Down to $450 million in mid-year update
Finance Minister Tom Marshall had some good news to deliver in his fall economic update: the province’s deficit is more than $100 million less than expected.
The province is better financially off than first anticipated, according to Finance Minister Tom Marshall’s mid-year update which he presented Monday. An additional $100 million was shaved off the projected deficit, which sits at $450 million. — Telegram file photo
Marshall said 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 review” 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.”
With Memorial University, he said, the government won’t cut the overall budget at all. Any savings it finds from its efficiency review can be spent on other areas of programming.
The big concern right now, Marshall said, is 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 its 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.
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 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 Finance is now calculating an estimated savings that comes from the amount of time a job sits vacant while the department is looking for staff and other situations where budgeted money doesn’t get spent.
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. Finance Minister Tom Marshall
“It’s little amounts over a huge list of capital projects — some delays in roads, some delays in the health sector and some delays in education,” deputy minister Donna Brewer said.
“We’ve said all along that this is a goverment that really doesn’t do a very good job budgeting,” Liberal Leader Dwight 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 take a softer approach to Memorial University and the health-care system, after the political beating they’ve taken for cuts from the budget this past spring.
Michael also raised the possibility that the reason that the government wasn’t able to spend the money it had budgeted last spring is because it laid off a bunch of workers, so things just aren’t getting done.
“Is there a relationship between cutbacks in people doing the work and the infrastructure work not happening,?” Michael said.
For his part, Marshall said Monday that even though there are still some problems in the province, he firmly believes that we’re living in “a golden age” and he rattled off a whole bunch of economic indicators to prove it.
“We’re seeing employment is up 22,000 people over 10 years. The unemployment rate is the lowest its been in 40 years,” he said.
“Average weekly wages, I think last year we exceeded the Canadian average for the first time in our history, and in terms of capital investment, we’re leading the country.”