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.