The provincial government’s $7.5 billion budget today confirmed anticipated news of hundreds of layoffs in the public sector, but also revised the projected deficit for 2013-14 from $1.6 billion down to $563.8 million.
The budget also announced that four current English-language school boards will see financial and administrative services amalgamated into one district office located in St. John’s.
There is also an increase to a number of fees on such items as tobacco, admission to historic sites and ferry rates. A 10 per cent reduction for online motor vehicle registration will be eliminated.
Premier Kathy Dunderdale will also reduce her cabinet by one minister to 15, and eliminate 10 executive officials from the public service (Executive officials are deputy ministers, assistant deputy ministers, executive directors, and their equivalents).
The government also announced a 10-year sustainability plan for the province. The plan sets out specific goals to ensure continued sound fiscal management over the long term with elimination of decificits and a return to a surplus budget in three years.
“We have worked hard to reduce this deficit of $1.6 billion and make government more efficient. Unfortunately this year, it has meant tough choices,” Finance Minister Jerome Kennedy said in his budget speech.
“Given that more than half of program spending is salaries, we cannot do it without layoffs”
The budget notes provincial government employees will be affected through cutting of vacant positions, attrition, voluntary retirements and straight job cuts.
In all, 485 jobs are set to be cut from the core public service - not including, for school boards and health boards.
Another 450 positions are going from changes in the health, school boards and other non-core entities such as the College of the North Atlantic.
A total 196 people have indicated they will avail of early retirement packages. Some of those positions will be filled, some will not. Kennedy told reporters he hopes that at least half of those positions will be eliminated.
About 142 positions are slated to be removed from Education. Reductions have been made in areas such as administration, learning resources support and district-based numeracy supports. This will result in the equivalent of 142 fewer positions assigned for the 2013-14 school year, with a further reduction of 18 positions as a direct result of enrolment decline.
And 250 funded vacant positions have been identified and will be eliminated.
Some of the employees directly affected by the cuts are already aware, while others will be advised of their status “as soon as possible,” according to information provided to reporters with the budget documents.
About 73 per cent of the affected core public service employees are unionized.
With the changes comes bumping - where senior job cuts can send employees to take on less-senior positions. In addition to procedures outlined in collective agreements around bumping, “a bumping tribunal will be established in collaboration with NAPE to oversee the bumping process.”
Meanwhile, the government's hiring freeze will continue, “until further notice.” However, Kennedy said it will be lifted in time for student employment.
The decrease in the projected deficit is a result of a combination of increased revenue and expenditure reduction, according to budget documents.
Projected revenue has improved by $695.8 million from earlier projections:
• Oil royalties are projected to increase by $265.5 million;
• HST revenues increased by $152.6 million as a result of a change in the methodology used by the federal government;
• Mining tax increased by $148.4 million;
• Revenue from personal income tax, corporate income tax and other revenue is projected to increase by $129.3 million.
The decrease in the projected deficit is also a result of reduction in net expenditure of $301.4 million. This includes $410 million resulting from the core mandate review, offset by increased expenses associated with new or expanded programs, and costs associated with workforce adjustments.
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The combined result of revenue increases and reduction measures has resulted in a reduction of debt servicing costs by $62 million.
School board consolidation
Budget 2013 makes provision for two provincial school boards in Newfoundland and Labrador as of September 2013 — one English-language board and one French-language board.
Four current English-language school boards will be amalgamated into one district office in St. John's. There will still be a regional presence in offices in Gander, Corner Brook and Happy Valley-Goose Bay. Many staff now located in satellite offices under the current board structure (Labrador City, Lower Cove, Stephenville, Grand Falls-Windsor, Burin, Clarenville, and Spaniard's Bay) will be deployed directly into schools.
Increase in fees and tobacco tax
According to budget documents, increases to various fees, the implementation of new fees and an increase to tobacco tax will result in increased revenue of approximately $19.3 million in 2013-14. All fees are effective April 1.
• A 10 per cent online discount for vehicle registration renewals will be eliminated resulting in revenue of $2.6 million.
• Provincial historic sites will increase admission fees at all locations throughout the province, and discontinue the practice of offering free admission one day a week.
• The tax per cigarette will increase by 1.5 cents effective 12:01 a.m. March 27. This will result in increased revenues of approximately $8 million.
• Ferry rates will increase by 10 per cent for all users of the service, resulting in revenue of approximately $490,000.
Reduction in cabinet
A review of departments' core mandates has resulted in a leaner group of executive officials across the public service, the budget states. Ten senior executive positions will be eliminated, with the total going from 121 to 111.
The size of the cabinet will be reduced by one department though the restructuring of the Intergovernmental and Aboriginal Affairs Secretariat, to be effective within this calendar year. The Intergovernmental Affairs Branch will be led by an assistant deputy minister, who will report through the clerk of the Executive Council. The premier will take on additional responsibilities as Minister Responsible for Intergovernmental Affairs.
The Aboriginal Affairs Branch will be merged with the Labrador Affairs Office to become the Labrador and Aboriginal Affairs Office.
The sustainability plan announced in today’s budget is based on projections around oil price and exchange rates, which the budget documents note are volatile.
The commitment is to reduce the province's net debt per capita to the all-province average within 10 years. The plan also builds on a foundation of debt reduction demonstrated by a decrease in net debt by approximately 28 per cent since 2004 and the recognition by credit rating agencies of government's responsible fiscal management.
In his budget speech, Finance Minister Jerome Kennedy said the 10-year plan will include:
• Year 1, a deficit reduction process;
• Year 2, will involve reviews of Memorial University, College of the North Atlantic, Regional Health Authorities and Unfunded Pension Liabilities.
• Year 3, a return to surplus.
• In years four to 10, a continued focus on innovation, economic diversification and debt reduction.