Cuts are coming

James McLeod
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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.”

Twitter: TelegramJames

Geographic location: Carbonear

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Recent comments

  • Peter
    February 16, 2013 - 10:46

    There are some 310 municipalities in NL Out of that 310, maybe a half dozen or so have amalgamated over the years. It's high time for the Newfoundland government to take a serious look at our little communities across the province with the view to amalgamation. Sharing services make a hell of a lot of sense and would avoid duplication. It's been picked at by government for a number of years but nothing has happened. Save the taxpayers money Madam Premier and reduce the number of municipalities whhich currently exist in this province.

  • Jeff
    February 15, 2013 - 19:01

    I would like to offer congratulations to Premier Kathy Dunderdale and her followers on taking a bright outlook for the future of Newfoundland and Labrador and literally pulling the plug. The projected deficits for the foreseeable future were not created by the people of our province nor by it's Civil Servants. The deficts are the result of poor fiscal management by the current government, worst numbers in recent memory. The biggest red flag is the controversial Muskrat Falls Project, just how much of the projected deficits are a direct result. At the onset of this project I had no doubt the bill would be carried on the backs of the people of this province. Doom and gloom has revealed it's ugly head again thanks to Kathy Dunderdale and her cronies, no pun intended. Cut Cut Cut Kathy while you create new departments and announce senior apponitments for party loyalists on what seems to be a weekly basis. Does laying off people, the ones who actually make government work, justify these senior appointments or does it merely display your ingnorance? Just remember Kathy, it is the Civil Servant who is the common denominator in government, the likes of you come and go like a bad rash! Sick and tired of this doom and gloom!!!! When former Premier, Danny Williams left his post he left on a high note. It was a hell of a ride which seen this Province start to rise from the ashes of previous blundering governents. It's now apparent we are in one hell of a slide down to where we are headed. Blundering, pun intended!!

  • a business man
    February 15, 2013 - 10:48

    Personally, I agree that cuts have to be made. I trust the government to decide what to cut. My only point of view on the matter is that cuts should be targeted towards those who do not pay into the tax base. As a owner of multiple businesses and a lawyer who pays lots of taxes, I don't want to lose anything that I enjoy. The people who lose services should be the people who do not contribute.

    • AGREE
      February 15, 2013 - 13:30

      Totally Agree 100%.. we, the taxpayers get enough cuts... make cuts to those able bodied men and women living off the government... get them to do work...cut the cost of hiring ! Get the welfare recipients to work for their $$ !!

    • Bonnie
      February 15, 2013 - 15:31

      Wow, Cuts are coming, I can't belierve that the MHAs as well as the premier will be accepting pay-cuts, but its about time, considering that they are the highest paid in Canada. Those cuts will help to pay for other things need by the people. Way to go Ms. Dunderdale.

  • david
    February 15, 2013 - 09:53

    This is not news. This day was in the cards ever since Danny's "big ideas" amounted to nothing more than handing out fire trucks like candy, producing beautiful but overpriced tourism ads, and scheduling speeches just to enjoy more standing ovations. The only "material" idea of his entire reign (and a reign it was) was Muskrat Falls, the announcement of which was done with one foot out the door. It will be our ruin, yet another national Newfie joke, and all the responsible parties will be long gone. Newfoundlanders were never meant to have any wealth....let's just face it.

  • Gordon
    February 15, 2013 - 09:18

    Oops! She's done it again.

  • Scott Free
    February 15, 2013 - 09:10

    Premier, for my priority picks, please reverse all the political patronage appointments made under your regime; maybe then, you could keep 3-4 public servants for each appointee. Stop with the political patronage appointments to Tory friends and supporters.

  • B
    February 15, 2013 - 09:09

    How about lifting the moratorium on non-Canadian citizens starting and operating new business in the Province? Why restrict those with new ideas and capitol from contributing to the local economy and progress?

    • Jack
      February 15, 2013 - 12:27

      That's especially true in the case of Corner Brook where their incompetent mayor, Neville Greeley, and backwards City Council members like Leo Bruce have a reputation for being anti-business as well as exerting Greek type regulations and red tape on aspiring entrepreneurs. Two excellent examples include Trent Quinton's "John's Point Subdivision" near the entrance to the North Shore Highway (Highway 440), and Daniel Griffin trying to establish a new modular home plant. In both the Trent Quinton and Daniel Griffin cases, Corner Brook City Council, especially Leo Bruce whom has a reputation for being anti-business, use every single excuse possible to reject it. As for Neville Greeley and Leo Bruce, if Corner Brook loses their pulp and paper mill, many people out of the job, and Corner Brookers leave the city due to lack of employers, that's your fault, not mine.

  • Paul
    February 15, 2013 - 09:00

    “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.” She keeps harping on this point. Why? Are the people who can least afford it and going to be ask to pay a higher percentage of the already stretched revenue dollar. The only reason this is there is due to the fact the higher income earner pays a higher rate of income tax. So if you have a person making 100000 dollars they will pay a higher rate of tax than someone making 30000. I find her continuous babbling about this fact elitest and that she has truly lost touch with the middle class and the poor in NL. I am sure she will not make any cuts that affect her district while she hands out 6 figure jobs to political cronies while telling everyone else to cut

  • Jerome
    February 15, 2013 - 08:36

    Citizens should get our priorities straight? That should also be the other way around. Premier and other Politicians, are you agreeable to take a cutback in your salaries, allowances, travel expenses, pensions, elaborate meals, etc.? I don't think so. You are suppose to be working for us; we are paying your salaries and everything else; yet we are not permitted to know how our money is actually being used. How about getting rid of the deadbeat Provincial Government workers who hold a position but have very little to do; three could probably do the work of ten? Get people on Welfare investigated. While they are living off the working taxpayers,(lying in a warm bed while the rest of us are out in the freezing cold shovelling to go to work to pay them), most of them certainly find the money for their cigarettes, booze, and even drugs, then on the other hand go to the Food Banks, or get St. Vincent de Paul to deliver them food. Taxis are even paid for in some instances. And another thing, it's just not right that funding was cut for the disabled. Most of them would love to be able to work, but can't. The very opposite of most Welfare leeches. Dunderdale, if you expect the citizens of NL to come up with ways to cutback, you and your staff do the same thing.

    • Jack
      February 15, 2013 - 09:40

      If Newfoundland and Labrador politicians don't, they will be no different than the Obiang's and Aliyev's, Equitorial Guinea and Azerbaijan's presidential families well known for living lavishly while their people suffer despite vast oil wealth. In the case of Azerbaijan, while this country is enjoying unprecedented vast oil wealth and economic growth like Newfoundland and Labrador, their people are still poor, government corruption is very problematic, and only politicians and large companies are getting full rewards from their oil wealth. Things are so bad in this country that one of President Aliyev's preteen children has nine luxury homes in Dubai while Azerbaijani people continue to suffer. Source: CNBC documentary "Filthy Rich". If this province continues to mismanage oil wealth, and politicians and bureaucrats are not willing to take part, Newfoundland and Labrador will become the next Azerbaijan.

  • Edward Sawdon
    February 15, 2013 - 08:18

    Yes I warned people that the Dunderdale P.C. Government would finance the multibillion dollar Muskrat Falls project (with its expected cost overuns) on the backs of Persons with Disabilities, Hospital Patients, the Working Poor, students, low and fixed income Seniors, Public sector workers and other groups! Today, COD-NL is experiencing Provincial Funding Cuts so we must ask ourselves, "Who's Next?" We live in a Have Province with lots of Havenot people! How can the Dunderdale Government have a Poverty Reduction Strategy when Provincial Public Sector cutbacks (excluding Nalcor) will mean more Poverty? How in the world is the Dunderdale Government going to attract immigrants and prevent Newfoundlanders & Labradoreans from leaving when Premier Dunderdale, Jerome Kennedy, and others are planning widescale cutbacks in our educational, healthcare and social programs? Speaking about Healthcare, what ever happened to a new Corner Brook Hospital and a new Waterford Hospital ? Whats the point of having a provincial Disability Policy Office when you cut funding to a cross Disability Organization such as the Coalition of Persons with Disabilities - NL. Premier Dunderdale, Jerome Kennedy and their P.C. colleagues have to ask themselves where is their sense of Social Justice and Equality? Edward Sawdon St. John's, NL

    • Jack
      February 15, 2013 - 14:50

      Since the Newfoundland and Labrador government are cutting programs at the expense of disadvantaged peoples, a tactic similar to Nova Scotia's John Savage era, despite its vast oil wealth, this province will end up like Azerbaijan. In the case of Azerbaijan, while this country is experiencing large economic growth due to its oil boom, their people like in third world conditions as the average Azeri earns a mere $420 per month. To add insult to injury, government officials, state own companies, and the presidential family, the Aliyev's, are living lavishly as they watch their people suffer and not benefiting from their oil boom. For example, according to the CNBC documentary, "Filthy Rich", I learned that President Aliyev's family live a lavish lifestyle including numerous homes in Dubai, glamourous lifestyles, and living like kings and queens while their people are subjected to slave life conditions. Even theiir youngest son, Heydar, still in his teens, is said to own 9-11 homes in Dubai. Now I fear that Newfoundland and Labrador are headed for the same path as Azerbaijan when government misappropriates our oil revenue, and we are the ones whom suffer.

  • lesley keating
    February 15, 2013 - 08:15

    It's a funny thing while Danny was in office things were going smoothly and we were a have province. Since Danny left office, Blunderdale has been on spending spree and busy with her political appointments with 6 figure salaries. Stop wasting our money. The department of finance had all the information regarding the oil projects being shut down for maintanence. It's only deferred revenue anyways. The all of a sudden deficit crisis is just smoke and mirrors for negotiating with the unions and financing the lower churchil project on the backs of the tax payers. I would think this is the last term in office for the converatives. It seems they have gone back to the old days of miss management before Danny was in office.

  • WDS
    February 15, 2013 - 08:14

    "But Dunderdale said she wants people to talk about priorities; more spending in one area means cuts somewhere else." Cut MHA salaries and pensions. Cut salaries at the higher levels. No more appointments. Look at consultant contracts.

  • Have Not Province
    February 15, 2013 - 08:11

    How can we be a"Have" province as this government has boasted when we are in a multi-billion dollar deficit? There will have to be cuts to education and health programs as they cost almost half of our budget. But, if we were a Have Not province, we would be eligible for Equalization transfers for those programs??

  • Ed
    February 15, 2013 - 08:03

    Well, it finally happen a predicted. This government has been overspending like the oil revenues were guaranteed to last forever. The civil service has grown even though we had the highest rate of civil servants per capita of any province. In addition the pay increases in the government and health care sectors were out of line with what was affordable. Unions thought their pay increases should be based on increased incomes from oil revenues but I believe they should only have benefited like all other residents, from better government services, lower provincial debt and lower taxes. Public servant pay should never be based on resource income and even if it was there should be included in the agreement is a term that allows a corresponding reduction in pay or the ability to reduce the staffing levels when the revenue source drops off. Most of this resource revenue should have been used to pay down our provincial debt and to fix the unfunded public service pension plan which we will eventually have to pay up on because none of our governments acted responsibly in the past. The one exception was when the Williams administration topped up the teachers Pension Plan. We need to do these things to to better prepare our province for the future. This government reminds me of a family that wins a lottery prize but rather than pay off the mortgage on the family house uses the money to fund a great new lifestyle that they want to live.

  • Whaddaya At
    February 15, 2013 - 07:40

    'Tranche' ?. That's a lovely word, Premier Dunderdale. Is the average person among the great unwashed expected to know what that means ?. Whatever, we're just about fed up with being a ' have ' Province and we don't know how much more of being ' have ', we can take. The great unwashed will have to put on extra sweaters, turn down the thermostat and stock up on macaroni and cheese while the fat cat politicians with their six figure salaries heave back in their plush chairs and pore over the second ' tranche ' of papers and decisions. Pass the barf bag.

  • chris
    February 15, 2013 - 07:07

    Looks like you are referring to Dunderdale as a male. "“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.”"

  • J
    February 15, 2013 - 06:56

    Jack, I concur. Let me offer another suggestion. As a town councillor for a town not far outside St. John's that provides various services for our constituents and tax accordingly. The problem arises in that there are so many of these financial service districts right next to our town that receives the same services from the Provincial Government for basically 1/5 the cost of what I as a homeowner pay in this town. The Province should be forcing Amalgamation of this smaller centres into the bigger towns into the region. Yes, they will pay more in taxes but I don't think everyone else should be subsidizing them through our Income Taxes, which is exactly wait is happening. So not only do I have to pay my taxes I have to indirectly pay for services for people in all these other small towns. Force Amalgamation.

    • Jack
      February 15, 2013 - 08:02

      If I can use the Avalon Peninsula as an example, here are the suggested county or regional municipalities. "City of St. John's" (includes Logy Bay, Goulds, Quidi Vidi, Shea Heights, Petty Harbour, and Cape Spear), "City of Mount Pearl" (includes Donovans), "Torbay" (includes Flat Rock and Pouch Cove), "Portugal Cove", "Paradise", "Conception Bay South", "Bay Roberts", "Spaniard's Bay" (includes Upper Island Cove, Bishop's Cove, The Thicket), "Harbour Grace", Carbonear, Baccalieu, "Trinity East", "Arnold's Cove", "Whitbourne", "Argentia", and "Irish Shore" (Irish Loop area). Communities within these municipality will retain their names, but designated as a "village" for counties and "communities" for regional municipalities.

  • Cold Future
    February 15, 2013 - 06:51

    So who is to blame; Joey Smallwood,Clyde Wells, Brain tobin? Surely no Tory could have anything to do with this. And the money peed away at Muskrat, Hebron and various drilled dry holes; it came from the tooth fairy, didn't it? Its high time that Dwight Ball and Lorraine Michael stand and answer for this-shame.

    • Eli
      February 15, 2013 - 11:41

      Hey man, Ball & Michael didn't cause the problem. They were hamstrung by a huge majority Williams/Dunderdale government who steamrolled Muskrat thru the House by legislation!

  • Jack
    February 15, 2013 - 06:33

    With Newfoundland and Labrador on a brink of being relegating to a "have not" province due to its poor financial management skills, there's a possibility this province will qualify for equalization payments, helping to reduce the deficit. As for pre-budget consultations, I submitted two new ideas last night. One idea is to have civic and school board elections on the same day like in other Atlantic Provinces such as Nova Scotia or New Brunswick, and another idea is for Newfoundland and Labrador to create county or regional municipalities in an effort to provide municipal services efficiently and reduce costs. Communities within a county or regional municipality will still retain their names, but settlements will be called "villages" or "communities". Main centres will still be called "towns" or cities.

    • Peter
      February 16, 2013 - 12:04

      Agree totally with Jack, especially to his closing comments on regionalization. It's high time government took a SERIOUS look at this.