Treasury Board President tables Public Accounts for year ending March 31, 2001

Finance Minister and Treasury Board President Joan Marie Aylward today tabled in the House of Assembly the Public Accounts for the year ending March 31, 2001. The Public Accounts are government�s financial statements and are presented in four volumes.

Volumes I and II are the financial statements of the province, prepared for accounting and management purposes using the accrual basis of accounting.

Volume III compares actual to budget on a cash basis for the consolidated revenue fund only, and shows the province�s projected deficit was $32.7 million whereas the actual deficit was $26.1 million, an improvement of $6.6 million.

Volume IV comprises the financial statements of Crown corporations, boards and agencies.

Volume I of the Public Accounts reports an accounting deficit of $349.7 million. This number includes the activities of the line departments as well as all the publicly funded bodies. Included in the consolidated accrual deficit is a provision of $225.2 million for the interest cost on the unfunded pension liability, health care and education board deficits of more than $100 million and all the accrued costs for severance, vacation pay and paid leave for all public sector bodies, much of which will not be paid out for years to come. Government made special payments of $116 million towards reducing the unfunded pension liability in fiscal 2001.

"Government�s financial statements are reported on an accrual basis in accordance with generally accepted accounting principles and tabled annually in the House of Assembly. The Public Accounts should not be confused with our budget, which is the fiscal plan of the province," said Minister Aylward. "The budget is not an accounting document. Rather, it presents in straightforward terms the province�s cash position and provides to the people of the province information on the revenues we expect to receive in the upcoming fiscal year and projected expenditures.

"The people of the province need to know if we are spending more money than we are receiving in revenues in a fiscal year," said the minister. "We budget our revenues and expenditures in the same way anyone would budget their income and expenses in the course of running any household in the province."

Minister Aylward noted that the Auditor General has recommended government move to accrual budgeting.

"A move to an accrual budget would make the budget an accounting document rather than the province�s fiscal plan," said the minister. "If it were an accounting document, there could be major swings in the deficit from one year to the next, which could have absolutely nothing to do with the fiscal plan. For example, in 1998 the province received $350 million dollars from the federal government for roads and ferry services for Labrador. If we had an accrual budget, those revenues would have created a surplus in that year (assuming we were balanced) of $350 million. In the following years as we are building the roads, all of those expenditures would have been considered an expense of the province."

Minister Aylward said that in fact the Public Accounts show government has made significant capital investments in hospitals, schools and other infrastructure, like roads, because it believes in the future of the province.

"These capital investments have been made within our fiscal capacity and in keeping with the growth in our economy. This province, as many private sector forecasters have projected, will continue to be among the leaders in real GDP growth in the country," said Minister Aylward.

"In fact, our public sector debt to GDP has improved by 8.9 per cent year over year, from 82.6 per cent in 2000 to 73.7 per cent in 2001. Government�s investments support and demonstrate our faith in the continued positive economic growth of Newfoundland and Labrador."

Media contact: Lynn Barter, Communications, (709) 729-0329.

2001 11 28                             3:05 p.m.