Congratulations on producing another very informative and important document. Just a couple of points expanding on what you have written. Equalization is based on the past five fiscal years, but the first two do not count. The third year has a weight of 50%; years four and five each weigh 25%. These facts are relevant since they force us to examine what was occurring to revenues as far back as fiscal 2019-20 and 2020-21. Looking at oil revenues, we see that the revised estimates (what the government received) were far less than was estimated in Budget 2019. Oil prices indeed declined, but production also dropped. Of course, the drop in revenues and production would also affect corporate income taxes, HST, and even perhaps income taxes. This should remind us that whether we want to like it or leave it, our collective prosperity depends on oil revenues.
We are again receiving equalization this coming fiscal year and may for the next year or so as the rolling average works its way through the system. Within a year or two, Hebron will likely reach "payout," which implies that resource royalties will significantly increase. Our dependency in the medium term will be short-lived.
Over the long term, oil production in NL will likely decrease, as will our natural resource fiscal capacity. Equalization will again be an ongoing feature of our provincial government's fiscal picture.
Congratulations on producing another very informative and important document. Just a couple of points expanding on what you have written. Equalization is based on the past five fiscal years, but the first two do not count. The third year has a weight of 50%; years four and five each weigh 25%. These facts are relevant since they force us to examine what was occurring to revenues as far back as fiscal 2019-20 and 2020-21. Looking at oil revenues, we see that the revised estimates (what the government received) were far less than was estimated in Budget 2019. Oil prices indeed declined, but production also dropped. Of course, the drop in revenues and production would also affect corporate income taxes, HST, and even perhaps income taxes. This should remind us that whether we want to like it or leave it, our collective prosperity depends on oil revenues.
We are again receiving equalization this coming fiscal year and may for the next year or so as the rolling average works its way through the system. Within a year or two, Hebron will likely reach "payout," which implies that resource royalties will significantly increase. Our dependency in the medium term will be short-lived.
Over the long term, oil production in NL will likely decrease, as will our natural resource fiscal capacity. Equalization will again be an ongoing feature of our provincial government's fiscal picture.
Good one Ed, I paid up last year, was that annual or for life? Should I ‘renew’ soon?