Premier says people must pick their priorities to avoid $1.6-B deficit
Premier Kathy Dunderdale speaks with The Telegram from her Confederation Building boardroom Thursday about the upcoming provincial budget. — Photo by Joe Gibbons/The Telegram
When the government delivers its 2013 budget this spring, the deficit won’t be anywhere near
$1.6 billion if Premier Kathy Dunderdale has any say in the matter.
The budget is still months away, but Dunderdale said her cabinet is looking at significant cuts and people really need to think about what their priorities for the provincial government are.
“I’m not going to save $1.6 billion this year. That would be insane. But I’m telling you, this is a very tedious process. We just came away from two days of cabinet meetings where we’re exploring some of the first tranche of papers and decisions
(on potential budget cuts),” Dunderdale said.
“We have been engaged in this work for almost a full year.”
On Thursday afternoon, Finance Minister Jerome Kennedy revealed the government is projecting unprecedented $1.6-billion deficits for each of the 2013 and 2014 budget years. Combined with the projected deficit of $726 million this year, the government is facing a potential shortfall of $4 billion in three years.
Dunderdale said that’s not going to happen; whatever the deficit is this spring, it won’t be $1.6 billion.
She said that projection is based on current revenue and current spending levels if the government doesn’t make any changes to the budget.
But changes are definitely coming, Dunderdale said.
“We know that we’ve got to get our spending down to a more sustainable level,” he said. “We’ve got to ratchet back our spending so that even when things do get better, we’re at a place where our spending is sustainable.”
Dunderdale was speaking to The Telegram as part of a wide-ranging interview on economic and fiscal issues. The full details of the interview will appear in the Telegram’s Horizons supplement, which will be published on Saturdays between March 15 and April 5.
On Thursday, Kennedy was in Carbonear for the first day of pre-budget consultations. Dunderdale said she hopes citizens will have conversations about what their priorities are.
Typically, pre-budget consultations involve various business, labour and community groups coming to government with a wish list of spending requests.
But Dunderdale said she wants people to talk about priorities; more spending in one area means cuts somewhere else.
“How important is this new spend, or this expansion of service that you’re looking for? And is it important enough to cut something else, and what is it that you want us to cut?” she asked.
“Or is it important enough that the citizens of the province are open to a tax increase? Now, that’s the dialogue that needs to go on between government and the people of the province.”
Tax increases aren’t on agenda
Dunderdale said tax increases aren’t on the agenda right now. Since 2007, the government has cut taxes to the point where there’s $500 million less in revenue
coming into government coffers every year.
Dunderdale said at this point, income taxes really only fund a fraction of the government’s budget. The vast majority of government revenue comes from oil royalties, mining related revenue and federal social and health transfers.
“Just over 15 per cent of our total revenue comes from personal income tax, and of that 15 per cent, 70 per cent of it is paid by about 16 per cent of the population,” she said. “We’ve shielded taxpayers; we’ve cut taxes as much as we can, but there’s only so far that money is going to take us.”