Speech provides hope that action on spending reform to come next year
New Finance Minister Siobhan Coady released her first budget yesterday amid the Covid-19 pandemic.
The delayed 2020-21 budget delivered more of the same in terms of increased expenditures, large deficits and massive amounts of borrowing. Expenses increased $524 M over 2019-20, to a total of $8.967 B. 93% of this increase was attributed to “COVID-19 related spending.” Government will borrow $3 B this year, contributing to a net debt of $16.4 B. The deficit is now projected to be $1.925 B, down slightly from the July fiscal update due to higher than expected oil prices and one time federal government transfers related to COVID-19. More details on the budget numbers can be found here.
Plans to “Reimagine Government”
Minister Coady was clear that this was a “pandemic budget” that reflects a snapshot in time and plans to get through the next six months. She revealed little in terms of spending/deficit reduction targets for coming years. Coady did reference plans to “reimagine government” in the budget speech, and the need to “address the structural financial problems” that we face. Positive indications that the new Premier and Finance Minister will take this seriously are the appointment of Dame Moya Green to lead an Economic Recovery Team. Ms. Greene is well known as a leader in change-management and has successfully restructured public entities in the past. Coady also laid the tracks for health care reform in the speech, discussing the creation of a “Task Force on Health Care” to deliver a 10-Year Health Accord to “reimagine health system delivery to help reduce costs and eliminate waste while improving services”.
“Strong, “war-time” leadership is needed to bring us through this crisis,”
said Executive Director Richard Alexander.
“The 2021 Budget will be the true test of the type of leadership Premier Furey and Minister Coady are going to provide.”
Some good messaging, but Budget 2021 will be the true test
The Employers’ Council has been in close communication with Minister Coady and the Premier’s office since the change in leadership has occurred and is hopeful that these initiatives will result in real, meaningful actions in the 2021 budget. It is time to address our structural overspending problem once and for all. We cannot continue down this same path. At $3B, the province is borrowing more than a third of all expenses. Debt servicing costs are now 15% of revenues, up from 13% last year. While government announced no significant new taxes or fees in this budget, we question the effectiveness and necessity of some COVID-19 related spending. With so much borrowing, every dollar spent means debt and interest payments, and therefore increased future costs to taxpayers. Despite COVID-19, all provincial spending announcements must be carefully considered in terms of term long-term economic impact and return on investment versus simply immediate social benefit.
As always the Employers’ Council will be closely monitoring the fiscal situation and holding government to account on the need for structural spending reform. Members with feedback on the provincial budget can contact jsullivan@nlec.nf.ca. Stay tuned for more on this issue.
View some of our budget reaction:
Business and Labour Groups Looking for Different Ideas of ‘Hope’ in Provincial Budget
NTV Evening News – September 29th
Serious Measures Must be Taken to Address Province’s Deficit: NLEC
VOCM – September 30th
VOCM Live Budget Broadcast – September 30th
VOCM “On Target” – September 30th
CBC Here & Now – September 30th
NTV Live Budget Coverage – September 30th
NTV Evening News – September 30th
The Telegram – October 1st
