March 30, 2006
The Right Choices:
Momentum for Growth and Prosperity
The Williams government today tabled its third budget, The Right Choices: Momentum for Growth and Prosperity. The budget has targeted expenditures in priority areas including education and skills development, infrastructure, culture, innovation, health and poverty reduction.
"Budget 2006 continues our government�s practice of making the right choices which has resulted in our province�s first-ever balanced budget on a consolidated basis," said Finance Minister Loyola Sullivan. "We have taken very seriously our fiscal responsibility, by making strategic investments that increase our ability to foster a stronger economy. Newfoundland and Labrador is a province that is on the move and this budget is reflective of the momentum we have garnered over the past two years. The investments in Budget 2006 build on our achievements and solidify a foundation for success and prosperity in our province."
Restoring Fiscal Health - The Job is Not
The province has also demonstrated increasing self-reliance. It currently generates 68 per cent of its own revenue and relies on federal transfer payments for only 32 per cent of revenue. This has substantially diminished since 2000 when the province depended on Ottawa for 45 per cent of its provincial revenues.
This year�s investment budget reflects the significant role the oil industry plays in the provincial economy. Increased expenditures are possible due largely to success with the Atlantic Accord which leaves greater revenues with the province. The province is also benefiting from a stronger economy and a positive medium-term outlook on oil/gas pricing.
"It is important to note, that without the successful negotiations by Premier Williams on the Atlantic Accord, we would be facing a deficit of almost $370 million," added the minister. "Clearly, this turning point in our province has enabled us to increase investments which will directly benefit the lives of Newfoundlanders and Labradorians. We have made great progress, and in fact, we are on track and ahead of schedule in terms of improving our financial position. But there is more to be done and we will continue as a government to be vigilant from a fiscal perspective, and ensure that investments have long-term benefits. We will achieve this by implementing multi-year planning, expanding our economic base and continuing with sound fiscal management."
Minister Loyola Sullivan noted that the province�s overall fiscal position has strengthened and government has reduced the unfunded liability of its pension plans which has resulted in lower interest costs on our debt. At the end of 2007 fiscal year, Newfoundland and Labrador�s debt-to-GDP ratio is expected to be 47.9 per cent, down from 70.2 per cent in 1998 and 63.4 per cent at the end of 2004. A debt-to-GDP ratio measures the strength of an economy to support its debt load.
In 2006, 13.7 per cent of the province�s revenue will be allocated toward debt expenses, a reduction from 23.3 per cent in 2003. As a result of using the Atlantic Accord advance payment to reduce the province�s debt, debt servicing expenses in 2006 will decrease by $156 million. This gives government more flexibility to re-invest the money in the priority areas of health, education and infrastructure to benefit all Newfoundlanders and Labradorians.
"While strong leadership, smart choices and oil and gas revenues have contributed to a brighter fiscal picture and more investment, our growth in expenditures must continue to be based on what is affordable over the long-term," said Minister Sullivan. This budget retains our strong commitment to making sound financial decisions but not at the expense of addressing our priorities today."
Budget 2006 Highlights
Photo #1: Loyola Sullivan - Minster of Finance and President of Treasury Board
Media contact: Deborah Pennell, Communications, (709) 729-6830, 685-6612
2006 03 30 2:15 p.m.
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