Amid cost of living and health-care worries, N.L. finance minister says budget aims to find ‘balance’


Finance Minister Siobhan Coady said the government is working towards a balanced budget. (CBC)

On the eve of Newfoundland and Labrador’s third provincial budget in 18 months, cost of living and health care are top of mind — even as the possibility of government spending cuts loom.

While speaking with reporters on Tuesday, Finance Minister Siobhan Coady said the government is working towards a more balanced budget and lowering the cost of borrowing, while taking the rising cost of living into account. 

“There are things that we can do to help put money in the pockets of people,” Coady said while speaking with reporters. “We’ll see what we can do in the budget come Thursday to support people.”

However, Coady also said any potential relief for the province’s taxpayers would have to be balanced with the goal of bringing down the provincial deficit.

Coady did not say if the government is planning dramatic cuts to public spending this year, but said last year’s report by the Premier’s Economic Recovery Team did have some influence.

“We’re balancing what we’re doing in light of the information that is contained in any report or recommendation the government has,” she said.

Impact of oil

On Tuesday, Coady warned not to expect a significant boost in revenue from oil royalties despite sky-high prices, since production is down this year and is expected to fall even more next year.

“Even though the price of oil might be higher, the actual revenues that we’re getting are actually lower,” Coady explained.

With water depths of some 1,200 metres, Equinor’s Bay du Nord project would use a floating production, storage and offloading vessel, better known as an FPSO, like the one pictured here in this illustration. (Equinor)

As of last fall’s fiscal update, Newfoundland and Labrador was running a $595 million deficit, with a net debt of $16.7 billion. The borrowing requirement was $1.7 billion. 

All of those numbers were smaller than forecasted in the 2021 budget, but because of higher-than-expected corporate income tax revenue, more mining and mineral tax revenue and more sales tax revenue rather than oil revenues.

As oil production declines, all eyes are on the proposed Bay du Nord project, which provincial officials and oil industry advocates have championed but climate change experts have condemned. Proponents of the project, which is currently under review by the federal environment minister, say it would bring the province billions in oil revenue.

Other sources of energy may be on the agenda too — on Tuesday, energy minister Andrew Parsons announced an end to the moratorium on wind energy in Newfoundland and Labrador. 

Gas tax and home heating rebate priorities for PCs

PC interim leader David Brazil said he hopes to see a reduction in the taxes on gas, and the reintroduction of a home heat rebate program — two notions that Coady poured cold water on.

“If we lowered our gas tax, it’s counter to what the federal government’s direction is,” she said.

PC interim leader David Brazil said he’s focused on two areas of the budget: health care and cost of living. (Mark Quinn/CBC)

Coady said if the province lowers the provincial gas tax, the federal government may apply the carbon tax to home heat — which it doesn’t currently do.

“There are other ways that we can assist people in the province, you know, instead of doing it just on the gas tax, which may have that consequence of burdening people that … use oil heat,” she said.

Coady said the province is not planning to introduce a home heating rebate program because that benefit was rolled into the income supplement program.

“It is for the most vulnerable,” she said.

Health care under strain

In February, the Health Accord N.L. released its final report, which included recommendations for the province’s health-care system over the next decade. Those recommendations included bringing the province’s air ambulance service and 60 ambulance operators under one operator, and shuttering some emergency rooms in rural areas. 

The province officially announced it would bring 911 operations under the provincial government on Tuesday.

That report didn’t recommend significant spending cuts, but the PERT report recommended slashing health-care spending by 25 per cent. Those spending cuts would be achieved by amalgamating the four regional health authorities, among other things.

The provincial government hasn’t indicated either way if significant cuts to health-care are coming in this year’s budget; the province continues to struggle with the impact of the pandemic and the lingering effects of last year’s cyber attack.

On Tuesday, Premier Andrew Furey and Health Minister John Haggie said short and long-term solutions are in the works to help the province’s registered nurses, who say they’re struggling with chronic understaffing and mandatory overtime

Brazil said he’d like to see the government increase spending in some areas, and look for ways to expand the practice of some health-care workers, like pharmacists and paramedics, in order to alleviate the pressure on others.

Read more from CBC Newfoundland and Labrador

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