Bud­get 2017 hits tar­gets, hides the bad news

The Pilot - - News - BY JAMES MCLEOD jm­cleod@thetele­gram.com

ST. JOHN’S — The gov­ern­ment of New­found­land and Labrador proudly an­nounced that things are bet­ter than ex­pected — and any bad news was care­fully hid­den from pub­lic view.

Fi­nance Min­is­ter Cathy Bennett will beat her deficit re­duc­tion tar­get, post­ing a $ 778 mil­lion short­fall this year, but the bud­get documents of­fered zero mean­ing­ful de­tail about where the $283 mil­lion in spend­ing cuts will hap­pen.

The gas tax will be cut by 8.5 cents on June 1, and a fur­ther four cents on Dec. 1, but the brief­ing ma­te­ri­als pro­vided to jour­nal­ists wouldn’t say how much rev­enue the gov­ern­ment will forego by im­ple­ment­ing the tax cut.

Only in re­spond­ing to ques­tion­ing from jour­nal­ists did Bennett ac­knowl­edge that it will mean a loss of $60 mil­lion in rev­enue this year, and an­other $85 mil­lion in fu­ture years.

After cas­ti­gat­ing the pre­vi­ous gov­ern­ment for be­ing “ad­dicted to oil” it ap­pears that a lot of the im­proved fis­cal sit­u­a­tion comes from oil rev­enue.

The oil fore­cast of $56/bar­rel for the com­ing year, and the as­sump­tion of a 75 cent ex­change rate are both more gen­er­ous than last year’s bud­get.

The gov­ern­ment will be en- act­ing leg­is­la­tion to freeze all man­age­ment and non-union salaries, but there’s no men­tion of lay­offs in the bud­get documents.

Fi­nance Min­is­ter Cathy Bennett was at pains to say that no mass lay­offs were an­nounced to­day, and no mass lay­offs were part of the plan.

But that doesn’t mean ev­ery pub­lic ser­vant’s job is safe; Bennett said that the gov­ern­ment will be con­stantly look­ing for “ef­fi­cien­cies” and who knows? That might mean cut­ting jobs later.

Look­ing to the long- term fore­cast, the gov­ern­ment is lean­ing ex­tremely heav­ily on oil rev­enue in­creas­ing in or­der to bal­ance the bud­get by 2022.

Bennett said that es­sen­tially, the bud­get will bal­ance it­self be­cause of oil roy­alty rev­enues, as long as the gov­ern­ment can keep spend­ing flat for the next six years.

But more cuts are def­i­nitely com­ing.

The me­dia brief­ing ma­te­ri­als talk vaguely about “re­view­ing ex­pen­di­tures of agen­cies, boards and com­mis­sions for an­tic­i­pated sav­ings of $42 mil­lion.”

There’s also a ref­er­ence of “re­mov­ing du­pli­ca­tion and stream­lin­ing man­age­ment struc­tures” for a sav­ings of $31 mil­lion with­out much in the way of specifics.

The most marked dif­fer­ence from last year’s bud­get was in the pre­sen­ta­tion.

Last year, in the Lib­er­als’ first bud­get, the cuts were clearly laid out, and the over­all pic­ture lacked any sort of clear nar­ra­tive or sense of politi­cians “sell­ing” the bud­get.

This year it’s the re­verse, with the cuts en­tirely ob­fus­cated, and gov­ern­ment of­fi­cials ini­tially de­clined to make Depart­ment of Fi­nance of­fi­cials avail­able to an­swer tech­ni­cal ques­tions about the bud­get.

Politi­cians were avail­able to high­light all the spend­ing gov­ern­ment is do­ing, even re­an­nounc­ing money that is typ­i­cally spent ev­ery year, or stuff that was al­ready re­vealed in pre-bud­get an­nounce­ments.

The clear nar­ra­tive from Bennett was that the Lib­eral medicine is work­ing; the state of the prov­ince’s fi­nances is still dis­mal, but last year’s fore­cast $1.8 bil­lion deficit ended up only be­ing $1.1 bil­lion, and the plan to re­turn to sur­plus is on track.

But the work isn’t done. When Health Min­is­ter John Hag­gie spoke to jour­nal­ists, he wouldn’t talk specifics but he said that the gov­ern­ment in­tends to im­prove health out­comes with­out spend­ing more money.

Given that the gov­ern­ment is fore­cast­ing an 11 per cent in­crease in in­fla­tion over the next four years, that means the health care sys­tem will need to do more with less.


Fi­nance Min­is­ter Cathy Bennett an­swers me­dia ques­tions prior to de­liv­er­ing Bud­get 2017 in the House of Assem­bly.

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