Over the past decade, oil revenue prompted a surge of economic prosperity in Newfoundland and Labrador; the construction sector could not find enough workers, real estate values shot skyward, the government invested heavily in infrastructure and social programs, and public sector wages rose at rates unseen in a generation.

For several years, the province led the nation in growth and, under the messianic leadership of Danny Williams, the view held by many in Canada that it is the poor cousin of Confederation was reversed.

In late April, it became clear that much of that prosperity was a mirage, as the government of Progressive Conservative Premier Paul Davis introduced a budget featuring a $1.1 billion deficit and the elimination of 1,700 government jobs. It promised to increase the harmonized sales tax by two points, to 10%.

In addition, two new high-income tax brackets are being phased in for those earning more than $125,000. The higher tax rates and a host of new fees will generate more than $122 million in revenue this year, rising to $254 million in future years.

This is the third straight year government is experiencing a budget deficit, which means the province’s net debt will also grow to almost $11.5 billion by the end of this year. This is a major reversal in fortunes since 2012, when the debt had been reduced to slightly less than $8 billion.

During the boom, government opted for short-term spending over providing long-term stability, which meant structural problems underlying the province’s economy went largely unaddressed. Government’s major weakness has been its dependence on oil-related royalties, with this source comprising about one-third of total revenue during the boom years. Its current budget is based on crude prices averaging US$62 per barrel, considerably below last year’s initial forecast of US$105.

Critics are now saying government should have done more to reverse population decline and to diversify the economy during the years of bounty. In response, the PCs are suggesting there will be a return to budgetary surplus in five years, based on the new tax measures along with projected world oil prices. Davis is also defending the 12-year record of Progressive Conservative governments by pointing to the overwhelming need for investments in health care, education and roads.

A big question is whether Davis will actually be in the premier’s suite long enough to implement many of the measures announced in the 2015-16 budget. A provincial election is expected this autumn and the Tories continue to lag far behind the opposition Liberals, led by Dwight Ball.

The Liberals have failed to show how they would manage the province any better, beyond vague generalities such as improving entrepreneurship and spending more wisely. But it’s still unclear whether a Tory strategy of pressuring the Liberals to be more specific will work with voters.

Both parties played a role in managing – or mismanaging – the economy over the past 15 years of oil wealth. So, it is far from clear whether a change of political stripes in the legislature would be enough to bring about genuine change.

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