Nfld. & Labrador

Government not ruling out layoffs as departments, agencies asked to trim 30%

The minister of Finance is not ruling out layoffs as the government asks departments, agencies, boards and corporations to identify budget cuts totalling 30 per cent.

Cathy Bennett looking for 'bold, innovative ideas'

Cathy Bennett scrum

7 years ago
Duration 1:01
Cathy Bennett scrum

The minister of Finance is not ruling out layoffs as the government asks departments, agencies, boards and corporations to identify budget cuts totalling 30 per cent.

Speaking in a media scrum Wednesday afternoon, Finance Minister Cathy Bennett said all options are on the table to find the savings needed, including layoffs.

"When you do the math, we're short 28 per cent of the money we need to pay the bills," said Bennett.

She said government is looking for "bold, innovative ideas" on how to address a $2.4 billion deficit.

During the 2015 election campaign, Liberals said there would be no job cuts to balance the books.

Bennett said Tuesday that she is looking for the "best ideas" and has ruled nothing out.

"To say that anything is not on the table would be irresponsible, but to say that we have our minds made up on something would also be not factual as well," she said.

"Every single thing that we can consider is going to be on the table until we develop the plan that we want to implement."

In documents obtained by CBC News, the government said agencies are encouraged to submit ideas that "extend beyond their individual mandates."

Specifically, the document asks for "savings totalling thirty per cent of their 2015-16 expenditures over the next three fiscal years."

"A specific target has not been set for each year, but departments and ABCs (agencies, boards and corporations) should be prepared to implement accepted proposals as early as possible."

A department spokesperson stressed that government will not be making 30 per cent cuts across the board, but called it an exercise to identify cost-cutting options.

"We do not have targets right now. This is a framework for a discussion," said Bennett.

"We have to look at revenues. We have to look at expenses. We have to look at efficient delivery of services. We have to look at programs that have maybe been around for a decade that are no longer serving the people of the province."

Massive impact

NDP leader Earle McCurdy said anything near a 30 per cent savings would have a significant impact.

Finance Minister Cathy Bennett, speaking to reporters at Confederation Building Tuesday, says it would be irresponsible to rule out any cost-savings options, including layoffs. (CBC)

"Anything even close to that number in an economy that's in a recession would really compound the problem," he said.

"It would also fly in the face of very clear promises that [the Liberals] made during the election that there would be no layoffs."

McCurdy noted a PC savings target of just three per cent in 2013 resulted in 1,200 layoffs.

He predicted the government will also have to close schools and hospitals to achieve significant savings.

13-year low prices

The province's financial firestorm is linked to a combination of record spending and a sharp drop in oil revenues.

Brent crude was trading Tuesday at a 13-year record low of $27.18 US. West Texas intermediate crude was trading even lower, at $26.26 US.

"It's very concerning," said Bennett. "The history of relying on oil prices as a significant proportion of our revenue has been flawed."

She said that "structural" problem means the province has to look at establishing a Legacy Fund to set aside future oil money for an economic downturn.

NDP leader Earle McCurdy says a 30 per cent government spending cut would mean massive layoffs. (CBC)

Last week, Premier Dwight Ball announced an initiative to tackle the dire fiscal situation. These latest instructions to identify savings of 30 per cent are part of that initiative.

The consultation process that's part of that plan will begin Jan. 25 with a public session in Rocky Harbour.

Others are planned for Corner Brook, St. John's, Port aux Basques and Grand Falls-Windsor.

With files from David Cochrane