1999 Economic Review
Mr. Speaker, in 1999 Newfoundland and Labrador had the fastest growing economy of any province for the second consecutive year, with real GDP rising about 5.3%. Together with 1998, this is the best consecutive two years of economic growth we have recorded since 1973-74.
Total exports, led by the oil and fishing industries, reached $5.7 billion, representing a gain of 13.1%.
Hibernia produced over 36 million barrels of oil with an estimated production value in excess of $1 billion. Oil and gas exploration increased from $67 million in 1998 to $250 million in 1999.
The value of fish landings rose 36% as a result of higher catches of crab, shrimp and groundfish. There was a 27% increase in newsprint shipments reflecting recovery from the previous year. The value of manufacturing shipments grew 13.1%.
Tourism, anchored by Soiree ‘99, continued to perform well, bringing non-resident visits to their highest level ever.
We had our third consecutive year of strong retail sales, with retail trade expanding 6.9%. Investment reached a record level of $3.4 billion, an increase of 21%.
Our growing economy led to strong employment growth of 5.5% and brought employment to its highest level since 1990. This rate is double the national pace and the strongest growth of any province.
The modest deficit, however, does not tell the whole story. We could have recorded a significant surplus of $166.2 million. This was due mainly to higher than expected current account revenues of $173.3 million. While recording a large surplus may have been a notable event in the short term, we are managing the finances of this Province for the long term and for the future sustainability of our social programs and our economy.
We were asked to control the deficit so social programs and public services can be sustained. We have delivered this kind of sound and prudent fiscal management every year and this year will be no exception. The deficit target for 2000-01 has been set at $34.7 million, which includes the $30 million contingency reserve we have maintained each year against unforeseen events.
People have told us that the average family cannot afford to pay higher taxes. This administration brought taxes down for the first time since Confederation with the $105 million HST cut in 1997. Taxes were cut again with the announcement last November that Provincial personal income tax would be cut by $175 million over three years, commencing on January 1, 2000.
People have told us that their priorities for any extra fiscal flexibility are straightforward. They want government to invest in health care, followed by education and helping those in need. Mr. Speaker, this is exactly what this budget does.
This budget also has another focus. We have listened carefully to the consultations held around the Province to renew our Strategy for Jobs and Growth. In this budget, we will be taking steps to respond to some of the things we heard.
A healthy fiscal position, combined with competitive taxes and a growing economy, is the only sure way to have adequate and sustainable social programs and public services. This first budget of the new century sets the course to achieving this goal.
Provincial Pension Plans
Since 1998 we have been contributing special payments to public sector pension plans, which by the end of 2000-01 will amount to $548 million. Further payments are required before government will have fulfilled its current obligations. The unfunded liability in all our public sector pension plans stands at $3 billion. We have committed to make additional payments of $116 million a year to reduce this obligation. These payments are necessary to ensure the pension benefits our employees have paid for are protected.
With the actions we are taking, pensioners can be confident they will continue to receive 100% of the benefits they paid for. Any increase in pension payments or indexing of the plans would require more payments by government and plan members. The present pension plans simply cannot afford any additional obligations for higher payouts at this time. We are open to discuss shared solutions with stakeholders.
for the health of our people, for the health of our economy
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