NLIS 7
March 27, 2003
(Finance)
 

Budget 2003 tabled

Investments in youth and education, initiatives to strengthen the climate for small business and job growth, and continued commitment to health care funding are among the strong themes of government�s $4 billion Budget 2003, delivered in the legislature today by Joan Marie Aylward, Minister of Finance and President of Treasury Board.

And, for the first time since Confederation, it is an accrual-based budget. Until now, budgets have been cash-based, reflecting only the total borrowing requirements for government departments. Budget 2003 includes total borrowing requirements of both government departments and government entities such as Newfoundland and Labrador Municipal Financing Corporation, The Heritage Corporation and Education Investment Corporation.

"This budget reflects many of the social and economic priorities we heard during our pre-budget public consultations," Minister Aylward said. "In every consultation session, we were told repeatedly to target strategic areas for expenditures, to be disciplined financial managers, and to achieve deficit reduction over the longer term so that we do not jeopardize the strong economic growth this province is experiencing. We are responding to that challenge and the strong direction we were given not to have a �slash and burn� deficit reduction program that would result in layoffs in the public service and reductions to existing government programs and services.

"Our priority is to ensure that our economic and employment growth continues. We are striking a balance between being disciplined in our expenditures and directing our resources to initiatives that will build on the strong economic and social foundations we have already established."

The cash deficit for government departments and its funded agencies for fiscal year 2003-04 is forecast to be $212.7 million. The total borrowing requirements, including borrowings for school construction, The Rooms, and municipal capital works projects, is forecast to be $286.5 million.

"The deficit is higher than in more recent years, but is manageable. We will significantly reduce or eliminate the deficit during the next mandate, and we will achieve this by continuing to control our expenditures, and by generating more of our own revenues as we have been doing for the past several years," Minister Aylward said.

Governments have recorded Consolidated Revenue Fund deficits in 52 of the 55 years since Confederation. (See Backgrounder called Newfoundland and Labrador historical financial position for more details).

Budget 2003 has an increase in tobacco taxes paid on fine cut tobacco and manufactured cigarettes, but there are no increases in corporate, personal or manufacturing taxes.

Some Budget 2003 initiatives that focus on youth and education "will help our youth find their futures right here, at home," Minister Aylward said. They include :

• $3 million of the $9.2 million Student Investment and Opportunities Corporation allocated for a new Youth Opportunities Newfoundland and Labrador program to assist in keeping post-secondary students and graduates in the province
• New tax incentives to encourage post-secondary students to work and stay in the province
• A further five per cent reduction in tuition at Memorial University
• Initiatives to enhance apprenticeship training

Education highlights also include:

• $2.5 million to address support staff services in the school system
• $6.8 million towards capital construction projects and school maintenance and repairs
• Retaining 218 teaching positions, despite declining enrolments of more than 6,000 students over the past two years
• $6.2 million for curriculum development
• Re-investing savings of $8.5 million associated with school consolidation back into the school system
• $1 million for new public library books
• Additional funding of $1.8 million for the Community Access Program

Government is building on the groundwork it has laid to create a strong environment for small business growth, investment, innovation, job growth and regional economic development. Budget 2003 measures include:

• Increasing the small business corporate income tax threshold over four years to $300,000 from $200,000
• Providing a corporate tax-free holiday for new small businesses that start up in the province between April 1, 2003 and March 31, 2006 in designated growth sectors
• Reducing the payroll tax for small business
• New incentives for venture capital, including making corporations eligible for tax credits under the Venture Capital (Direct Equity) Tax Credit Program; offering a provincial tax credit to set up a provincially-based labour sponsored venture capital corporation
• Engaging experienced and respected entrepreneurs to identify opportunities to reduce, streamline, or eliminate "red tape" that may unintentionally act as a barrier to job creation and business growth
• $5 million to establish an Industrial Research and Innovation Fund
• Establishing a new Business Attraction Agency to entice new investment, new companies, and new industries to the province
• $9 million to implement a number of industry and community initiatives approved under the Canada-Newfoundland and Labrador Comprehensive Economic Development Agreement

Other budget highlights include:

• $2 million home heating fuel rebate to assist low income households
• A second MRI for the province
• An increase in the seniors� benefit
• Tax measures to assist persons with disabilities
• Funding to increase the number of permanent officer positions with the Royal Newfoundland Constabulary
• Investment of $500,000 in child nutrition
• Increase of $13 million for Memorial University, bringing the total to $145 million
• $6.5 million Agriculture Policy Framework
• Multi-year commitment to capital infrastructure for municipalities
• $500,000 for fisheries diversification

All Budget 2003 documents can be accessed on the Internet at  www.gov.nl.ca

Media contact: Josephine Cheeseman, Communications, (709) 729-0329.

2003 03 27                                        3:10 p.m.