Nfld. & Labrador

Deep red ink continues as N.L. manages 'tough phase' in 2018 budget

The theme of this year’s Newfoundland and Labrador budget is “building for our future,” but the finance minister says he's grappling with decisions from the past.

No big new spending, taxes or cutbacks planned

The Newfoundland and Labrador government is projecting a deficit of $683 million for the 2018 fiscal year. (Fred Hutton/CBC)

The theme of this year's Newfoundland and Labrador budget is "building for our future," but Finance Minister Tom Osborne says the province continues to grapple with decisions from the past.

"Our goal is to manage through this tough phase," Osborne said in his budget speech, delivered in the House of Assembly Tuesday afternoon.

Osborne unveiled a 2018 fiscal blueprint with lots of red ink, but no big new spending, taxes or cuts.

There is a continued plan to balance the books within four years, although much of the heavy lifting to make that happen is left for the future.

"There have been many who said Newfoundland and Labrador could not withstand the financial crisis we inherited," Osborne said.

"Those individuals underestimate the spirit of Newfoundlanders and Labradorians and our ability to overcome challenges."

Surplus forecast in 2022

A lot of the action to overcome those challenges won't happen in 2018.

To balance the books in four years time, the government expects to spend $450 million less in 2022 than it has projected to spend this year.

But there are few details in this year's $8.4-billion budget on how that will happen, other than that government will be relying on attrition in the public service, and will be hunting for efficiencies in how tax dollars are spent.

For now, there is still a lot of red ink splashing around the treasury.

Finance Minister Tom Osborne speaks with reporters prior to tabling the 2018 provincial budget. (Fred Hutton/CBC)

The 2017-18 deficit is expected to come in at $812 million. A $683-million shortfall is projected in 2018-19.

In a year's time, the province will have an estimated net debt of $15.5 billion on the books — nearly double the level of a decade ago.

It's a  nothingburger .- Financial analyst Larry Short

"It's a nothingburger," said St. John's financial analyst Larry Short, who attended pre-budget briefings with CBC journalists.

Short said the Liberals were deferring the toughest decisions needed to balance the books for years to come.

'Opportunity to expand attrition plans' 

The 2018 budget speech did not contain any mention of layoffs to come, although Osborne did note that 795 positions in government departments have been eliminated over the past two years.

He said those cuts happened "while maintaining service delivery and protecting a vulnerable economy."

The province will instead focus on voluntary retirements in the bureaucracy to reduce its salary tab.

Confederation Building in St. John's houses the provincial legislature and much of the civil service. (CBC)

"We recognize that there is an opportunity to expand attrition plans across the entire public service, as there are more than 5,000 public service employees who are eligible to retire," Osborne told the legislature.

"By carefully conducting workforce planning we will be able to reduce the size of the public service and spending in a more gradual way without the risk of disrupting service delivery and the economy."

In the longer term, Osborne said, the province will continue to look for savings by reducing discretionary spending, and working with management and unions to address such issues as overtime and sick leave.

The government will also consolidate its vehicle fleet under one department, which will result in the reduction of the number of vehicles by 10 per cent.

There will also be a move toward making it easier to access government services online.

No major impacts on taxpayers

There were no big impacts on consumers in Osborne's budget.

Two years ago, the Ball government introduced or hiked hundreds of taxes and fees, as it grappled with an apocalyptic financial situation caused by climbing expenses and cratering petro prices.

By carefully conducting workforce planning we will be able to reduce the size of the public service and spending in a more gradual way without the risk of disrupting service delivery and the economy.- Finance Minister Tom Osborne

Last year, some of those increases were at least partially rolled back.

In the coming year, there is a measure of relief pledged to drivers and businesses.

The 15-per-cent tax on automobile insurance will be cut by two per cent on Jan. 1, 2019, and will see further one-per-cent reductions in each of the next three years. In 2022, the auto insurance tax rate will be 10 per cent.

The move only affects automobiles; home insurance will remain at 15 per cent.

As well, the province will increase the threshold for payroll tax from $1.2 million to $1.3 million, which will save up to $2,000 for employers and drop 50 businesses from the tax rolls altogether.

And a new search and rescue volunteer tax credit will be introduced for first responders in 2019.

Other notable numbers

There were some other notable numbers announced Tuesday.

Oil royalties are expected to tick in at just under $1 billion in the coming year. The government has forecast the price of oil at $63 US per barrel, with a 79-cent loonie.

On Tuesday, Brent crude — the type of oil that Newfoundland and Labrador tracks — was trading at $70.12 US. 

There are also plans to spend $619.7 million on infrastructure.

And nearly $34 million has been set aside to fund the public inquiry into Muskrat Falls over the next two years.

The province will funnel $724 million to Nalcor Energy this year, an investment that will support the completion of the troubled hydro megaproject.


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