Big-deficit budget promises benefits for everybody

James
James McLeod
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The first question Finance Minister Charlene Johnson faced from reporters during her budget day news conference was, “So minister, is this an election budget?”
Johnson didn’t give a straight yes or no answer, but there was plenty on offer Thursday that would be good fodder for the Tories if they decide to hit the campaign trail.

The provincial government will bring in full-day kindergarten starting in September 2016, it will replace student loans with non-repayable grants for post-secondary students, and there will be tax cuts, seniors’ benefits and more money for people on income support.

Johnson said the government is giving the people what they want.

“This is a budget that reflects what we've heard from the residents of the province, from stakeholders, from our own constituents,” she said. “I think it reflects our theme of the budget: shared prosperity, fair society and a balanced outlook.”

This year was supposed to be about more belt-tightening.

Last year, when then-finance minister Jerome Kennedy laid off close to a thousand civil servants and delivered across-the-board spending cuts, he said it was just the first year of a “10-year sustainability plan.”

Year 2 of that plan was supposed to put Memorial University, the College of the North Atlantic and the province’s four regional health authorities under the microscope.

But there were no cuts on display Thursday. The government kicked in $5.1 million to keep the tuition freeze going for another year, along with the $50.6 million over five years to turn student loans into grants.

There were no cuts in health care, either. This year, the government will spend $3 billion on health. Johnson said people told her cuts wouldn’t go over well.

“The health authorities, I mean, as I heard going around the province, the biggest thing that people wanted more spending on is health care,” she said.

“Our population is aging and when you see what we have in here in terms of health care, it's not only spending for new cancer drugs, breast cancer, prostate cancer.

It’s also looking at how to better use the health-care dollars we have.”

Johnson insisted the government is still committed to the ultimate aim of the sustainability plan — getting net debt down to the per capita Canadian average within 10 years.

But the government is running a $537-million deficit — the second year in a row that the government has forecast more than half a billion budget shortfall.

And net debt continues to climb; this year, it will rise to $9.8 billion, fuelled by the ever-growing unfunded pension liability and related retirement benefits.

The gap between what the government has in the pension fund and what it’ll need to pay out to retirees in coming years has widened to $7.3 billion, and if something isn’t done, the pension and retirement benefits liability will account for 85 per cent of the total net debt by 2016.

Johnson told reporters that she takes the problem very seriously, and she’s got meetings scheduled for mid-April to talk to the unions about a way to fix things.

“It's the most significant financial issue facing the province,” she said.

Even that kind of language wasn’t strong enough for Richard Alexander, executive director of the Newfoundland and Labrador Employers’ Council, who was visibly angry in the lobby of Confederation Building reacting to what he saw in the budget.

“Overall, the budget is frightening, I think, because it’s overshadowed by the fact that our net debt in this province continues to increase at a rapid rate,” he said. “What we have now is a government that’s increased the size of the public service to be the largest of any workforce in North America. The province obviously can’t afford that. If we could afford it, we wouldn’t be running these massive deficits.”

But at least for the people benefitting from Johnson’s budgetary offerings, Thursday was a good day. Michael Walsh, representative for the Newfoundland and Labrador branch of the Canadian Federation of Students, said replacing student loans with grants is something the federation has wanted to see for a while.

“There’s always more than can be done, but today is about applauding the good work which is happening here,” he said. “By reducing student debt in the way that they have, new graduates are going to be able to contribute meaningfully to the economy by doing things like starting families, starting small businesses and really helping to build Newfoundland and Labrador.”

 

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: College of the North Atlantic, Newfoundland and Labrador Employers, Confederation Building Canadian Federation of Students

Geographic location: Newfoundland and Labrador, North America

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Recent comments

  • Virginia
    March 28, 2014 - 13:55

    'Here's your budget, Minister. Just came down from the premier's office. Says he hopes you like it. By the way, he said you should go out and buy yourself a lovely pair of high-heels - on the house.'

  • Businessman
    March 28, 2014 - 11:46

    Great watching the blue jays shut out the phillies here in clearwater yesterday, but even better watching NTV news afterward. The crowd at the condo here on clearwater beach last night taking in the budget are almost all newfie businessmen of one type or another. There's total agreement this was a good budget - and a great looking finance minister to boot. Except for a couple of the wives, we're all pretty much dyed-in-the-wool tories. Haven't been home since Dunderdale quit - really can't figure that out. This government has been good for business and so is this budget - especially for St. John's where all of us have businesses. Some are worried the tories aren't getting back in next year. This budget plus Frank Coleman as premier could change that. Worse comes to worse, the liberals will only get a small majority and the tories will only have to sit out one term. Some weren't thrilled about full kindergarten - basically expensive free day-care - but I think it's brilliant. This is Marshall's way of dropping a few hot potatoes in Ball's lap. Win-win all around. Ball goes ahead with it, tories get the credit. Ball kills it because it's too expensive, liberals get the blame and the tories still get the credit. Same thing with the deficit. Tories run huge deficits to fund the election goodies but promise a surplus by 2016. To do that, the new Ball government will have to cut like crazy and the liberals will be off to a real bad start. This is a real smart move for the tories. If you know you're going down, you promise the world - spend like crazy - and let the new guys deal with the fallout. Looks good on 'em!

    • SayWhat
      March 28, 2014 - 13:08

      One thing missing in this great satirical piece. "Can't wait for the Stanley Cup Playoffs. Got our tickets for when the Habs visit Tampa for two games."

    • Corporate Psycho
      March 28, 2014 - 15:04

      I can't friggin believe I actually agree with this guy.

  • corner boy
    March 28, 2014 - 11:00

    @ NC.....no corporation would hire a CFO whose background is forestry engineering. Nonsense...I think not. It's time experience goes with the position. I sincerely hope you are not self employed. You won't be around long. We have had enough teachers etc. running this govt. with absolutely no experience....just one of the good 'ole boys. Those days must go.

  • corner boy
    March 28, 2014 - 10:58

    @ NC.....no corporation would hire a CFO whose background is forestry engineering. Nonsense...I think not. It's time experience goes with the position. I sincerely hope you are not self employed. You won't be around long. We have had enough teachers etc. running this govt. with absolutely no experience....just one of the good 'ole boys. Those days must go.

  • Agree
    March 28, 2014 - 10:47

    What exactly is Unfunded Pension Liability? Govt says 7.3B but the latest Pension report of 2007 shows only 190M paid out. If we all compared our mortgage to our salary, we would be bankrupt. However compared to monthly mortgage payment, it's not so bad. The plan is not affordable but give us the right numbers.

  • SayWhat
    March 28, 2014 - 10:06

    If it was not for the Alberta economy, just think of the dire state we would be in today. Here are some figures to ponder. Back in fiscal 2011-12, the Provincial Government collected over 939 million dollars in income taxes. In fiscal 2013-14, Government collected nearly 1.222 billion dollars in income taxes. You tell me how our economy has expanded whereby income tax revenue went up by approximately 280 million dollars. It hasn't. The Alberta economy has become a major lifeline for this government. But here's the kicker, Government expects a reduction of nearly 9% in income tax revenue for fiscal 2014-15. Storm clouds looming on the horizon?

  • Torey Nomore
    March 28, 2014 - 08:55

    A weak election budget is reason number 165,873 why I cannot vote Tory no more.

  • Something for everyone...
    March 28, 2014 - 08:09

    Running up more debt at a time when we should be salting money away for when the non-renewable revenues run out. Yup, something for everyone indeed - just don't forget that the goodies we get now in this election budget will have to be paid for by everyone eventually. As for the pension issue, a really great start would be to lead by example and adjust the A pension to something a little more realistic.

    • saelcove
      March 28, 2014 - 09:43

      Is it true our elected politicians are paid more than in the rest of Canada

  • james browne
    March 28, 2014 - 07:20

    There is something wrong with a government that uses the excuse of "how much is wasted on pensioners and civil servants" when the waste takes place in government itself. A minister rises with a self serving smile on their face and announces that another corporation has threatened to leave and the only thing that will keep them here is the infusion of millions of dollars(Kruger). Another example,1/3 the people with CONA are administrators. The corruption within the upper echelon and the use of so called experts to determine what the problems are is madness. There is a theory that government gets so top heavy it falls . Listen to the people. They are like the others in Ottawa running in desperation in the hope that people actually believe the crap put out.

  • nerilldp
    March 28, 2014 - 07:01

    Wow, what arrogance! The PCs must believe the voters are total simpletons. Go ahead, give them another majority and watch all these "gifts' disappear and return to cuts: look at what being a Conservative means. Wonder how many people this sham will fool?

  • corner boy
    March 28, 2014 - 06:43

    Charlene Johnson....Minister of Finance for the Prov. of NL. Background....Bachelor of Science degree in Forestry Engineering. I just don't equate. This is why we have a net debt of $9.8B. People of NL, we are BANKRUPT!

    • NC
      March 28, 2014 - 07:16

      Are you seriously looking at her educational background to determine whether or not she's qualified to be Finance Minister? That's complete nonsense.

    • Jay
      March 28, 2014 - 07:33

      The debt, before the PCs got elected was over 10 billion dollars. There are numerous reasons for this, not Charlene Johnson.

    • paul
      March 28, 2014 - 08:38

      I agree 100%. And for the person below to say that's nonsense makes no sense. Reality is that this budget was all about saving face, and tying to make up for the Dunderdale Error. Only problem is that the majority see through it and will vote Liberal. Take that to the bank.

    • Changing the Face of Government
      March 28, 2014 - 11:25

      I'm not saying that she can't do the job - perhaps she can, regardless of her educational background - but she's pretty and soft-spoken. I'm sure giving her the post of finance minister was at least, in part, an attempt to change the public face of the PC government.

  • It's Called POLITICS
    March 28, 2014 - 06:43

    Remember when the Dannyman put the public service out on strike but then gave them a 20% raise just before the next election? It's called POLITICS and there is nothing new here.

  • corner boy
    March 28, 2014 - 06:43

    Charlene Johnson....Minister of Finance for the Prov. of NL. Background....Bachelor of Science degree in Forestry Engineering. I just don't equate. This is why we have a net debt of $9.8B. People of NL, we are BANKRUPT!

  • J
    March 28, 2014 - 05:59

    I've voted Conservative all my life and I will now vote for the Liberals if for nothing else than to get these jokers out of power. Why is no one addressing the fact that they have budgeted on $105 oil. Brent currently sits at $106 and change. Oil is a global commodity and it can drop as well as rise and they have not taken into account that Terra Nova or Whiterose may have to go off station if something comes up. The the deficit will ballon like theres no tomorrow and they will never get back out in front of it. They should be budgeted on $80 or $90 a barrel of oil and using any surplus to pay down the debt. Once oilfields reach the plateau the production always starts dropping off, exponentially, it's happening offshore now. Eventually the oil production will be a magnitude less than it is now, probably another 15-20 years. I pray for the tax paying citizens at that time, my children included (if they are still here) as they are going to be saddled with enormous public debts and no way to pay them down. Mark my words, Newfoundland will Default on its public sector debt before 2050.

    • Yo mama
      March 29, 2014 - 06:09

      Couldn't have "said" it better myself. It should also be strictly oil revenues that pay for MF.

  • chris
    March 28, 2014 - 05:45

    Yes and as the government stars to talk to the unions about their pension plans they the government < should start talking about theirs also . Considering what they get for a few years of service which is indexed plus perks.