November 17, 1997
(Finance)

The following statement was issued today by Paul Dicks, Minister of Finance. It was also read in the House of Assembly:

Mid Year Financial Statement

I am pleased to present to this House a mid-year report on the province's finances for the fiscal year 1997-98.

In March, the government presented a three-year fiscal plan in its 1997 Budget. This was the first plan of its kind in the province's history. It was intended to bring stability and predictability to the province's finances, end mid-year budgetary adjustments and create a climate for job creation and economic growth.

Today, I am pleased to report that the plan is working. This year, for the second year in a row, there will be no mid-year budget adjustment. There will be no unplanned downsizing. There will be no pre-Christmas layoff of public servants.

Let me review what was said in the budget, and give a brief summary of the progress we've made.

Our revenue forecast has been accurate, and has improved somewhat since budget time. Our expenditures have increased, primarily as a result of meeting needs within the health and education systems. We will, however, meet our budgetary targets.

The provincial economy has performed better than forecast. Employment increased by 0.5 per cent between January and October this year over last year. Employment increased in October alone by about 6,300 jobs.

More than 2,000 new jobs in the fish processing sector provided a much needed boost to parts of rural Newfoundland - reflecting the reopening of the cod fishery in certain parts of the province, increased crab and shrimp quotas, and the allocation of a shrimp quota to the inshore fishing fleet for the first time ever.

The Harmonized Sales Tax has had a substantial impact on retail trade in this province. Sales were up 6.1 per cent in the January to August period over last year.

As a result of these improvements, the provincial economy will decline by 1.6 per cent rather than 2.7 per cent forecast at Budget time.

During the last provincial election, we acknowledged that these years, 1996 and 1997, would be difficult years for the economy, and for our provincial finances. We believed the economy would improve after 1997, with strong economic growth in 1998 and beyond. Most of this growth will come from our major resource developments. However, increased employment and commercial activity will not immediately increase provincial government revenues. Royalties from resource projects in particular are delayed until major development costs are recovered. We must therefore continue a prudent and careful fiscal approach since the direct benefits to the province from our large resource projects is still some time away. While we can and do take heart from these economic improvements, we cannot be foolish and spend money which has not yet accrued to the Treasury. We must keep our expenditures in line with our revenues.

We are confident in the future of our province. Our plan to restore fiscal stability is working. Our economy will improve substantially, and our people will enjoy greater opportunities for economic growth and employment. For our part, we must stay on track, and create a positive economic climate in which businesses will flourish and jobs be created.

We are committed to growth. Today's statement demonstrates that, through careful planning, we are keeping that commitment. Our plan is fair, reasonable and most importantly, effective.