March 23, 2005
Nfld. government will increase spending in fiscal 2005-06
ST. JOHN’S, Nfld.
Buoyed by record-high oil prices and a federal windfall, Newfoundland’s Conservative government had a little something for everyone in its second budget Monday.
The provincial government will increase spending in 2005-2006 with major investments in health care and education.
It’s a drastically different budget than the first one brought in by the Conservative government of Premier Danny Williams a year ago, which slashed spending and called for the elimination of thousands of public sector jobs.
The government will increase overall spending by four per cent, from $4.06 billion in 2004-2005 to an estimated $4.24 billion in 2005-2006.
The government does not anticipate balancing its cash budget for 2005-2006, despite increased cash flow and better-than-forecast economic performance.
It does expect to cut its projected deficit from $759 million last year to $492 million for 2005-2006.
“Overall, I think it balances our fiscal responsibility with a social conscience,’’ Finance Minister Loyola Sullivan told reporters prior to tabling his 2005-2006 budget in the legislature.
Sullivan said he was proud of the progress the government made since being elected in October 2003.
“Our situation is improved and it’s improved considerably, but we still have a long ways to go,’’ he said.
Last year, the province had to take drastic action, Sullivan said.
“Now we need a more moderate approach,’’ he said. “We’re still cognizant of the bottom line but we can’t put everything on hold.’’
Among $180 million in increased spending, the province promised $20 million in one-time stabilization funding for regional health authorities so they can meet budgets that were slashed last year.
The Conservatives will spend $23.2 million to reduce patient wait times and purchase medical equipment and $7 million to expand the provincial drug program.
Sullivan said the government is well ahead of their multi-year goal of balancing the cash budget by the end of their mandate.
High oil prices, a renegotiated offshore accord, an equalization increase and boost to federal health care funding put the province in position to balance its budget on a cash basis this year.
Instead, the government paid off outstanding debts for previous school infrastructure and the construction of a provincial arts and culture centre in St. John’s called The Rooms.
Sullivan said he now hopes to have a cash surplus of $143 million by 2006-2007.
Other than a slight increase in tobacco taxes, there were no fee or tax increases. Nor were there cuts.
The Newfoundland finance minister continued with his conservative approach to the provincial finances, estimating oil revenues at $38 (U.S.) per barrel. Oil is currently trading at $56 (U.S.) per barrel.
Williams was also proud of the state of provincial finances, after sounding the fiscal alarm when he took office more than a year ago.
In its first budget last year, the government announced the elimination of 4,000 government jobs and delayed or cancelled dozens of projects.
“We made some tough but necessary choices and we have been fortunate to benefit from increased revenues in key areas,’’ he said in a statement.
The province has benefited from the government’s fiscal approach, he said.
“There is still much to be done, and we can not lose sight of our fiscal challenges,’’ Williams said. “However, we must also embrace and capitalize on opportunities for meaningful economic growth.’’
The provincial government promised $1 million to combat OxyContin abuse, including establishment of the province’s first methadone program.
The federal government will remain the largest single source of provincial income in 2005-2006, providing 37 per cent of revenues.
Equalization and other federal sources will account for approximately $1.6 billion in provincial spending. In comparison, just 4.9 per cent comes from offshore royalties and 17.8 per cent from personal income tax, or $779 million.
The Canadian Press
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