Minister not buying new shoes

James
James McLeod
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Tom Marshall bracing people for bad budget

February 21, 2011 was a historic night in the Coast of Bays as the provincial Minister of Finance, the Honourable Tom Marshall met with various officials from the region to listen to their concerns and issues they would like to see addressed in the 2011 provincial budget.

Traditionally, the finance minister wears new shoes on budget day, but Tom Marshall is trying to lower expectations on everything this year.

“Too expensive,” he said. “Deficit year. Maybe I’ll skip it for a year.”

For the past year, the government has been trying to downplay expectations.

While Tuesday’s budget probably won’t be anything spectacular, the situation probably won’t be as dire as some people expect.

This is this is the first year when the provine won’t receive Atlantic Accord payments from Ottawa, which will punch a $536 million hole in the budget according to Marshall. And oil revenue will be down as the Terra Nova production vessel comes offline for 147 days for maintenance, and the White Rose is taken offline.

This time last year the government was predicting the province would face a $496-million deficit. During the provincial election, every PC party campaign promise came with a caveat — “we’ll do this if we can afford it.”

More recently, Premier Kathy Dunderdale said she isn’t really thinking about new government spending, and will look at making budget cuts wherever possible. Dunderdale went so far as to suggest hundreds of temporary workers within the civil service could be on the chopping block.

It’s safe to say, though, that it won’t be as bad as all that.

Governments always carefully manage expectations so they come out looking better, and already a CBC report suggests budget cuts will be in the “dozens” and not the hundreds.

The budget deficit will almost certainly be lower than half a billion dollars too.

For one thing, in 2011 the government spent $1 billion on infrastructure. Even if they cut that down by a little bit, it would still take a big bite out of the deficit.

Dunderdale basically already said as much to reporters following the throne speech last month.

“”It’s time to rein in our spending on infrastructure particularly,” Dunderdale said. “We’re going to maintain good service delivery. We’re going to meet the needs of the people of the province, but we don’t want expectations to be very high on new initiatives in the budget.”

Similarly, last year the government transferred $348 million to Nalcor; if they don’t do that again, it would cut the deficit down by a whole lot.

The lowered expectations from government, though, is more about getting interest groups ready, because there will likely be no big government gifts coming.

During pre-budget consultations Marshall made it clear he wasn’t interested in hearing “wish lists” from anybody.

Mayors from across the province have been pressing for a new funding formula for municipal operating grants. Memorial University president Gary Kachanoski said earlier this month the university needs a new 300,000-square-foot engineering building — at a price tag of around $250 million. That likely won’t happen either, although there may be some preliminary money for “design work” or something similar.

The bottom line, Marshall said Friday, is the provincial government is in a fiscal tight spot right now, and the top priority is figuring out how to squeeze through.

“People know what the big issue is this year, we have a fiscal challenge,” he said. “Obviously we have to manage our way through that. Now fortunately, because of the fact that we’ve been able to run surpluses for six out of the last eight years, we have been able to accumulate liquidity and pay down debt which gives us capacity to manage through two years of deficits.

“(On Tuesday), we’re going to lay out a plan that’ll show how we intend to do that.”

jmcleod@thetelegram.com Twitter: TelegramJames

 

Organizations: CBC

Geographic location: Ottawa, Terra Nova, White Rose

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