Finance
April 24, 2012
Budget 2012: People and Prosperity – Responsible Investments for a Secure Future
The Dunderdale Government today unveiled a strong economic and social plan that balances responsible fiscal management with priority investments. Budget 2012: People and Prosperity – Responsible Investments for a Secure Future includes measures to strengthen health care, sustain economic activity, improve child care, support apprentices, foster a thriving and skilled labour force, and further strengthen public infrastructure.
The province has recorded cumulative surpluses of approximately $5.5 billion in six of the last seven years, with a corresponding reduction in net debt of $4.1 billion to March 31, 2012. The projected surplus for 2011-12 is $776.4 million. Consistent with the Blue Book commitment, the equivalent of a third of the surplus will be invested to fund public service pension plans.
“Budget 2012 provides priority investments to benefit our people and our province, supported by our vision of a Newfoundland and Labrador where the prosperity we have achieved, and will continue to achieve, is accessible for all,” said the Honourable Kathy Dunderdale, Premier of Newfoundland and Labrador. “Our government has proven to be responsible and strategic stewards of the public treasury. This budget reflects that responsibility with a reduced rate of spending growth, while providing important programs and services to Newfoundlanders and Labradorians.”
This year’s budget reflects the end of offset payments under the Atlantic Accord, amounting to a reduction in revenue of $536.1 million in 2012-13. In addition, both the Terra Nova and White Rose projects are scheduled for maintenance shutdowns during the year, further constraining provincial revenue. As a result, the province is expecting a deficit of $258.4 million for 2012-13. A return to surplus is anticipated by 2014-15.
Over the past few months, departments were asked to review expenditures and bring forward proposed reductions that would not impact vital frontline services. As a result of that process, the province has incorporated anticipated savings of $38.8 million in the 2012-13 Estimates.
The savings come primarily from reducing administrative costs related to operating the various departments. Some of the areas affected include budgets for travel, professional services and purchased services. Also, approximately 45 temporary positions within the public sector will be eliminated.
The Provincial Government will continue to invest strategically in areas that matter most to residents, communities and businesses, balanced with the objective of fiscal sustainability.
These Budget 2012 strategic investments include:
- An overall investment of approximately $3 billion to enhance access to health care in areas such as long-term care and community support, breast cancer screening, and shorter wait times;
- Almost $900 million for infrastructure improvements such as major roads projects, replacement of aging ferries, continuation of construction of new schools and hospitals and repair, maintenance or redevelopment of existing buildings;
- Almost $200 million is available for businesses to facilitate growth and development in all regions of Newfoundland and Labrador;
- $150.8 million in the Poverty Reduction Strategy, an increase of approximately $11.3 million from last year;
- An investment of $130 million over two years for new municipal infrastructure projects;
- In addition to the $17.8 million provided to communities on an annual basis through the Municipal Operating Grants (MOG), the Provincial Government has maintained the additional funding level of $4.6 million that was provided last year. The province will continue to consult with municipalities on the development of a new formula that is equitable and sustainable;
- $9 million in new funding to increase apprenticeship training, support post-secondary institutions and students, and enhance workforce development;
- An additional $8.8 million for the Department of Child, Youth and Family Services bringing the total new investment to almost $41.8 million in just three years;
- $3.7 million to provide a 35 per cent reduction to seniors aged 65 and older on driver’s licence and vehicle registration fees, and other licences and fees for such things as hunting, fishing, cutting wood, and camping; and,
- Continuing tax initiatives such as the Residential Energy Rebate, the supplementary Child Care Tax Credit, Personal Income Tax reductions and the Low Income Seniors’ Benefit that see residents save in excess of $500 million annually as compared to 2006.
“Our economy has never been stronger and investment is at record levels,” said the Honourable Tom Marshall, Minister of Finance and President of Treasury Board. “More people are working in Newfoundland and Labrador than at any other point in our history and net debt is at the lowest level since 1999. Having said that, we must remain vigilant and ensure our level of spending growth is affordable and sustainable to attain the goal of lowering net debt per capita to the all-province average within 10 years.”
While real GDP growth in 2012 is expected to be constrained by lower oil production, many other economic indicators are expected to remain robust reflecting the higher levels of investment on major projects and overall strength in the economy:
- Employment growth of 1.8 per cent;
- Unemployment rate decrease of 0.4 percentage points;
- Personal income and disposable income growth each at 5.4 per cent;
- Retails sales growth of 4.0 per cent;
- Population increase of 0.5 per cent due mainly to positive net in-migration;
- Capital investment increase of 30.1 per cent to $9.6 billion;
- Mineral shipments to increase by 24 per cent to $ 5.7 billion; and,
- An increase in total overnight tourist visits by about 1.0 per cent.
The Government of Newfoundland and Labrador will work within a fiscal policy framework which focuses on long-term financial stability and supports sustainable investments in programs and services. The Provincial Government will also begin a structured core mandate review of its operations to identify opportunities to do things better and ensure the efficient and effective delivery of programs and services.
Coinciding with this review, departments have also been asked to hold the growth of the public service where possible through attrition.
“We will continue to be responsible fiscal stewards of the public purse,” said Premier Dunderdale. “Decisions we make today will contribute towards providing a stable and secure future for generations of Newfoundlanders and Labradorians. Striking a balance between fiscal prudence and strategic investments will continue to be a focus for this government.”
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Media contacts:
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Glenda Power Director of Communications Office of the Premier 709-729-3960 glendapower@gov.nl.ca |
Milly Brown Press Secretary Office of the Premier 709-729-4304, 631-8477 millybrown@gov.nl.ca |
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Luke Joyce Director of Communications Department of Finance 709-729-6830, 725-4165 lukejoyce@gov.nl.ca |
2012 04 24 2:25 p.m.