Nfld. & Labrador

Dwight Ball defends tough budget, broken promises

For the first time after his budget was announced, the Liberal premier defended his actions in a speech on Friday.
Dwight Ball speaks to reporters after a speech at the Mount Pearl-Paradise Chamber of Commerce on Friday. (CBC)

Newfoundland and Labrador Premier Dwight Ball spoke on Friday to defend his governments actions — and the promises he broke — for the first time since his budget was tabled.

Ball used a speech at the Mount Pearl-Paradise Chamber of Commerce to defend Thursday's tough tax hikes, including the HST increase, saying drastic change was needed to the province's bottom line.

"Not doing anything was really not an option for us," he told reporters after the speech.

"There was nothing in the future of our province [such] that not doing anything would have pointed to a solution for this fiscal crisis."

Ball broke two key election promises on Thursday when his government hiked the HST rate and announced the elimination of about 600 positions from the public service. He had promised to avoid layoffs. 

Those changes were all in an effort to reduce a massive deficit, which is still projected to hit $1.83 billion this year.

The premier said reneging on his HST promise "took some teeth grinding," but claimed he didn't know just how bad Newfoundland and Labrador's financial state was until he took office.

"When we really got in and saw the information that was put to us ... the best thing for me to do was take the politics out of it and make the decision that was right for Newfoundlanders and Labradorians," Ball said.

"It wasn't about me being stubborn and saying this was a political commitment I had made. The right thing to do for our province was to back away from personal commitment," he said.

Revenues in Newfoundland and Labrador have dropped significantly, led by a huge loss of resource royalties the province has seen since 2012. 

Ball said that oil would have to return to $140 US a barrel for the government to run a balanced budget. On Friday, Brent crude was hovering around just $40 per barrel.

He also defended his government's deficit reduction levy, announced on Thursday as a temporary tax measure until the province returns to balance.

Some have criticized the levy, saying it disproportionately taxes poorer people in the province.

In response, Ball claimed that the top 35 per cent of taxpayers in Newfoundland and Labrador pay 88 per cent of all taxes to the government.

In an earlier interview with the St. John's Morning Show, Finance Minister Cathy Bennett said that richer residents are paying more when you consider all of the changes brought in on Thursday.

Still investing

Thursday's budget was filled with doom and gloom.

There was a large tax increase, spending cuts and a dismal projection that the province's unemployment rate would hit nearly 20 per cent in the next few years. 

But Ball said that there's still good news for residents of the province.

"It's awful worthwhile pointing out there's nearly $8.5 billion in this budget yesterday that's going to be spent in this province providing services that people in Newfoundland and Labrador want," he said.

The public service was largely spared during Thursday's budget, which raised revenues instead of cutting deep into the province's spending.

But that's just the first act of the province's three-step plan to return to balance. Many fear the axe will come this fall to spending, and jobs, in the government sector.

Ball said on Friday that he believes government workers are valuable.

"We need a strong public service to keep in place some good, credible, critical services that people in our province rely on," he said.

Government will start to negotiate with a number of public sector unions in the coming weeks, Ball said, and will try to find savings.

"It will be fair process. Attrition still remains the preferred option," he said.

There are about 46,000 public sector workers in Newfoundland and Labrador.

With files from Peter Cowan