Ministerial Statement � Mid-year Fiscal Update
Hon. Loyola Sullivan, Minister of Finance & President of Treasury Board
December 15, 2004

Mr. Speaker, I rise today to update honourable members on our fiscal situation for 2004-05.

Since taking office one year ago, government has been focused on turning around the serious fiscal situation we inherited. We were forced to make difficult, yet necessary decisions, in this year�s budget. The situation simply could not continue and we knew measures had to be taken for the good of the province.

Mr. Speaker,

At this point in the fiscal year, the deficit is projected to be $707.5 million, down from the $839.6 million estimated at budget time. The $132.1 million variance is primarily the result of an increase in oil prices, revised federal estimates of equalization and new health care money. One-time revenues of $102.5 million have contributed to this improvement.

Oil royalties are currently expected to be $78.5 million higher than forecast at budget reflecting higher oil prices. Equalization and offset payments increased by $89.6 million from the budget forecast.

Health and Social transfers are expected to be $30.1 million higher than estimated at budget time. The main reason for the increase is additional revenue from the federal Ten Year Plan to Strengthen Health Care. For the 2004-05 fiscal year, this commitment will result in an additional $34.4 million for the province offset in part by federal re-estimates of these transfers.

These positive adjustments to revenues are offset in part by a projected negative adjustment to HST revenues of $64.2 million.

Mr. Speaker,

On the expenditure side, we are basically on track with our budget projections. Throughout the year, it is common to experience variances in expenditures, overruns in one area are offset by savings in another. With continued vigilance, we expect to maintain budget targets for expenditures.

In terms of cash requirements,the 2004-05 budget projected a need of $361.6 million. The total cash requirement is now projected to be $118 million, an improvement of $243.6 million. This variance is primarily due to the reasons I just discussed, and the deferral of the census loan repayment.

Mr. Speaker,

Government has made some progress in addressing the province�s fiscal situation, but the work is far from over. Most of the positive variances since budget time will likely not be available next fiscal year. We must, and we will, remain steadfast in our commitment to sound fiscal management.

Thank-you.