ST. JOHN'S, N.L. - The Liberal government in Newfoundland and Labrador has brought down a budget with a lower deficit than was suggested in the mid-year forecast, but faces a continuing rise in its long-term debt.
The province has run an annual deficit of $812 million in the last year. The forecast is for another deficit, $683 million, in 2018-2019.
Newfoundland and Labrador is now borrowing about $1.8 million a day to service its deficit.
The province’s overall net debt stands at $14.6 billion. By the end of 2018-2019 it is forecast to reach $15.5 billion.
Finance Minister Tom Osborne told reporters the net debt, when looked at as a per cent of GDP, is coming down.
“We’re definitely headed in the right direction,” he said, in a line often repeated on the day, by more than one minister.
The plan now is for a return to an annual surplus in 2022-23.
In order to get to surplus and start getting at the debt problem, the province is actively shrinking its public service. It is also consolidating spending outside of salaries, then making cuts where it can. One example is a new plan to bring all government vehicles under a single department (Transportation and Works).
Already over the last two years, Newfoundland and Labrador has cut 795 positions out of its public service through attrition. And the plan is to push more. There are, in a rough estimate noted in the budget speech, more than 5,000 public sector workers currently eligible to retire.
Government is also continuing to work to get severance off its books. The current deficit and expected deficit includes the cost for severance payouts resulting from the new contract agreement with the Newfoundland and Labrador Association of Public and Private Employees (NAPE) and other public sector unions.
Full budget coverage:
- How the new Newfoundland and Labrador budget could affect you
- Budget 2018: Newfoundland and Labrador investing $2 billion in education, skill and childhood development
- Budget 2018: No start date yet for constructing new Waterford Hospital
- Budget 2018: Disaster spending goes up in Newfoundland and Labrador
Changes at Nalcor Energy
The province remains heavily reliant on resource revenues from oil and mining and is basing its current budget on an oil forecast of US$63 per barrel.
The U.S.-Canada exchange rate is set at US$0.79.
The new budget includes the previously reported plans to separate Nalcor Oil and Gas from the rest of Nalcor Energy and establish a stand-alone Crown corporation.
“It would work directly with the Department of Natural Resources to accelerate the growth and opportunity of our petroleum industry, returning significant value to the people and economy of Newfoundland and Labrador,” Osborne said in his budget speech.
That’s as far as the details go right now.
Responding to questions from reporters, Osborne could not speak to the set-up of the new entity, any new administration or personnel costs. Natural Resources Minister Siobhan Coady said the new entity will work more closely with Natural Resources and that will also offer opportunities to keep administration costs down.
The province will be providing $723.9 million to Nalcor Energy, as it stands, in this year and that includes payments required to see the completion of the Muskrat Falls hydroelectric project.
Despite the current financial concerns, the Liberal government has asked residents — and finance companies — to keep an eye to the future.
The promoted image is of a province with greater employment and output from the agriculture, technology, oil and mining sectors, with a more health-conscious population and a leaner government.
“Our plan is working,” Osborne said in his speech. “Our future is promising.”
