The Finance Minister has unveiled a budget vastly different to that of last year.
The new plan has no new taxes and avoided widely anticipated mass-layoffs within the civil service.
A year after announcing across-the-board fee and tax increases, Cathy Bennett says the province benefited from higher-than-anticipated oil revenues, so there will be no tax increases this year. In fact, government will begin phasing out the gas tax by 8.5 cents in June and another four cents in December.
With close to 400 senior management positions cut in the weeks leading up to today’s budget, there was widespread speculation that mass layoffs were coming in the civil service. That didn’t happen. Bennett says talks with unions are ongoing and no cuts will be announced at this time.
Using zero-based budgeting, government reviewed every expenditure and cut spending this year by $283-million. This year’s total budget is $8.1-billion.
With higher oil royalties and expenditure cuts, the current account deficit has been cut to $1.1-billion from the projected $1.8-billion.
After two years of heavy borrowing—amounting to $4.9-billion—this year the province will only have to borrow $400-million.
Bennett says Newfoundland and Labrador’s credit rating, which dropped to the lowest in the country last year, will be a focal point for the Liberals as they continue to work towards reducing the cost of borrowing.
Oil production is expected to drop by nearly eight per cent to about 70-million barrels with lower production at Hibernia, Terra Nova and White Rose. Government projects nearly $4-billion in oil revenue this year based on a cost of $56 USD per barrel.
$3.3-billion is going towards salaries and benefits for employees. How much of that will be saved after contract talks remains to be seen.
The province still hopes to return to surplus by 2022-23.
Government Taking Action to Steady Power Rates
The provincial government is all but assuring that electricity rates are not going to double. There had been fears that rates would skyrocket to help cover the costs of Muskrat Falls, which has nearly doubled from original estimates.
Finance Minister Cathy Bennett says it is not acceptable for residents to pay excessive electricity rates. Minister Bennett has directed Nalcor, the primary manufacturer of electricity, to allocate $210-million to lower electricity rates starting in 2020-21 after Muskrat comes on stream.
The preliminary rate reserve would grow to $245-million in the following fiscal years.
Budget Aims to Maintain Tuition Freeze
The provincial government has provided funding to allow post secondary institutions to continue with the freeze on tuition rates. The Liberal Government says it is committed to having the lowest possible tuition fees for university and college students.
The freeze began many years ago under the Williams Government, and leaves Memorial University with the lowest tuition fees in the country.
Through changes to the Student Loan Program, Newfoundland and Labrador is able to maximize access to the federal portion of the loans before any provincial contribution. The federal-first student loan policy provides the same overall funding to students according to the finance minister, saving the province $12.6-million annually.
Memorial gets $319-million to maintain the freeze, the College of the North Atlantic $89-million for the 17 campuses around the province.
The secondary education system is getting extra money to help with inclusion. An additional $500,000 has been allocated to increase student assistant hours. The President of the Newfoundland and Labrador Teachers’ Association, Jim Dinn, says it is money—but won’t do enough to meet current needs.
Funds Allocated for New Child Protection Model
Newfoundland and Labrador is going to have a new decision-making model for child protection services. About $300,000 has been allocated to provide training for child protection staff.
Government is also allocating more money to help reduce the cost of daycare spaces.
The province will also have a $285,000 fund to assist those who participate in the National Inquiry into Missing and Murdered Indigenous Women and Girls. The money will be used to fund Family Information Liaison Units to provide services to those who are participating in the inquiry.
Library Lifespan Bolstered by Funding Restoration
Government has now partially undone a real sore point from last year’s budget. It has restored the $652,000 cut from libraries to keep the establishments open until after an independent review of those cuts. It will also allow for the status quo until government has time to consider the recommendations of that review.
About half of the province’s libraries were going to close, had government gone ahead with its plans.
Many people say the budget should also have scrapped the book tax.