COVID to push P.E.I. into record deficit territory, says premier
Opposition questions government projection employment numbers will recover by fall
The P.E.I. government is set to table its operating budget in three weeks, and Premier Dennis King says the deficit could reach $175 million.
That would be the largest deficit for the province going back to at least 1999 — as far back as the province's online financial records extend.
For the past week, MLAs in the legislature have been questioning government's spending in response to COVID-19, as outlined in a document that also looks at forecasts from major banks predicting P.E.I.'s economy could shrink anywhere from three to eight per cent in 2020.
"If you look at the world, for the last 12 weeks the world has stopped," King told reporters Wednesday. "The economy has stopped around the world."
According to preliminary figures released this week from Statistics Canada, P.E.I. led the country in economic growth for the second straight year for the fiscal year ended March 31, 2020, with real GDP growth of 4.5 per cent.
So what is it? Boom times or the worst economic downturn since the '30s?— Interim Liberal Leader Sonny Gallant
Now faced with an economy that could shrink by the same amount in the current fiscal year, King said "I'd be hard-pressed to believe there's been a time in the last 100 years where there's been such a fluctuation in such a short time."
"I think we're in a very, very difficult place and we should be prepared to dig in for a long road back."
King said the province is facing shortfalls in many of its major revenue sources including income, corporate, sales and gas taxes.
"People aren't moving around spending money so our revenue will be down, and we're needing to spend more money."
We have just begun the hardship of our financial woes for our Islanders. —Green MLA Michele Beaton
Additional spending nears $100 million so far this fiscal year.
According to the province's report on COVID financing under debate in the legislature, the P.E.I. government had spent $44,680,000 on COVID-related supports for individuals so far this fiscal year; $39,361,000 on supports for businesses; and an additional $23,318,000 in medical expenses, partially offset by expected savings within the health-care system of $8,955,000, as some services and procedures have been cancelled or postponed due to the pandemic.
The province says those figures were current as of May 15.
Job numbers questioned
During question period Wednesday, interim Liberal Leader Sonny Gallant questioned the province's estimates around job losses.
The province projected COVID-related employment losses would peak at nearly 24,000 in May — more than a quarter of the Island's workforce before the pandemic hit — but that by October job numbers would have recovered to be even higher than they were at the same time in 2019.
"I think it is fair to say your projections of an employment boom in four months appears very much on the side of extreme optimism," Gallant said.
"So what is it? Boom times or the worst economic downturn since the '30s?"
Finance Minister Darlene Compton advised Gallant wait for her to table the province's operating budget.
Green Party finance critic Michele Beaton questioned government's plan to defer more than $200 million in property tax payments from Islanders until Dec. 31, saying they may not be in a better position to pay their taxes then.
"We have just begun the hardship of our financial woes for our Islanders," said Beaton.
"And when those tax bills come due, when those mortgage deferrals come due, when those loan payments come due, Islanders are going to be a lot worse off than possibly where they are right now."