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Jerome Kennedy says we're spending too much

I had an interesting chat with Finance Minister Jerome Kennedy in the lobby of Confederation Building Wednesday.

I included part of the interview in a story on the Canadian Centre for Policy Alternatives' report on the Newfoundland and Labrador budget situation. But Kennedy's comments warranted a bit more attention. Budget day isn't until Tuesday, but he gave me a pretty good sense of where his mind is at when it comes to the province's finances.

For starters, he told me point-blank that the province is facing a structural deficit.

Here's what he said: “There's certainly a structural deficit.”

He also told me point-blank that the government has been spending a lot of money. Too much money, really.

Here's what he said:

“There's certainly an expenditure problem here. I mean, we've increased our spending in health care from 2001 to 2012 from $1.2 billion to $2.9 billion, an increase, I think, of 140 per cent. We've increased spending on education from $700 million to $1.2 billion, or again, an increase of 70 per cent. We've reduced our debt by 25 per cent, but we've also increased our infrastructure spending by more than 200 per cent. So we've spent quite to the point where 60 per cent of our revenues go to social sector spending, so it's an expenditure issue at this present time.”

Kennedy justified the spending, saying in the past decade of Tory government, they had to spend lots of money to fix the province up.

Here's what he said:

“We inherited a province that had a significant structural deficit and also an infrastructure deficit and what we've done over the last number of years, we've used the money we had, the revenues to pay down debt, to build infrastructure and to rebuild the province.”

Now, none of this is earthshattering news. The government has been sending signals out for a while that the cuts were coming. They were weaving it into the messages even months before the mid-year fiscal update where then-finance minister Tom Marshall revealed the government was running a $726-million deficit.

Remember back in October, when I blogged about Premier Kathy Dunderdale's off the cuff speech to the Tory faithful in Gander? 

Here's what she said at the time:

“Let me tell you, we’re spending too much money. The Board of Trade talks to us about spending too much money, they’re absolutely right. We are. And we’ve got to get a handle on it.”

On Tuesday, there are going to be significant budget cuts. Dunderdale's government has been spending too much money. That shouldn't surprise anyone. The Tories have been talking about it for the past six months.

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  • Conservatives Needed
    April 11, 2013 - 15:02

    My only observation was that this and the previous administration, under Williams, decided that the winfall from oil should be spent on: 1. Hiring 10,000 additional public sector workers. Now approx. 1 in 3 works for gov't in NL. 2. Including pay raises of approx. 20% depending on the sector. 3. Sell the "Quebec is a boogeyman" fiction to Nfld to promote Williams' legacy project. 4. Stifle small business with poor economic policy. I guess Lana Payne was the unofficial minister of finance. Absolutely pathetic fiscal performance from these administrations. I guess after seven years of NDP-style PC government the proverbial chickens are coming home to roost. Newfoundlanders need to take a long hard look in the mirror....

  • Corporate Psycho
    March 30, 2013 - 06:27

    I can't believe Kennedy is still blaming previous governments.

  • Interested Observer
    March 21, 2013 - 10:30

    Interesting that the Board of Trade is quoted. Why didn't she listen to the BoT when they advised following along the lines of the 2012 Drummond Report (see this article in the policy section of the bot website) “Government ministries and agencies should always strive for efficiency gains, not only when driven by overall budget restraint or in response to problems unearthed by the Auditor General or exposed by a spending scandal. We have also drawn lessons from both public- and private-sector restructurings, a series of “dos and don’ts” that we will set out in reverse order. The “don’ts” are proposals that sound useful, but are often harmful:  Do not simply cut costs. The imperative to restrain spending should instead be an opportunity to reform programs and service delivery;  Avoid across-the-board cuts. They represent an abdication of the government’s responsibility to make real, and often difficult, decisions;  Avoid setting targets for the size of the civil service. A leaner civil service will be an inevitable result of lower-cost programs and achieving greater value for money;  Do not rely unduly on hiring freezes and attrition to reduce the size of the civil service;  Do not hang onto public assets or public service delivery when better options exist; and  Do not resort to traditional short-term fixes. The “dos” apply across the entire public sector:  The government should issue a road map setting out its vision. Such a document would both inform the public about the changes that lie ahead and also serve as a script for all bureaucrats;  Higher priority should be given to programs and activities that invest in the future rather than serve the status quo; Policy development should be more evidence-based — with clear objectives set based on sound research and evidence — and relevant data collected and used to evaluate programs;  Governments must minimize the cost of operations, but they also need rules to ensure that taxpayers’ money is not abuse;  Within their operations, public-sector service providers should assign people to jobs where they are most effective, efficient and affordable;  Seek common themes across the reforms to achieve economies of scale and to simplify communications; and  Reform must be pervasive and speedy. Broader action favours a public perception that the reforms are fair, as opposed to a view that a few programs were unfairly targeted. Change is disruptive, but the medicine does not go down more easily if it is dragged out over a long period.2 The Board of Trade would agree with these guiding principles. This submission makes some further recommendations focused on the three key and interconnected issues of debt, diversification and demographics. All three of these issues must guide long-term government policy, resulting in economic growth and sustainability.

  • Leo Tobin
    March 21, 2013 - 09:35

    But is there any solution other than consolidation of communities? Less communities = less repetitive tenders for infrastructure! Maybe this government has the brass set needed!