Newfoundland and Labrador unveiled a budget on Thursday with a $ 1.8 billion deficit, one of the largest in the province’s history, caused by a huge drop in revenues because of persistently low oil prices.
But while the two provinces share the same illness, it was interesting to watch them prescribe vastly different solutions this year. Alberta laid out new money for families, for low-income Albertans, for small business and for investors in an attempt to stimulate the economy.
Although Newfoundlanders knew a tough budget was in the works, the details were still a shock to some.
“My reaction when I heard what they’re doing right now is three-fold,” Memorial University professor Wade Locke “One was — wow, I was surprised at how big the cuts and taxes are. Two was holy — and you can put whatever four letter word you want into it — and the other reaction was this is just one shoe that’s going to drop and the other one is going to drop in the fall.”
Two very different plans to deal with similar problems. Should be interesting to watch how it all turns out.
The decision itself was no surprise, but it’s always fascinating to listen to the central bank to hear their views on which way the economy is headed.
The bank’s overall tone was one of cautious optimism, as it hiked its forecast for growth this year. But the bank took pains to not be too cheerful, which caused many to suspect the bank is trying to talk the loonie back lower.
“The Bank of Canada had a very difficult policy communication challenge here,” Manulife’s chief economist Francis Donald said. “They had to acknowledge that growth was better but they don’t want too strong a Canadian dollar. We have to remember, there are some good things that come with a weak Canadian dollar, and that is that our exports and manufacturing sectors do well, but the problem is it can be really difficult on consumers and on businesses who have to import a lot of things.”
“You want a sweet spot there,” Donald said.
More than a hundred businesses have voiced their opposition to the law, and are putting their money where their mouths are. That’s rare for corporations, and a sign that social activism from the corporate world is gaining steam.
“I don’t think it’s very risky, but it is a trend,” business professor Maurice Schweitzer at the Wharton school said this week. “It’s a shift from where corporate activism used to be, much more narrowly focused on the business, and here we’re seeing this shift towards social activism.”
“It’s a really interesting trend.”
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