The Newfoundland and Labrador government unveiled a steady-as-it-goes financial plan today that will see minimal job cuts and spending reductions.

Previous warnings of an austerity budget proved unfounded, with just 45 temporary positions cut and $38.8 million in savings identified from a review of government programs. Those savings amount to roughly 0.6 per cent of overall program spending.

"We decided we’re not slashing and burning this year," Finance Minister Tom Marshall told reporters. "We’re not doing it all at once."

In the months before budget day, Premier Kathy Dunderdale warned of spending cuts of up to three per cent, which translates to roughly $200 million. She later modified the three-per-cent figure to exclude things like health care from the review.

'We decided we’re not slashing and burning this year. We’re not doing it all at once.'—Finance Minister Tom Marshall

The premier had also indicated that as many as 800 contract positions could be on the chopping block.

Instead, government program spending will actually rise by 1.7 per cent this year, or roughly $140 million.

That increase, however, is lower than the rate of inflation.

Marshall defended the level of spending, noting that the province has run surpluses in six of the past eight years.

"We have moderated our program expenditures," the finance minister said.

"According to the auditor general, living within your means is running a surplus, so we’ve done that."

10-year review

The government will now embark on a 10-year plan to rein in its finances. Marshall said the ultimate goal is to restrain growth in program spending to the rate of inflation, and reduce Newfoundland and Labrador’s debt level to the all-province average.

A so-called "core mandate analysis" is part of that process. It will look at everything, including those areas excluded from the previously completed three-per-cent review. The recommended savings will be implemented in next year's budget.

The net debt is now down to $7.8 billion. That’s more than $4 billion lower than its peak level. The number is expected to creep up again, to $8.5 billion, in 2013.

Newfoundland and Labrador once again exceeded its financial expectations this past year.

Higher-than-expected royalty revenues drove the province to a $776.5 million surplus for the 2011-12 fiscal year.

But the government says it will run a deficit of $258.4 million in the coming year.

Atlantic Accord payments valued at more than half a billion dollars have run out, darkening the fiscal picture.

And two of the province’s three producing oil fields will shut down for planned maintenance, further choking off revenues.

There were few pocketbook issues in this year’s budget — no tax increases or decreases, although some fees were reduced for seniors.

The premier said the budget was a responsible one.

"Our government has proven to be responsible and strategic stewards of the public treasury," Dunderdale said in a statement.

"This budget reflects that responsibility with a reduced rate of spending growth, while providing important programs and services to Newfoundlanders and Labradorians."