Churchill Falls revenue can put province on a better pathway: NL finance minister

In the moments after the new Churchill Falls agreement, NL’s finance minister was asked what he’d spend the first $1 billion on.

Minister Craig Pardy, with a little excitement in his voice, said the revenue from the new agreement would cover most of the province’s health-care budget, and then some.

He also said it’s a good deal for the future of the province.

“I can say that we’re all eager to make sure that we have more revenue coming for the benefit of Newfoundlanders and Labradorians,” he said at the time.

A month later, that excitement still permeates Pardy’s voice as he discusses the money — though still imaginary at this point — that will flow into the provincial coffers once the deal gets finalized.

“We’re really in tune to make sure that we set a better pathway for the future generations in Newfoundland and Labrador,” said Pardy.

“We stated at that time that we didn’t feel the need to have to borrow money in order to put into a future fund by continuing to add to our debt, which occurred prior to this year.”

The money coming in over the course of this new agreement has been covered in plenty of ink and airtime since it was announced on Aug. 15.

It’s supposed to bring in some $273 billion, with a cash flow of $10 billion coming to the province before the expiration of the current agreement in 2041. That includes $1 billion after the first year.

For Pardy and his government, that represents the chance to wipe out a large chunk of the province’s debt in one fell swoop.

“Now, some may say $10 billion from the Churchill Falls project is not what they would expect until ’41, but that’s a lot of money when you’re looking at that’s half our net debt that we currently have,” he said.

It’s part of a desire for the province to start bringing in more revenue than they have for the last several years. The deal will help solve that and, in turn, help with the delivery of services to people across Newfoundland and Labrador.

Things like improved access to health care, tax relief and other items are all on the table.

“Probably perennially, really, with an odd exception of that, we spent more than the money that we’ve generated,” said Pardy. “This deal will bring us the revenues that I think that we can improve delivery for Newfoundlanders and Labradorians.”

The prospect of delivering more power and billions in revenue through this new Churchill Falls agreement, which also includes the development of Gull Island, is one thing.

Another for this government is the opportunity to create industry in northern Labrador and its mining sector once more power starts flowing to the area.

That industry and its anticipated dividends are expected to add to the revenue generated by Churchill Falls.

That’s one of the carrots of this new deal for Pardy.

“Once they’re developed, then we had a very attractive figure that far exceeded the Churchill Falls one in what the potential revenues would be in for the province,” he said. “So two pathways: one to Churchill Falls, which you looked at the $10 billion. The other one is an increase in economic development that we would we would foster.”

That does nothing to mention the windfall that is expected to come from Bay du Nord and other oil and gas interests.

When NL Premier Tony Wakeham and his government set off on the campaign trail, the premier made a promise to help residents balance their pocketbooks before the government would.

Any returns from Churchill Falls, according to Pardy, is going to help the government make sure that’s a promise kept.

The minister said now is the time to start that work in advance of the revenue the province is expected to generate.

“There’s a lot of things that are hitting the taxpayers of Newfoundland and Labrador,” said Pardy. “That’s contingent on us as government to make sure that while we look at debt management and look at our part, we need to provide relief as well.”

In the midst of all of this, the province is going to start working towards its next operating budget early in the new year.

The prep for that will include a fiscal update, which Pardy expects to be brought up during the fall sitting of the House of Assembly.

The minister doesn’t anticipate his second budget being draconian or something like that, but that doesn’t mean it will be open season on spending either.

“We need to have a budget to make sure that we hold expenses to the best we possibly could,” said Pardy. “We need to make sure that in this budget we’ve got a great debt management plan that I think people can relate to.”

Either way, with the revenue expected to come from Churchill Falls, the industry it will create in Labrador and oil, he believes that while things look bleak now, they won’t always be.

For Pardy, that’s exciting.

“I believe that the future is very bright, and I would hope that you’ll start to see indicators of that this fall,” said Pardy.