Deficit more than $700 million: Marshall

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Tom Marshall, Minister of Finance and President of Treasury Board, provided the 2012-13 fall financial update for the province in St. John's today. — Photo by James McLeod/The Telegram
 

The provincial government is deep in the red this year, due to lower than forecast oil prices, and lost Atlantic Accord payments from the federal government.

Finance Minister Tom Marshall delivered his mid-year fiscal update this morning and revealed that the province's deficit this year is projected to be $725.8 million.

In April, the government said it would be running a $258 million deficit, but that was based on an oil forecast of $124 per barrel. Oil has consistently traded lower than that all year.

Marshall said the update is a "story of two economies." Essentially, he said, the province's economy is strong, but problems in the world economy are dragging down oil prices and causing issues.

Not only were oil prices lower, but mineral resource royalties were also down substantially.

Marshall said the government is slowly reducing spending, and they're trying to shrink the size of the civil service.

The government is also reviewing all programs and services to find places to cut.

"Future expenditures have to be in line with our forecasted revenues," Marshall said.

He specifically said that public servants who are now in the midst of collective bargaining should not expect big pay increases.

More coverage in Friday’s full edition of The Telegram.

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Recent comments

  • Winston Adams
    December 14, 2012 - 11:29

    The rationale of increasing high oil prices has caused this 700 million shortfall is one of same rationale that is driving the MF as a better option that the isolated island option. The MHI report in Oct says Nalcor has already tendered the cable supply contract and is about to award it. What is that worth , 500 million? Will they jump the gun on this, even before govn sanction, or Nova Scotia sanction? Is Marshall holding the reins? Or will Martin's schedule take priority?

  • Eli
    December 13, 2012 - 20:50

    Budget at $124.00 a barrel? This joker is irresponsible!

  • Majorie's sloppy seconds
    December 13, 2012 - 19:14

    Make no wonder that the MHA's are stalling for their pay raises, good legal advice. Its ok that we planned for a deficit during a year of labour contracts and not during an election year. Then we have Mha's the likes of paul lane get up and applaud this disengenous politicial move.

  • Jay
    December 13, 2012 - 19:03

    Any casual observer of oil prices could have provided government with a more accurate range of oil price projections than they used in their budget. Their projections were ridiculously high, and I have trouble believing they could be that stupid. Can it just be a coincidence that they're in financial trouble now that negotiations with unions are coming up, and when they're trying to claw back pension benefits. Maybe a general strike is in order.

  • david
    December 13, 2012 - 17:42

    We get waht we deserve....a pathetic, sad, hilarious, awful joke.

  • Gordon
    December 13, 2012 - 16:33

    It looks like Tom got it wrong. Let's apply Westminster rules. The Minister who gets it wrong resigns. Well?????

  • Political Watcher
    December 13, 2012 - 15:12

    Not sure what it is going to take for residents of this Province to stand up and take control. This is the same group who are predicting the cost of oil and electricity 50 years out and spending over $10 Billion doing it. WE WILL BE A HAVE NOT PROVINCE ONCE AGAIN IF WE DON'T DO SOMETHING NOW.........

  • James
    December 13, 2012 - 14:27

    We need a good old fashioned ground war. Nothing drives up the price of oil and raw materials like war

  • Market Watcher
    December 13, 2012 - 14:20

    Minister Marshall.....would you care to predict next years' deficit based on this gem, posted on the internet yesterday! ...... In Bank of America/Merrill Lynch's 2013 Energy Outlook Read more: http://www.businessinsider.com/how-surging-shale-production-could-bring-oil-prices-down-to-50-per-barrel-2012-12#ixzz2Exf8S0Zu

  • Maurice E. Adams
    December 13, 2012 - 14:08

    I have been saying for months now (and see my website) that over 50 years ratepayers will have $35 billion come out of their pockets (about $15 billion of which is operating and debt servicing costs alone). Now government is confirming that Muskrat Falls is a backdoor $20 billion TAX GRAB --- by stealth)........ Do the math. If rates are less than half their true cost in the first few years, then they will have to be more than double in the later decades. Nalcor has confirmed that it is not "foregoing" any return on equity, just "deferring" it to later decades. Yearly costs for Muskrat on average is about 8 times our 10 year average oil cost for Holyrood, and Holyrood has NO AFFECT on 92% of the province's greenhouse gas emission, most of which (about 73%) is from large industry and transportation. Greenhouse gas reductions are on the backs of ratepayers. Where is industry's contribution?

  • Scott Free
    December 13, 2012 - 14:07

    How can even the most gullible Tory minions among us still think that any of Kranky Blunderfest's top Lieutenants like Marshall, Kennedy and King, have even an ounce of crediblity left? This gang of Dimwits have less credibility than their Federal cousins in the Con Party of Canada under Prorougie Steve such as Oda, MaKay and Peneshue.

  • steve
    December 13, 2012 - 13:40

    Here's a thought - we can't afford a billion dollar new hospital in Corner Brook. Here's another thought. Doesn't every community in NL have a new fire truck by now? Haven't all their town halls been painted yet? Hasn't every school got a new roof yet? Can we please lay off on capital expenditures for a while?

  • Me
    December 13, 2012 - 13:28

    I would like to know how much tax payer money has been sunk into Muskrat falls to date......

  • Cold Future
    December 13, 2012 - 13:19

    WHEN YOU SEE IT IN THE GOVERNMENT RELEASE THE STARK REALITY SETS IN“Muskrat Falls is a project that will not impact net debt by a single dollar while providing us with an affordable, reliable, environmentally-friendly source of electricity for generations to come,” said Minister Marshall. “It will also be a major revenue generator for the province as we diversify our economy. We estimate that the province will see revenues in excess of $20 billion over 50 years beginning in 2017, with average annual revenues of $450 million over this period” THAT MEANS THAT: every ratepayer in the province will pay $1500 additional per year assuming that $150 M of the $450M annually will come from power sales outside the province and assuming that there are 200000 ratepayers. That is a staggering amount. To compare the present 8 % subsidy is about $120 for the consumer who uses $1500 worth of electricity per year now. Is anybody out there on fixed income scared, WOW!

  • Scott Free
    December 13, 2012 - 12:34

    This is one of Minister of the Clown Marshall's closest guess yet! He' only off by 300%! Wait years from now when the real figures come out on Muskrat.... It's no wonder that he offered up his resignation last week, a parting gift to the electorate. How much of this Tory incompetence can we take?? The Danny Damage Era and the Dunderdumb Dimwits demolition continues!

  • Winston Adams
    December 13, 2012 - 12:12

    725 million deficit--NO PROBLEM- We'll get that back in two years from Muskrat power sales to the USA spot market-- after the shale gas surplus dries up, a hundred years from now. Now Marshall took about 8 percent off the GSt for residential heating, at a loss of 56 million per year to governmnet revenue. A rebate program for efficient heating would need 52 million per year.It would require a 8 percent surcharge but would save customers 30 percent on their annual electricity costs. Now if the government had kept the Gst in place and used this to finance the efficiency program, it would have a 4 fold benefit to consumers on their heat; 30 percent instead of 8 percent, and also ratcheted down oil consumption at Holyrood, with substancial energy use reduction. But such logic does not jive with the Muskrat plan , where more demand is essential. Perhaps our government needs a science council advisor, like the USA president has. Certainly the benefits of heating efficiency is being applied only to government buildings, and not the residential and small commercial sectors here. There is lots of expertise among our mechanical engineering consultants here to guide them- if best practises were practised here. I'm sure this is but one example where money coould be better spent, and benefit the average citizen much more.

  • Steve
    December 13, 2012 - 12:03

    Support Muskrat Falls means less power prices for the province.. cut jobs in health care and public service means less care for our sick and less learning for our children not to mention other areas. Newfoundlanders need to speak up.... I'm not saying raise salaries but the system is struggling now.. Our lives are not measured in dollars and cents... Government cares nothing about the people of this province!!! Lawyers have no feelings about people just rules and money...

  • Jack
    December 13, 2012 - 11:42

    Good cost cutting idea for the Dunderdale Government is to encourage Income Assistance recipients to look for a job or find means to become employable. For example, in Nova Scotia, when the Family Benefits and Social Assistance programs were merged into the existing "Employment Support and Income Assistance" program, this new program also included a series of measures to help recipients become employable including transportation allowances and additional employment supports. Recipients were even required to undergo an Employability Assessment to determine a person's strengths and weakness, and develop an action plan to help them get long term jobs. If assessed to be "employable", he/she had to look for a job, get training, or lose their benefits.

  • Whats the real mandate
    December 13, 2012 - 11:38

    Thats as much as we have spent already on Muskratfalls and it ain't even a go yet. Make no wonder everything in the province is being consolidating and cutting pensions and services in education and healthcare to name a few. We have been waiting a long time to develop our natural resources and we are off to lousy start. Muskrat is compareible to the F-35's that harper and company have been disengenous about. Our provincal conseratives have really dropped the ball on our future. We have this deficit for all the wrong reasons and having a good responsible, open and accountible, transparant government is one of them.

  • crista
    December 13, 2012 - 11:37

    we are not being sarcastic you would not believe the relief to see and to hear that some one is not afraid to speak and say it the way they see it because after a while you get to think no body is listening to you and we do know what is gone on and going on.And here is some advise do not let them do it to you because all they are doing is damages and you going to go around second guessing your self and you can believe they know what they are doing ????

  • Duggan
    December 13, 2012 - 11:34

    Neither Minister Marshall or his officials have been accurate with their provincial Budgets for the past 6 years so why should today's update be any different? Most importantly of all, I wish all of them would stop their 3,4,and 5 years projections when they can't keep year to year accurately. Finally, while I agree with the Muskrat falls project in principle, it must be noted here that NALCOR received $650 million cash in Budget 2012. take that away and we are only running a 50 million dollar deficit - nothing.

  • Jack
    December 13, 2012 - 11:33

    I think a good idea to service mergers relates to supports for disabled persons. At this time, if a person with a disability needs government Social Assistance, they have to go through two departments, Advanced Education and Skills for the Income Support, and Health and Community Services for extra supports like the Enhanced Board and Lodging Supplement. Persons with disabilities should only have to go through one government department to get income assistance they need, not two departments. In other words, Advanced Education and Skills should handle extra supports like the Enhanced Board and Lodging Supplement for disabled persons on boarding arrangements. Having one government department handle financial supports for disabled persons will reduce the extra costs of needing additional Social Workers. Therefore, if a disabled person applies for Income Support and lives on a boarding arrangement, they will automatically receive a $362.00 per month Enhanced Board and Lodging Supplement without having to go through the Department of Health and Community Services and dealing with a Social Worker. Besides, there's no need for a disabled person to go through two government departments just to get needed financial assistance.

    • Joe
      December 13, 2012 - 20:48

      @ Jack you will soon get your wish, there will be a merger very soon (next budget) Income Support and Health Services you mention will be with Child Youth and Family Services, along with less people to assist you, you think its hard to get in touch with a worker now, wait for a few months and see how hard it will be. Its time people to get rid of the PCs in NL, they have robbed this province, Danny left and Blunderdale sank the ship!

  • Jack
    December 13, 2012 - 11:24

    How can $109.00 per barrel oil result in a $725.8 million deficit when just four years ago, prices were around that level and we have a $2 billion surplus? Perhaps now is the time for the Dunderdale Government to have their financial books audited to find out the true financial picture. What's even more shocking is that even though the province is a further $467.8 million in the hold, the cash reserves are down $600 million, which is another reason why Tom Marshall is not telling Newfoundlanders and Labradorians the truth. In addition, since I heard that the Dunderdale Government admitted to diverting money originally used for projects like the new hospital in Corner Brook for Muskrat Falls equity investments, maybe Eddie Joyce and Gerry Byrne were right after all. I think now is the time for Newfoundlanders and Labradorians to have their own version of the "Arab Spring" and have an uprising against the Dunderdale Government and their financial mismanagement.

    • Brett
      December 13, 2012 - 11:44

      right - because spending money on hospitals and other services will help balance the books.

  • roy
    December 13, 2012 - 11:21

    I think this is a very smart govt. In between contracts with civil servants and pension issues they peg the price of oil low and the amount produced low so that when oil production increase and the price is higher than forecast they had a surplus. This time with hybernia down for a while and prices low they have a defecit so no money for contracts so they are cutting services and number of employees, do you see the game plan here? Minister Marshall is a master of the shell game.

  • Cyril Rogers
    December 13, 2012 - 11:19

    This is the same crowd that tells us they can forecast oil prices 50 years out.....and they can't even do it for one year. As NEWFOUNDLANDER suggests, maybe we are that pathetic to allow this government to blunder its way into a financial catastrophe with this Muskrat Falls fiasco. The only certainty is that we will sacrifice our financial freedom on the altar of Muskrat, unless this premier and this government get their heads out of the sand. Wait til the real price of power from Muskrat is known. Isn't it now being costed at 22 cents delivered to Soldiers Pond? Don't forget that NL Hydro and NP will get their share of profits after they buy it at that price. You and I will pay at least 30 cents, once the artificial accounting comes of the books. That would make it some of the most expensive power on the planet, without further cost overruns. Anyone who touts this as a good deal is either naive, stupid, or getting some benefit from it, That beneficiary is certainly not the ordinary ratepayer.

  • derek
    December 13, 2012 - 11:15

    Newfoundlander.....you are so correct. And we are the fools for believing that lawyer knows anything about budgets and finances.

  • W Bagg
    December 13, 2012 - 11:07

    shrink the civil service? you mean get it back to where it was in 2004. Guess who inflated the civil service

  • W Bagg
    December 13, 2012 - 11:05

    govt should have got the "experts at Nalcor" to do the budget

  • Newfoundlander
    December 13, 2012 - 10:46

    Irresponsible to the point of incompetence for this government to base a budget on the price of oil being 124 dollars a barrel. No government anywhere else the world used numbers like that. Alberta only used a dollar amount of 105 dollars per barrel and they regret picking it that high. Dunderdale, in an attempt to carve her name out after following in the shoes of Danny Williams has sunk us all. The province has now crippled itself. If we weren't such an apathetic group of people we should be demanding a special election to get these people out of there.

    • Brett
      December 13, 2012 - 11:42

      It's a different kind of oil Newfoundlander. Calgary oil is cheaper.