Ballooning surplus a ‘good problem’: Compton
Finance Minister says balanced position preferred, but is still thrilled with positive gain
The province’s Finance Minister says she’s happy with the province’s $57 million surplus but would prefer to see finances closer to a balanced position.
For the second year in a row, the province’s public accounts showed a surplus far higher than budgeted. The surplus was fuelled by higher-thananticipated revenue in provincial corporate, sales and income tax. The previous Liberal government had budgeted for a surplus of only $1.5 million.
“We see that the population is growing so that’s a good problem to have,” Finance Minister Darlene Compton told The Guardian.
“Most of this we’ve inherited from the previous government but fair enough.”
The 2017-2018 fiscal year saw a surplus of $75 million after budgeting for a far more modest surplus of $600,000.
Compton acknowledged that her party, while in opposition, had criticized the Liberal government of Wade MacLauchlan last year, after the province announced the $75 million surplus.
“Most of this we’ve inherited from the previous government but fair enough. I’m thrilled we have a surplus.”
“The population is growing, the economy is growing. There’s a number of indicators there that show we’ve got growth in employment, economic growth and international export growth.”
Still, Compton said she would prefer to see revenues closer to projections.
“I would like it to be closer to balance, not be such an excess,” Compton said.
Compton noted corporate tax revenue has had the most substantial increase. Between 2015 and 2019, actual revenue from corporate taxes has increased by almost 44 per cent.
Actual corporate tax revenue was $23 million more than budgeted. Similarly, revenue from sales tax was almost $14 million more than budgeted while income tax revenue was $8.5 million more than projected.
“That shows the province is in a good place. We’re experiencing extreme growth and companies are busy. We all know that,” Compton said.
Heath MacDonald served as Finance Minister during the previous Liberal government. His most recent operating budget served as the basis for Thursday’s public accounts.
MacDonald said tax revenue projections had to take many factors into account.
“You want to build consistency as close to possible. It’s not an exact science,” MacDonald said.
“We have a small economy, but it’s a diverse economy. You have to be on the cautious side when budgeting time comes around.”
MacDonald said the previous government achieved the two years of record surpluses while making substantial investments in housing and healthcare and paying down the provincial debt.
Green finance critic Michelle Beaton said the surpluses of recent years are a sign that the province’s financial managers are not on top of the numbers.
“Surpluses or deficits should never be a surprise when you get to the end of the year,” Beaton said.
Beaton said the most recent budget, tabled in June by the Progressive Conservatives, is based largely on work done by the previous Liberal government.
“Are we running a surplus for the third year in a row?” Beaton said.
“If we are, we really need to start looking at the services that are underfunded and where we can find more programs and services to Islanders.”
Beaton pointed to the chronic shortage of housing in P.E.I., as well as the 15,000 people who do not have access to a family doctor as examples of programs that need more investment.
Over the past three years, corporate tax revenue has been consistently budgeted below the actual amount collected in the previous year.
In 2017, the province budgeted $62.3 million in corporate tax revenue but collected almost $80 million. In 2016, the province collected $73 million in corporate taxes.
In 2018, the province budgeted $60 million, an even lower amount in corporate tax revenue. The actual corporate tax revenue was $98 million.
In 2019, the province budgeted $70 million in corporate revenue. Actual revenue was $93.6 million.