Nfld. & Labrador

Cut spending, N.L. government tells agencies, boards, corporations

Revenue in Newfoundland and Labrador is lower than projected in the 2017 budget, and the projected deficit is higher, the province's finance minister said Tuesday in a fall fiscal update.

Economic update shows revenue down because of decline in oil royalties, deficit to be larger than projected

Finance Minister Tom Osborne delivers the Nov. 14 fiscal update at Confederation Building. (Bruce Tilley/CBC)

Health and education authorities and Crown corporations such as Nalcor were put on notice Tuesday by Newfoundland and Labrador's finance minister.

The message from Tom Osborne in a fall economic update was that the agencies, boards and corporations have to bring their spending under control and he's prepared to introduce legislation to force them to do that.

"I am making my expectations very clear. They need to find cost reductions and operational efficiencies," Osborne said, explaining that the agencies account for 60 per cent of government spending.

"I will be introducing legislation that will ensure that these entities are more accountable, that these entities find efficiencies and practice attrition measures."

MHAs gathered for the news Tuesday as Tom Osborne updated figures presented in the spring budget. (CBC)

Memorial University, one of the agencies being lectured, said it does not have any comment except to say it is required by legislation to have a balanced budget and can only spend what the government allocates.

Revenue down, deficit up

The fiscal update adjusts figures presented in the 2017 budget, presented in April.

According to Osborne, revenue has decreased by $78.8 million, mainly because of declining offshore oil royalties and prices, and a higher exchange rate on the dollar.

The deficit has been revised upward from $778 million to $852 million.

While core government departments have reduced their spending by $22 million, Osborne said agencies, boards and commissions have shown an increase of $18 million, partly because of pension obligations.

Unemployment is also up, to 15.1 per cent, because of layoffs at Long Harbour and the end of the Hebron construction project. 

While Osborne said the province remains on target for expenses and within 99 per cent of revenue projection, he admitted the deficit is "unsustainable."

NDP 'very disturbed'

NDP interim leader, Lorraine Michael, said she would like more details about how the government proposes to control spending by boards and agencies.

"I have a real problem with government saying that they're bringing in legislation because their budgets come from government. Government actually controls how much money they get," Michael said.

While she supports a tighter rein on Nalcor, the corporation running energy projects, including Muskrat Falls, she is less inclined to support penny pinching elsewhere.

NDP interim leader Lorraine Michael is accusing Osborne of evading specific questions about social spending. (Bruce Tilley/CBC )

"We do not need more cuts in social services and I am very disturbed by the way in which he [Osborne] is just evading the question that's being put to him."

In October, outgoing auditor general Terry Paddon released his final report, questioning how the province will continue to sustain itself given a debt of $13.6 billion and current spending levels.

Osborne said consultations for the 2018 budget will start soon instead of in January because people have asked for earlier input.

CUPE: continued investment crucial

The N.L. chapter of the Canadian Union of Public Employees also weighed in Tuesday. 

"Now is not the time to cut services or increase taxes. A confident government who looks to the future will create jobs and invest in quality public services, not cut them," said president Wayne Lucas in a media release. 

CUPE President Wayne Lucas says 'now is not the time to cut services or increase taxes.' (Ted Dillon/CBC)

"Austerity measures will sound alarm bells and discourage investment in our proud and strong province."

The union wants government to continue to invest in the province's commodities as it prepares for the spring budget, "whether they be the province's natural resources or its hardworking Newfoundland and Labradorians."

With files from Peter Cowan