected to stir the pot with its advice, and it did just that. There are bound to be some intense debates in Newfoundland and Labrador in the days ahead about the recommendations in the report titled The Big Reset.
So how does Moya Greene, who led the committee of volunteers that released its recommendations Thursday, think the people of the province will interpret her the recommendations?
She admits it depends.
"I think if you are a young person in school today, staring at that debt load, staring at the challenge of our generation which is to manage better the climate change, staring at the dependency ratio, you will want to see the province put on a more stable footing, you will want to see the opportunities opened up to you that can come from pursuing a strategy to green the economy.… You may think these are necessary measures to take for now," she told reporters at Thursday's news conference.
However, that optimism wouldn't be shared by all, she said.
"If you are a person that's being asked to pay more tax, you probably won't like it, but if you believe, as we do, that this is necessary in order to put the province on a more stable footing and to take advantage of the asset base that we have, you'll probably grit your teeth and say, 'Yes, OK, as long as we start cutting our expenditure cloth to fit where we are,'" she said.
The report recommends dismantling Nalcor, reducing the number of health authorities from four to one and other measures that will no doubt affect jobs.
"If you are a person who are affected by any of the expenditure cuts, you're probably not going to want to see any of it happen. But if you take a longer-term view and you ask yourself what else is practical, given that we have now 12 years of spending 25 per cent more than we take in and as a result we have accumulated a very worrisome debt level, even you, you might be big enough to say, 'Yeah, I see that this has to change.'"
Here are some of the highlights of the 338-page report that Greene released on Thursday:
Taxes
The report recommends increasing:
- The corporate income tax rate by two percentage points.
- All personal income tax rates by one percentage point and introduce tax credits for the lowest income group to offset the increase.
- The HST and provincial sales tax by one percentage point.
- The gas tax by 1.5 cents per litre.
- The payroll tax by half a percentage point.
- The tobacco tax by 5.5 cents per cigarette.
- Fees and fines by 15 per cent.
(More and new) taxes
The report also recommends:
- The Newfoundland and Labrador government and the federal government put in place an annual wealth tax of one per cent on wealth exceeding $10 million or another amount that's agreed upon. Currently, no province or territory has a wealth tax.
- Developing a tax for people who have a second home or a vacation home, valued at $100,000 or more, no matter where it's located.
- Establishing a minimum tax that would apply to all residences that are built outside municipal boundaries.
For sale
The report says the provincial government should sell all or a majority interest in the Newfoundland and Labrador Liquor Corporation.
"The NLC is a profitable entity and has consistently paid the province a considerable dividend. In the last 10 years, dividends have totalled $1.6 billion," reads the report. "This consistent profitability makes the NLC an attractive investment to the private sector."
One option is that the government could contract out blending and bottling.
Marble Mountain, a ski resort on Nefoundland's west coast, is "not the type of business that government should operate," reads the report, which says it costs the province over $2 million a year and the private sector should be running that enterprise.
Another item proposed for sale is the the Bull Arm Fabrication Site, currently owned by the Oil and Gas Corporation.
Union contract changes
The government and public sector unions should develop a new compensation package, according to the report, whose key points are that the government should:
- Find different ways to reduce the payroll base, like a four-day work week for some positions, or seasonal positions for peak demand periods.
- Freeze wages.
- Convert pensions to a collective defined-contribution plan in three years.
- Look at other ways to provide the services.
- Implement work-from-home policies.
- Use effective legislation if a negotiated settlement is not possible.
School, teacher changes
The report recommends getting rid of both the the Newfoundland and Labrador English School District and the Conseil scolaire francophone.
It suggests the Department of Education run program administration, and share HR, IT and payroll.
Teachers should have an eight-hour day, the report states, so they can "use some non-teaching time during the work day for professional upgrading and collaboration."
Principals and vice-principals, and other supervisory staff, should not be members of the Newfoundland and Labrador Teachers' Association as they are now.
Volunteer school boards should be dissolved and replaced with one volunteer provincial school advisory council. "This provincial council will be connected to existing school advisory councils to link parents, families and communities more strongly to the school system to enhance collaboration and greater accountability," reads the report.
Future fund
The report says a future fund needs to be established, and points out that Norway has adopted a similar model.
"Fifty per cent of volatile oil and gas revenues should be placed in this fund, as well as all revenues from any asset sales. The future fund would only be used to pay down debt or to fund the green economy transition," reads the report.
Greene suggests Premier Andrew Furey should launch a 20-year strategy to transition to a green economy.
Cash cuts, frozen funds
The report says more transparency is needed on public service wages. It says, for instance, that the income of employees, contractual or otherwise, who earn more than $80,000 annually must be made public.
Salary step progressions for management and executive employees in government or its agencies, boards and commissions, should be frozen until the provincial budget is balanced, says the report.
It also says bonuses and dividends should be immediately eliminated for all publicly funded organizations, including provincial government agencies, boards and commissions, as well as any public or private organizations receiving government money.
The report recommends legislation so that MHAs are no longer allowed to receive multiple provincial government pensions.
Health authorities
The report says Newfoundland and Labrador does not need four regional health authorities — Eastern, Western, Central and Labrador-Grenfell, which have a combined net debt of $710 million.
"This creates duplication and results in higher operating costs," it reads.
All the work can be done with just one health authority, according to the report.
The province has more than 180 health-care sites. The report does not suggest how many there should be.
Reducing the grants to heath authorities — by 4.15 per cent a year over six years — would add up to a savings of $237.2 million in 2022-23, increasing to $593.1 million in 2026-27, according to the report.
