Kennedy's debt warning comes under fire

NDP and Liberal critics are taking aim at Finance Minister Jerome Kennedy's dire warnings of a $4-billion increase to Newfoundland and Labrador's debt.

NDP, Liberals take aim at $4-billion projection

Opposition MHAs Dale Kirby and Eddie Joyce on COD-NL and new debt projections 5:09

Newfoundland and Labrador was launching its pre-budget consultations Thursday amid a warning of a heavily mounting debt, and criticism from the Opposition about the government's motives.

Finance Minister Jerome Kennedy is kicking off the consultations in his home district in Carbonear, a day after saying that cumulative projected deficits would add about $4 billion to the province's debt.

NDP critic Dale Kirby says he wants to know why that projection — the latest in a series of gloomy scenarios that have come from Premier Kathy Dunderdale and her senior ministers about what's expected to be a cost-cutting budget — was not released earlier.

"I think it would have made a lot more sense for the premier to let us have that information before we tied ourselves to their 50-year, Muskrat Falls, multibillion-dollar-debt project," said Kirby.

"We needed to have that information."

Kirby questioned whether Newfoundland and Labrador is at risk of losing its status as a so-called "have" province. Newfoundland and Labrador stopped receiving equalization payments from the federal government in 2008. Liberal critic Eddie Joyce said Kennedy's remarks show that spending has been out of control for years.

"It's sad times when you come in and you get almost $30 billion in extra money from royalities that you have to … cut, and you are going to be more in the hole than you were back when you had all of this influx of cash," Joyce said.

Kennedy, widely considered to be one of the most aggressive ministers in Dunderdale's cabinet, took over the finance portfolio in a mini-shuffle in January.

In December, former finance minister Tom Marshall said the government was expecting to end the current fiscal year with a deficit of about $726 million, far worse than the $258 million projected in last April's budget.

The government had expected Brent crude to trade at an average price of just over $124 per barrel over this fiscal year, although it has traded below that figure since budget day. Brent was selling for under $118 on Thursday morning.