Kennedy unveils austerity plan

James McLeod
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Government budget includes significant layoffs and 10-year economic road map

Finance Minister Jerome Kennedy dramatically reshaped the provincial government Tuesday with his 2013 budget, laying off nearly a thousand employees and moving to reduce the overall size of government.

For the past two months, Kennedy has been warning of a projected $1.6-billion deficit, but increased revenue from oil royalties and taxes softened that blow. Combined with major cuts across the board, the government managed to bring that forecasted deficit down to $563.8 million.

To make that happen, Kennedy moved to consolidate and make cuts right across the government. Employees have been laid off in every department and more jobs are being eliminated.

The government is also eliminating positions that have been left vacant by an ongoing hiring freeze, and Kennedy said he hopes he’ll be able to get rid of roughly half of the positions of the 190 people who have  opted into the early retirement program.

All in all, more than 1,500 positions are affected in one way or another, and many more employees will be hit by union bumping based on seniority.

“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,” Kennedy said. “Given that more than half of program spending is salaries, we cannot do it without layoffs.”


Apart from layoffs, the government is also doing major restructuring; the Department of Education will amalgamate all schools in the province into two school boards: one for English schools, and another for French.

On top of that, Premier Kathy Dunderdale will eliminate Felix Collins’ cabinet position, folding the Intergovernmental Affairs portfolio into Executive Council.

Spending cuts are only one portion of the effort to reduce the deficit, though. Extra money from mining taxes, offshore royalties, personal income tax and the HST helped to reduce the size of the deficit by almost $700 million.

The government also raised fees on everything from driver’s licence registration to admission for provincial historic sites.

The government is forecasting another deficit of $650 million next year, but Kennedy says the province will be back to surplus by 2015.

Those projections are part of a 10-year “Sustainability Plan” Kennedy presented as part of the budget.

The backbone of that plan is happening this year and next year, with major cuts and restructuring of government operations happening right away.

In 2015, the plan says government will return to surplus, and between 2016-2022, the plan just says there will be a “continued focus on innovation, economic diversification and debt reduction.”

Liberal Leader Dwight Ball wasn’t impressed, saying that it all seems to pivot around the crucial 2015 general election.

“There’s no confidence at all that they’re able to put together a sustainability plan,” he said. “As a matter of fact, I don’t consider this to be a 10-year sustainability plan at all. It’s more of a three-year re-election plan for this government.”

The sustainability plan also specifically says the government will spend the coming year looking at regional health authorities, along with Memorial University and the College of the North Atlantic to find more ways to save money.

Public-sector pensions are also in the crosshairs; Kennedy said the current system is in jeopardy if something isn’t done, and he’s getting ready to talk to the unions about it.

“We’re going to have discussions. This is about protecting people’s pensions,” Kennedy told reporters. “They’re interested in protecting their members’ pensions, we’re interested in protecting their pensions, but also, we have to deal with the unfunded aspect of the pension liabilities.”

In the past year, the province’s unfunded pension liability jumped by almost a billion dollars, pushing the total net debt of the province to $9.5 billion.

New Democrat Leader Lorraine Michael said she was “disturbed” by what she read in the budget documents.

“They have not built in a plan for the present and for the future with regard to new sources of revenue,” she said. “They don’t have a plan in there to show what other new sources they’re going to go to as they continue on.”

Twitter: TelegramJames


Organizations: College of the North Atlantic, Department of Education, Intergovernmental Affairs

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Recent comments

  • Black arm band
    March 27, 2013 - 11:50

    1500 positions affected! Adult Basic Education program cut from College of the North Atlantic! No cost of living raises for anyone! If we don't take care of the sick, the poor and the illiterate, what's the point in having oil and hydro?

  • West coaster
    March 27, 2013 - 10:29

    When Debbie Cooper asked Dwight Ball what he would have done in the budget, he couldn't answer and she asked him the second time and he still couldn't tell the answer. I guess he to had no solution! Come on Dwight, give us some answers!

  • Corner B'y Tom
    March 27, 2013 - 09:42

    Any layoffs at the Elite Guardian Office of NL aka The Office of the Rural Secretariat, saviors of rural NL? Doubt it. What's the average salary of those think tankers up there? $100,000+?

  • Original Proud Bayman
    March 27, 2013 - 09:27

    As you state in your disclaimer; I will be courteous...I'm not sure about parties in opposition having plans...but by virtual of the name "it is opposition"! Now for the gist of my comments; I don't see much of a plan as put forward by Dunderdale, Kennedy, etal; other than everything is going to be just great by 2015-2016! If I were to believe this; I would have to have my head stuck in the sand! I've seen these five year plans many times before but surprisingly the base year keeps getting shifted outward and we never see the end of the five year plan! As for government plans to reduce the Cabinet; I heard Felix Collins on an open line show this morning protesting that he was still in the cabinet (ie getting a cabinet salary) but having no cabinet folio! What a way to pad your income; I wonder how many other government employees that have been axed are still getting paid! Wow doesn't this seem ridiculous! I wonder where Felix Collins will pop up in the future in the government's five year plan!

  • Bob
    March 27, 2013 - 09:02

    An ex-nun can certainly do better than Dunderdale,an ex....???? did she even have a real job before or any kind of qualifications or education???

  • Bonnie
    March 27, 2013 - 08:18

    Its the Same Old Sameo, the rich get rich (or they stay rich) and the poor get poorer. Any help for seniors? Didn't think so. Dark, dark days ahead when our province is supposed to be booming.

  • Protocol Advisor
    March 27, 2013 - 07:43

    Is the Premier's $140 thousand a year Protocol Advisor one of the positions being eliminated? Didn't think so. So important to advise the Premier on which fork to use.

  • original townie
    March 27, 2013 - 06:43 state the govt. does not have a plan regarding present and future sourses for new revenue. And your plan is........? I am so tired of your useless comments. They have absolutely no base. Maybe if you brought a plan to the table when you open your mouth, people would take you seriously. Please do not vote NDP next election. If you think it can't get worse, you will be mistaken. An ex - nun running the province.....please no.

    • None of the Above
      March 27, 2013 - 09:08

      I am voting none of the above. Lorraine likes to hear herself talk..........about nothing. It's her job as the opposition to pick and point out flaws. Yet you are right, she has no solution other than sit back and complain. Useless.