Debt looms large while budget pushes problems down the road, analysts say
'Last year was a panic budget. This one is kind of a reprieve,' says Larry Short
"The credit cards are still maxed out."
Larry Short, a chartered professional accountant, was forward about the province's financial situation coming out of Thursday's budget speech.
With the budget, the government announced it will not launch any new taxes or fee hikes and has not committed to more layoffs in the public sector.
"Last year was a panic budget," Short said. "This one is kind of a reprieve."
At a time when the government scrounges for every penny, Short takes issue with the gas tax being repealed — especially since the Liberals have already weathered the backlash it spawned.
"This doesn't make a lot of sense," he said. "Economically, they should not have cut that tax. We need the money."
Spending remains biggest issue
It's a sentiment echoed by Ed Hollett, a researcher with the Atlantic Institute for Market Studies.
"You have to reduce spending," he said.
The province carries a net debt of $15.2 billion and aims to get the deficit down to $778 million by the end of 2017-2018.
While the government aims to slash spending by $300 million with this budget, there is still a long way to go. Hollett worries the government is only pushing the problems further into the future.
A beacon of the road ahead can be seen in a pie chart tucked inside the budget papers, he said.
"The most critical thing people have to notice in this budget is the second largest expense item is just paying the interest on the debt... And that's just going to get bigger."
Of the province's debt, two-thirds — more than $10 billion — is owed to public service pensions.
"The amount that's owed is not to any distant group out there," Short said. "It's owed to the actual pension plans themselves."
While there has been talk about the return of equalization payments to the province, Short says it is not likely to be any sort of saviour.
The payments are based largely on revenue per capita — a measure that Short believes will prevent Newfoundland and Labrador from receiving the payments.
Major costs to cut but no layoffs, minister says
Despite using phrases like "eliminating waste" and "efficiency improvements," Bennett said there's no plans for massive layoffs.
Newfoundland and Labrador came into the last provincial budget with the largest civil service in the country per capita.
Nearly 300 jobs have been cut since then, with the government pounding home the message of a "flatter, leaner" civil service.
Despite Bennett's message on Thursday, Short suspects more layoffs could follow.
"If I were an employee of the provincial government, I would make sure the lights were turned off every single night when I go out that door," he said. "I'd be looking at every single pen, paper clip and piece of paper."
With files from Anthony Germain and Cecil Haire