Our efforts to call attention to the cost of doing business in NL are paying off.
Today’s provincial budget included an increase in the payroll tax (Heath and Post Secondary Education tax, or HAPSET) threshold from $1.3 M to $2 M. This will exempt 1250 businesses from paying this 2% tax on payroll. In conversations today, the Finance Minister credited the Employers’ Council’s lobby efforts for this reduction, calling it a regressive tax she would like to eliminate. Employers’ Council Executive Director, Jaclyn Sullivan, raised the damaging nature of this tax in multiple meetings with the minister this year, as did members, and we have been in the media highlighting the need for its elimination. RST on personal property insurance tax was eliminated, building on last year’s one-year elimination, but this does not include commercial property insurance. The continuation of the gas tax reduction had previously been announced. Government also committed to looking at additional ways to reduce costs to business in the coming year, including red-tape reduction and continuous improvements within government departments.
We look forward to working with the government on this.
Government holds the line on most indicators, budgeting close to balance
The government reported a surplus for last year and a small deficit of $160M for this year. They plan to return to balance in 2024-25. That is two years ahead of earlier projections. This is largely due to revenue increases and reduced borrowing last year due to higher-than-expected economic activity. They did a good job holding the line on spending projections for 2023-24, with just a $100 M increase over last year’s expenditures – less than inflation. However, from earlier projections, overall expenses were up $300 M last year. When revenues increase, government typically increases spending, and last year was no different. Some of this was due to cost-shared projects with the federal government. They also reduced borrowing, invested in the future fund, and plan to do the same this year. Many of the investments announced by government seem to be modernizations that will help restructure health and some infrastructure spending, including roads. For details, visit: https://www.gov.nl.ca/budget/2023/.
Net debt is now at $16,2 B. While government positioned this as “down from projections of $17.1 B,” it is also up from a low of $15.7 B last year due to the projected deficit and capital expenditures. Interest on our debt remains high, at $1.05 B, up from $1.041 B last year. Government will borrow $1.5 B this year, invest $127 M in the Future Fund, and the oil price is projected at $86 USD per barrel with an exchange rate of 75.7 cents. These seem reasonably aligned with other projections but could have been a little more prudent.
Jaclyn Sullivan was onsite at the Budget Lock-In and reacted in the media with cautious optimism about the improved position. It was important to remind people that we still have work to do. We are still relying on revenue to get to balance by increasing spending when times are good. We are in a much better position than we were a few years ago, and many of the new spending announcements were positive investments in modernizations. However, we still have to hold government accountable for spending restraint and fiscal responsibility. Because of the volatility of resource revenues and our large debt burden and interest cost, we need decisions that improve outcomes for citizens while spending within our means. Now we will hold government accountable for hitting these spending targets, keeping announced projects as efficient as possible, and continuing to focus on the need for innovative solutions.
View some of our media coverage:
Open Line with Paddy Daly
VOCM– March 22nd
Employers’ Council Calls for Responsible Spending in Upcoming Budget
VOCM – March 22nd
NL Employers’ Council provincial budget
On The Go – March 22nd
VOCM Live Budget Coverage – March 23rd
NTV Live Budget Coverage – March 23rd
Critics say cost of living measures in Budget 2023 don’t go far enough
NTV – March 23rd
Reaction to Budget 2023
CBC Here & Now – March 23rd
On The Go – March 23rd
Here’s what NL’s business, labour and political leaders think of the 2023 budget
CBC.ca – March 24th
NL Budget: Mixed reaction from advocacy groups, unions, Opposition
The Telegram – March 24th
allnewfoundlandlabrador.com – March 24th
VOCM Morning Show – March 24th