The Newfoundland and Labrador government says it is suspending bonus payments to its top civil servants this coming year because of the province’s deteriorating fiscal situation.

The deputy minister/equivalents performance management program was launched in the 2009-10 fiscal year. It was a three-year pilot project.

Participants were eligible for performance pay of up to 10 per cent of their base salary.

In 2010-11, 29 top bureaucrats were eligible for bonuses.

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Finance Minister Jerome Kennedy has warned of impending government cuts, as the province faces a $1.6 billion deficit if it does not take action this coming fiscal year. (CBC)

The amounts paid ranged from $2,740 to $17,391, according to documents obtained by CBC News under provincial access-to-information laws.

The average percentage of the bonuses paid that year was 6.2 per cent of base salary. The average payment was $9,175.

The bonus component of the program was renewed for the just-ending 2012-13 fiscal year.

The Department of Finance said it decided to extend bonus payments to "encourage deputy ministers/equivalents to focus clearly and effectively on the priorities established within [their performance] contracts."

In a statement, the Department of Finance called the bonus program "modest" compared to other public and private sector incentives.

But there will be no additional pay available in 2013-14.

Even though this year’s financial incentives have been cut, civil servants will still be required to work under performance contracts, and will still be evaluated.

The government says there are no other performance pay programs in effect for its employees. Some entities, like Nalcor, have their own regimes in place.

Darkening financial situation

Last month, Finance Minister Jerome Kennedy warned about swelling deficit figures.

The shortfall in the just-ending fiscal year is expected to come in at $726 million.

And without any action, in a worst-case scenario, the deficit in each of the next two years is forecast to climb to the $1.6-billion range.

That’s a potential total of $4 billion in red ink added to the province’s books by early 2015.

Series of austerity measures

The cancellation of the bonus program for top civil servants is another in a series of similar austerity moves over recent weeks.

On Wednesday, the house of assembly management commission voted unanimously to forego planned 1.5 per cent pay hikes for MHAs in each of the next two years.

The base salary for provincial politicians will now be frozen at just over $95,000 until at least 2015.

A week earlier, in a memo to all government employees, the province’s top civil servant said there is now a hiring freeze in effect.

"Please be advised that effective immediately, routine departmental recruitment activities have been temporarily suspended until further notice," Robert Thompson, clerk of the Executive Council, wrote.

"While this suspension is in place the only instance where a department will proceed with staffing a specific position is if it is absolutely necessary."

Reining in spending

And Finance Minister Jerome Kennedy told the CBC’s political show On Point in mid-February that the government will rein in spending.

"There will be cuts," Kennedy said.

'There will be cuts.'—Finance Minister Jerome Kennedy, in mid-February

And those cuts, he noted, will include job losses.

"There will be layoffs, there’s no question about that," Kennedy said.

But the exact number of layoffs remains unclear.

The province is currently at the bargaining table with public-sector employees.

Thousands of unionized workers have been without a contract for nearly a year.