N.L.’s deficit grows amid lower off­shore oil roy­al­ties

The Guardian (Charlottetown) - - THE ISLAND - BY SUE BAI­LEY

New­found­land and Labrador will tar­get big spend­ing in health, ed­u­ca­tion and by the Crown cor­po­ra­tion over­see­ing the bloated Muskrat Falls pro­ject as its deficit mounts.

The province is now ex­pect­ing a deficit of $852 mil­lion this fis­cal year, up from $778 mil­lion pre­dicted in last April’s bud­get.

Fi­nance Min­is­ter Tom Os­borne said Tues­day the in­creased short­fall is largely due to lower off­shore oil roy­al­ties. They dropped $147 mil­lion from bud­get pro­jec­tions thanks to de­flated prices and higher ex­change rates.

A Con­fer­ence Board of Canada econ­o­mist re­cently de­scribed over­spend­ing in the province as “a tick­ing time bomb.”

Still, Os­borne said it’s en­cour­ag­ing the gov­ern­ing Lib­er­als are close to rev­enue pro­jec­tions and on tar­get to cut costs.

“How­ever, we are still fac­ing an un­sus­tain­able deficit level,” he told a news con­fer­ence. “Bor­row­ing $2.3 mil­lion a day is not sus­tain­able. We need to look at ev­ery­where gov­ern­ment is spend­ing money.”

Os­borne said since tak­ing power al­most two years ago the Lib­er­als have cut public sec­tor jobs through at­tri­tion and trimmed spend­ing across gov­ern­ment de­part­ments which ac­count for about 40 per cent of the province’s $8.1 bil­lion bud­get.

Sixty per cent, or $4.3 bil­lion, is spent on boards, agen­cies and com­mis­sions. They in­clude four re­gional health au­thor­i­ties, Memo­rial Univer­sity of New­found­land and Crown cor­po­ra­tion Nal­cor En­ergy. Nal­cor is re­spon­si­ble for the $12.7-bil­lion Muskrat Falls hy­dro­elec­tric pro­ject in Labrador which has nearly dou­bled in cost since it was ap­proved five years ago.

Os­borne strongly hinted Tues­day that while there has been in­creas­ing ef­fort to rein in bud­gets by health and other agen­cies, Nal­cor has not stepped up.

“Nal­cor re­mains this province’s most sig­nif­i­cant risk,” he said. “Our largest bor­row­ing in re­cent years has been to fund Nal­cor.”

A spokes­woman for Nal­cor did not im­me­di­ately re­spond to a re­quest for comment.

The province saw an eco­nomic bo­nanza fu­elled in part by off­shore oil earn­ings for sev­eral of the 12 years Pro­gres­sive Con­ser­va­tives were in power be­fore the Lib­er­als won in 2015. Oil prices had be­gun to tank the year be­fore, gut­ting a trea­sury that in 2010 re­lied on the off­shore sec­tor for 30 per cent of gov­ern­ment rev­enues.

To­day that per­cent­age has plunged to about 10 per cent. Yet spend­ing has not been brought in line, and the province con­tin­ues to over-rely on off­shore oil earn­ings.

It counted in last April’s bud­get on an av­er­age price for Brent crude of US$56 a bar­rel. The ac­tual price has hov­ered closer to US$52 de­spite a re­cent rally. Rev­enue from per­sonal in­come taxes is also down as the pop­u­la­tion slowly shrinks and tax fil­ers sought ways to limit the im­pact of sweep­ing rate hikes in the 2016 bud­get.

The un­em­ploy­ment rate rose slightly to just over 15 per cent.


An ice­berg is seen just out­side of the Nar­rows off St. John’s har­bour in this CP file photo. New­found­land and Labrador is fore­cast­ing a deficit of $852 mil­lion this fis­cal year, up from $778 mil­lion pre­dicted in last April’s bud­get.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.