Auditor General, Julia Mullaley, delivered her report to the House of Assembly today on the audit of the financial statements of the Province of Newfoundland and Labrador for the year ended March 31, 2018. In her report, Ms. Mullaley shares observations about the financial condition of the Province and highlights risks to achieving the Province’s budget targets to 2022-23.

“Financial indicators continue to show that the Province is not living within its means. Consecutive deficits over the last six years have contributed to a substantial increase in the net debt of the Province – now at $14.7 billion – the highest in the history of the Province,” noted Ms. Mullaley. With deficits expected to persist until 2022-23, the net debt level will continue to increase. She further observed, “There is risk that the budget targets, including a return to surplus in 2022-23, may not be achieved. Should these risks materialize and result in significantly less revenues, or more expenses, than expected, Government would be significantly challenged to address such a situation over the short-term.”

While the deficit for 2017-18 of $0.9 billion is less than half of the deficit recorded in 2015-16 and a modest improvement over 2016-17, it is still a significant deficit. The Province’s net debt per capita at March 31, 2018 of $27,761 is significantly higher than the average of all other provinces and, with continued deficits, this gap has widened considerably in recent years. Further, at March 31, 2018, the Province’s net debt as a percentage of its GDP is 44.5%, which is significantly higher than the average of all other provinces.

“The Province of Newfoundland and Labrador generates more revenue, on a per capita basis, than every other province. However, per capita spending in this Province is substantially higher than per capita spending in every other province and is also higher than the Province’s per capita revenues,” noted Ms. Mullaley. This suggests that revenue is not the primary issue creating the deficits but the level of spending. “Continued emphasis on sustainably reducing the Province’s per capita spending will remain important.”

The full report is available on the Office of the Auditor General website at www.ag.gov.nl.ca/ag/reports.htm

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Media contact
Nancy King
Office of the Auditor General
709-729-2700
nking@oag.nl.ca

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