Deficit, job cuts smaller than expected
Finance Minister Tom Marshall (standing) delivers the 2012 budget in the House of Assembly Tuesday. — Photo by Gary Hebbard/The Telegram
Finance Minister Tom Marshall rolled out a humdrum budget Tuesday without much in the way of new spending or big surprises.
In the coming year, the province will run a $258-million deficit, much smaller than the $496-million deficit the government predicted a year ago.
Similarly, the government cut jobs, but only 45 temporary positions — not the hundreds of job cuts Premier Kathy Dunderdale braced the public for last month.
There was very little in the way of new spending from the government, and Marshall said curtailing the government’s activities will be part of the long-term goal for the next 10 years.
Despite the deficit this year, Marshall said he ultimately wants to get the province’s per capita net debt down to the national average.
“We’re not slashing and burning this year. We’re not doing it all at once,” Marshall said. “We’re going to institute a plan. We’re going to determine what our priorities are to diversify the economy for when the oil and gas is gone.”
In the months leading up to the budget, government departments tried to find savings and temporary jobs that could be eliminated.
In total, there were $39 million in cuts across government.
The 45 temporary jobs that were cut actually weren’t enough to offset 142 new positions created in other areas — including 47 temporary positions.
All told, though, spending increased by a meagre 1.7 per cent to $7.9 billion.
The province’s net debt is forecast to rise to $8.4 billion in the current year, though, driven partly by this year’s budget deficit, but mostly by an anticipated $468 million increase in the government’s unfunded pension liability.
Economist Alison Coffin said the government’s goal to get the per capita debt down to the national average in the next decade is “laudable,” but until Marshall can get a handle on that pension liability, she said it will continue to be a problem.
“They have not addressed the unfunded pension liability,” she said. “It doesn’t seem to be that they’re doing the short-term actions to justify the long-term goal.”
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But what Marshall lacked in discipline on the debt side, he made up for on the spending side of things.
The government’s press documents — normally awash with new funding initiatives — this year touted their past record, and a steady course of more of the same.
For example, one news release boasted about “Continuing tax initiatives such as the Residential Energy Rebate, the supplementary Child Care Tax Credit, Personal Income Tax reductions and the Low Income Seniors’ Benefit that see residents save in excess of $500 million annually as compared to 2006.”
Similarly, the government talked up the nearly $900 million being spent on infrastructure this year, but the majority of that is being spent on routine work and projects that are continuing over from previous years.
The budgetary pruning will continue in the coming years, too. The whole government will be going through a “core mandate analysis” to figure out what its essential functions are. By refocusing government departments towards their “core mandate” and cutting non-core functions, Marshall said they hope to “free up capacity” to pay for new spending priorities.
The government will also be looking to shrink the size of the civil service. Nearly a quarter of the more than 9,000 public sector employees will be eligible for retirement in the next few years, and Marshall said he doesn’t want to see all of those people replaced.
There are no specific targets for how many positions will be eliminated through attrition, though.
“In the core public service 24 per cent are eligible to retire. We’ll ask the heads of the departments — the deputy ministers — to take advantage of that,” Marshall said. “It’ll be up to the deputies to fill the position or not.”
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