Province forecasts deficits until 2013

Rob Antle
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Budget/Finance

After four straight years of surpluses, the Williams administration is now predicting four consecutive years of deficits for Newfoundland and Labrador.

Finance Minister Tom Marshall said the province plans to continue with deficit spending as long as the global economic situation remains fragile.

Tom Marshall

After four straight years of surpluses, the Williams administration is now predicting four consecutive years of deficits for Newfoundland and Labrador.

Finance Minister Tom Marshall said the province plans to continue with deficit spending as long as the global economic situation remains fragile.

"Obviously I don't like to run deficits, but if I've got to fight a recession, if we've got to get the economy booming, then I'm not afraid to spend money and we're not afraid to lower taxes to stimulate the economy," Marshall said.

"That's good public policy."

The provincial deficit for the just-ending 2009-10 fiscal year will be $295 million. Officials forecast a deficit of $194 million for the coming year.

But the red ink is not expected to end there. The government expects to continue with deficits in the same range for the following two years.

Newfoundland and Labrador's government expects it will continue spending more cash than it brings in until 2013. The province will look at reining in spending when the economic situation improves, Marshall said.

"When that's done - when the economy gets back to what it was, when we see real traction in economic growth - then that's the time we can come back a little bit, and get back to balance and get back, ultimately, to surpluses once again."

After years of chopping away at the province's net debt, reducing it by $4 billion, the Williams administration is now headed in the opposite direction. By the end of the coming fiscal year, the net debt is projected to be $9.2 billion. That's $1.3 billion higher than the 2009 figure.

The 2010 budget speech carried the tag line, "The Right Investments For Our Children and Our Future."

Marshall did not see any contradiction in a child-focused budget that appeared to dump additional debt load on generations yet to come. He said those generations will benefit from $1 billion in planned infrastructure investments this year, such as new schools, water bombers and ferries.

"The debt relating to the infrastructure spending - those projects are going to benefit not only us today, they're also going to benefit our children in the future," the finance minister said.

Better-than-expected oil revenues hacked nearly a half-billion dollars off the past year's expected deficit, but could not erase it entirely.

For 2010-11, the government is forecasting production of 90 million barrels, a price of roughly US$83 per barrel and a 95.5-cent loonie.

The government expects an infusion of more than $2.1 billion in offshore royalties this year, or more than 30 cents of every dollar it receives from all sources.

Asked what would happen if royalties come in lower than anticipated this year, Marshall said the deficit would be higher.

rantle@thetelegram.com

Organizations: Right Investments

Geographic location: Newfoundland and Labrador

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Recent comments

  • I C Clearly
    July 02, 2010 - 13:31

    ''The province will look at reining in spending when the economic situation improves...'' And what's 'plan b' if it doesn't? The next government will be saddled with unsustainable public spending, a shrinking tax base and forced cuts rather than planned ones. Dan is fine with spending other people's money - he will never have to worry about the bills that his adminsitration is racking up.

  • Mark
    July 02, 2010 - 13:30

    The folks who live out their days in Sarasota will never have to worry about the province's debt. They'll have left it, and the foggy weather behind.

    This government has increased the cost of running itself by nearly 80% since taking office. Who else can you possibly blame for that recklessness, other than the government, and the one man show who leads it?

  • Guy
    July 02, 2010 - 13:26

    Manuel Clark from St.johns, Newfoundland says... Previous members have put this government in the situation it is in...

    But isn't it funny how quickly Manuel gives King Dan's government credit for oil revenues previous governments already did all the hard work for ?

    So which side do you want to take Manuel ? Pick one and stick with it, or does that blue elixir fog your head, and King Dan can claim credit for All That Is Good, even if it wasn't on his watch, and not take blame for All That Is Bad even though it was ?

    THIS is the real problem I have with people who are unable to think for themselves.

  • Manuel
    July 02, 2010 - 13:21

    Ok well all of you are going to blame Danny for a deficit.
    I see Mark already has. how about you be our new premier Mark.
    How many of you will stand up and take responsibility for voting in the previous members that have done nothing more then steal from you. Previous members have put this government in the situation it is in. Im sure if you all go over the recent things that have happened to Newfoundland youll see Danny is the only one who has attempted to get us what we deserve. Not take from us and leave us with nothing. All of you are seeing this as something that is permanent. Do you see the deals and the money that is going to come from them. No you dont. All you see is red for a few years and thats it its all Danny's fault.
    It is no wonder all of the world thinks Newfies are stupid. You give them all the ammo they need.
    IC CLEARLY lets see your budget and how your going to run this province.

  • amused
    July 02, 2010 - 13:17

    Yes, sir, Tom!! If the shoe fits wear it.......But for a pair of $1.75 toy shoes.....I don't think you travel far before you realize the purchase made was a serious error in judgment! You should have bought a pair of cheap 'Chinese made' slippers which would have been more comfortable.....for the time you're going to wear them.......

  • Mark
    July 02, 2010 - 13:09

    In other words, Premier Williams will spend whatever it takes to remain popular, and then quit politics leaving the deficit mess to someone else.

    And, as per usual, we'll fall for it.

    What a great manager he turned out to be.

  • I C Clearly
    July 01, 2010 - 20:19

    ''The province will look at reining in spending when the economic situation improves...'' And what's 'plan b' if it doesn't? The next government will be saddled with unsustainable public spending, a shrinking tax base and forced cuts rather than planned ones. Dan is fine with spending other people's money - he will never have to worry about the bills that his adminsitration is racking up.

  • Mark
    July 01, 2010 - 20:18

    The folks who live out their days in Sarasota will never have to worry about the province's debt. They'll have left it, and the foggy weather behind.

    This government has increased the cost of running itself by nearly 80% since taking office. Who else can you possibly blame for that recklessness, other than the government, and the one man show who leads it?

  • Guy
    July 01, 2010 - 20:13

    Manuel Clark from St.johns, Newfoundland says... Previous members have put this government in the situation it is in...

    But isn't it funny how quickly Manuel gives King Dan's government credit for oil revenues previous governments already did all the hard work for ?

    So which side do you want to take Manuel ? Pick one and stick with it, or does that blue elixir fog your head, and King Dan can claim credit for All That Is Good, even if it wasn't on his watch, and not take blame for All That Is Bad even though it was ?

    THIS is the real problem I have with people who are unable to think for themselves.

  • Manuel
    July 01, 2010 - 20:04

    Ok well all of you are going to blame Danny for a deficit.
    I see Mark already has. how about you be our new premier Mark.
    How many of you will stand up and take responsibility for voting in the previous members that have done nothing more then steal from you. Previous members have put this government in the situation it is in. Im sure if you all go over the recent things that have happened to Newfoundland youll see Danny is the only one who has attempted to get us what we deserve. Not take from us and leave us with nothing. All of you are seeing this as something that is permanent. Do you see the deals and the money that is going to come from them. No you dont. All you see is red for a few years and thats it its all Danny's fault.
    It is no wonder all of the world thinks Newfies are stupid. You give them all the ammo they need.
    IC CLEARLY lets see your budget and how your going to run this province.

  • amused
    July 01, 2010 - 19:58

    Yes, sir, Tom!! If the shoe fits wear it.......But for a pair of $1.75 toy shoes.....I don't think you travel far before you realize the purchase made was a serious error in judgment! You should have bought a pair of cheap 'Chinese made' slippers which would have been more comfortable.....for the time you're going to wear them.......

  • Mark
    July 01, 2010 - 19:44

    In other words, Premier Williams will spend whatever it takes to remain popular, and then quit politics leaving the deficit mess to someone else.

    And, as per usual, we'll fall for it.

    What a great manager he turned out to be.