Finance Minister Tom Marshall had some good news to deliver in his fall economic update: the province's deficit is more than $100 million lower than expected.
Minister of Finance Tom Marshall spoke to the media today regarding the 2013-14 fall economic update at Confederation Building. — Photo by Rhonda Hayward/The Telegram
Despite higher prices and a beneficial currency rate, oil revenues are expected to be down due to lower than forecast production in the offshore, but the government is now expecting to spend $270 million less than it originally budgeted, through a combination of delayed infrastructure projects and small program savings across government.
Marshall said that he still wants to stick to the 10-year Sustainability Plan unveiled last spring on budget day, but at the same time, he signalled that he's ready to back down on budget cuts planned for Memorial University, the College of the North Atlantic and the province's four health authorities.
Year 1 of the sustainability plan called for a “core mandate reivew” of the government, and it resulted in nearly a thousand people being laid off.
Year 2 of the plan was supposed to involve similar reviews to the university, college and health authorities.
“I think we can take a longer term approach,” Marshall said. “We would expect government agencies to be efficient, but we don't expect that there's going to be cuts of the magnitude that you saw at budget time this year.”
The big concern right now, Marshall said, is the pensions. The net debt of the province is just over $9 billion, and more than two thirds of that – $6.5 billion – is unfunded pension liabilities and post-retirement benefits.
Marshall said he's already been having some conversations with the province's union about the problem, and that they're looking at options, but personally, he doesn't want to convert public sector pensions to a defined contribution system.
“I'm not a proponent of the view that we should go to a defined contribution plan; I don't think they work,” Marshall said.
“We've said all along that this is a governess that really doesn't do a very good job budgeting,” Ball said. “We find out today they really don't do a very good job even spending what they budgeted in last year's budget.”
New Democrat Leader Lorraine Michael was also underwhelmed by the announcement. She said she wasn't surprised by Marshall signalling that he'll be taking a softer approach to Memorial University and the health care system, after the political beating they've taken for the cuts from the budget this past spring.
Finance Minister Tom Marshall had some good news this morning in his update on the state of the province's finances — the deficit is $113 million lower than expected.
The new forecast deficit is $450 million.
When the provincial government presented its budget last spring, they had a deficit of $563 million, but oil has been a little bit higher than expected, and the Canada-U.S. currency exchange has been working in the province's favour.
Transfer payments from the federal government have also gone up.
The mid-year fiscal update typically sets the tone for the winter pre-budget consultations, and the process of pulling together the budget.
Last spring, the government was sending signals that cost cutting would continue, with the province's health authorities and Memorial University firmly in the crosshairs.
Marshall said that he's still trying to stick to the plan, which calls for major government cuts and a return to surplus in the 2015 budget year.
Revised government numbers indicate that the province's net debt is now at just over $9 billion, a reduction of around $400 million.