New­found­land and Labrador’s deficit grows amid lower off­shore oil roy­al­ties

The News (New Glasgow) - - ATLANTIC -

New­found­land and Labrador is fore­cast­ing 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 de­te­ri­o­rat­ing sit­u­a­tion is largely due to lower off­shore oil roy­al­ties, which dropped $147 mil­lion from bud­get fore­casts due to lower prices and higher ex­change rates.

Os­borne said the up­date over­all is en­cour­ag­ing as the prov­ince is close to rev­enue pro­jec­tions and is on tar­get to cut costs.

“How­ever, we are still fac­ing an un­sus­tain­able deficit level,” he said.

“Bor­row­ing $2.3 mil­lion a day is not sus­tain­able. We need to look at ev­ery­where gov­ern­ment is spend­ing money.”

The prov­ince had counted on an av­er­age price for Brent crude of US$56 a bar­rel, but it has hov­ered closer to US$52 de­spite a re­cent rally. Rev­enue from per­sonal in­come taxes is also down as the un­em­ploy­ment rate rose slightly to just over 15 per cent.

Os­borne said gov­ern­ment de­part­ments have cut ex­penses by $22 mil­lion — but agen­cies, boards and com­mis­sions in­creased spend­ing by $18 mil­lion. That hike is partly due to higher pen­sion obli­ga­tions.

Sixty per cent of the provin­cial bud­get is eaten up by com­mis­sions, boards and agen­cies — in­clud­ing Crown cor­po­ra­tion Nal­cor En­ergy, health au­thor­i­ties and Me­mo­rial Univer­sity of New­found­land — and Os­borne said he plans to in­tro­duce leg­is­la­tion soon to force them to lower costs.

Nal­cor is among play­ers that have not stepped up to rein in costs, he said.

“The re­al­ity is gov­ern­ment is spend­ing too much money.”

Net debt is now al­most $14.7 bil­lion, a his­toric high for the prov­ince, down from $15.2 bil­lion pro­jected last spring. That re­duc­tion is partly due to de­layed spend­ing on cer­tain con­struc­tion projects.

Last year’s deficit of $1.1 bil­lion was higher as a per­cent­age of gross do­mes­tic prod­uct than any other prov­ince.

The gov­ern­ing Liberals have crit­i­cized what they call “mis­man­age­ment” by the for­mer Tory gov­ern­ment. Progressive Con­ser­va­tive govern­ments were in power for 12 years be­fore the Liberals took over two years ago af­ter oil prices crashed.

“We did not get into this fis­cal sit­u­a­tion overnight and there are no easy so­lu­tions,” Os­borne told a news con­fer­ence.

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