NLIS 1 March 30, 2004 (Finance) Protecting Our Future Government Moves Forward with Two-pronged Approach for Managing the Deficit and Growing the Economy The Williams government today introduced its first budget which contains a responsible two-pronged approach for managing the province�s deficit, while at the same time making strategic investments intended to grow Newfoundland and Labrador�s economy. Although this budget represents fundamental changes in spending patterns, it maintains a strong financial commitment to helping those groups and individuals who need government�s help most. "As a result of the serious fiscal problems we inherited from the previous administration, our government has had to make some very tough but responsible choices to protect our province�s future. According to an independent report conducted by PricewaterhouseCoopers (PwC), if we did not act immediately the province would face average annual deficits of approximately $1 billion in each of the next four years. Clearly, that is not acceptable and decisive action was required for Budget 2004," said Loyola Sullivan, Minister of Finance and President of Treasury Board. The PwC report projected a deficit of $989 million for 2004-05, with a cash component of $602 million. Through an expenditure review process, the cash component has been reduced by $240 million to $362 million, or approximately 40 per cent. The accrual deficit for 2004-05 is $840 million. Growth in annual expenditures has been reduced from the average rate for the last few years of five per cent, to less than one per cent. "Unfortunately, at $362 million, the province is still incurring the highest cash deficit in its history and significant additional work remains," Minister Sullivan said. "Prior to forming the government, we knew this province was in a difficult financial position. However, the scope and magnitude of the problem was grossly understated. What�s more, last year�s budget said that the deficit could be eliminated through increased revenues. Obviously, that statement was inaccurate and misleading and has placed the new government in a very difficult position." "The initial decisions we have made, and the decisions which will follow over the coming years, will impact every Newfoundlander and Labradorian in some form. The responsibility for managing this deficit should not place an unfair burden on any one group or individual. It is a collective problem which we must address together. Likewise, our problems did not occur overnight and can not be solved overnight. Nonetheless, we have developed a comprehensive strategy to get there during this mandate," Minister Sullivan said. In order to eliminate the cash component of the deficit over a reasonable period of time, government will pursue a two-pronged strategy of managing expenditures and increasing revenues through targeted economic investment and sound policy development. Funds will be targeted for infrastructure maintenance and social programs. Some of the more substantive actions taken to reduce this year�s deficit include (more information on these items may be found in News Releases and Backgrounders in the Information Kit):
"As the premier stated in his January 5 State of the Province Address, government�s initial focus was to review all expenditures to determine what savings could be made to immediately reduce this year�s deficit. This work was successful in that the cash component was reduced by some $240 million, or 40 per cent. However, we fully acknowledge that our province has a structural deficit that can only be corrected through structural changes. Such changes can not and should not be made without a comprehensive review process. A special committee of ministers will commence this process immediately and report to Cabinet in time for next year�s budget," Minister Sullivan said. "Government will use the process of program renewal to realign government expenditures to better address the needs, values and priorities of Newfoundlanders and Labradorians. We no longer have the luxury of being all things to all people. Therefore, we will focus on the essentials. Program renewal will be the process to facilitate that realignment," he said. Health Care "The first priority for the people of the province is to have access to quality health care. People want to know that health care services will be available when they need them," said Minister Sullivan. To strike the right balance between quality health care and an efficient, sustainable system, the provincial government is adopting a health strategy consisting of four major parts: an integrated, efficient and smaller governance structure; a fair and equitable approach to locating health services; a skill-mix framework to ensure the right mixture of health care professionals; and development of a "best practices" culture. Several Budget 2004 measures will enhance the quality of care available to many people in the province, including:
"Our government will not look to eliminate the deficit solely by reducing expenditures. Instead, we will also look to increase revenues by facilitating economic growth. To accomplish this, we will be moving forward with an agenda of targeted investments intended to grow our economy. These investments will bring increased revenues to government�s coffers and increased employment opportunities for the people of Newfoundland and Labrador," Minister Sullivan said. Some of the strategic investments government will be pursuing this year to support its economic agenda include (more information on these items may be found in News Releases and Backgrounders in the Information Kit):
"Despite our fiscal challenges, government recognizes that it has a social responsibility to protect the most vulnerable citizens in society, including our children, women and low-income earners. Therefore, new investments have been made in key areas that will protect those who need help most," said the minister. Some of the measures designed to protect those who need help most include (more information on these items may be found in News Releases and Backgrounders in Information Kit):
Media contact: Diane Keough, Communications (709) 729-6830 2004 03 30 2:15 p.m. |
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