December 5, 1995
Ministerial statement - Mid year financial position
The following statement was issued today by Paul D. Dicks,
Minister of Finance. It was also read in the House of Assembly:
On November 3, I informed honourable members that government was projecting a budgetary shortfall of $60 million in its 1995-96 fiscal year.
Since that time, each minister has been asked to review his or her department's spending estimates to identify savings to restore a fully balanced budget position this year. I am able to advise the House today that government has taken decisions which will balance the budget for this fiscal year.
In arriving at the individual decisions that comprise this $60 million, we have attempted, where possible, to avoid direct impact on the public. Consequently, we have placed considerable emphasis on the reduction of departmental operating budgets. We have also been able to achieve cash flow savings in our capital accounts.
Honourable members will recognize that the majority of government's discretionary expenditures are salaries. Consequently, it is not possible to obtain significant savings without affecting our employees. The spending reductions that have been accepted include reductions in the public service of 475 positions; 390 of these positions are presently filled and are spread across a number of departments and agencies of government. All of the individual employees affected will be notified this week. The savings this year will be $4.7 million less any severance payments required. The annualized saving each year thereafter from these staffing measures will amount to approximately $18 million.
In taking these staffing measures government was conscious of minimizing the impact on the service to the public. Of the positions where layoffs will take place less than 50 will be front line workers. The result is that the majority of the staff cuts have taken place in our administration structure. This includes reductions in our central agencies such as Cabinet Secretariat, Treasury Board Secretariat and the Department of Finance. The Honourable the Premier has reviewed the mandate of his own office and has put in place a restructuring which will lead to a 40 per cent reduction in staffing from 17 to 10 positions.
The government will achieve $30 million in savings through a variety of program reduction measures, the more significant of which are as follows.
As honourable members are already aware, government will reduce Municipal Operating Grants by $4.1 million this year.
We have been particularly sensitive to the health care sector which is undergoing a period of fundamental restructuring. We believe, nevertheless, that savings of approximately $2.5 million can be made to year end in the areas of grants to Institutional Health Boards, the Faculty of Medicine, and spending at MCP without disrupting the provision of essential health services to all residents of our province. This represents less than one-third of one per cent of government's spending on health care operating budgets.
The operating grant to the university will be reduced by $3.4 million for the balance of the year. School board operating grants will be reduced by $3.9 million and provincial colleges will be required to identify savings of approximately $2 million. The Department of Social Services has identified $3.1 million in savings through reduced program spending in community development and other areas. This represents less than one per cent of this year's Social Services budget.
Enterprise Newfoundland and Labrador Corporation, the Economic Recovery Commission and the Department of Industry, Trade and Technology will contribute $4.9 million in both program and operating savings.
In the Department of Justice we will be reducing our expenditures under the RCMP contract for policing in the province by $1.9 million this year, and we will be implementing certain economies in the operations of the Royal Newfoundland Constabulary. These budget reductions in policing will be implemented in such a way as to ensure that our principal policing functions are not affected. The Women's Correctional Centre at Stephenville will be relocated to the more modern facility at Clarenville. The male inmates currently housed at the Clarenville facility will be transferred to available space in other locations.
The balance of our expenditure reduction plan includes having departments and agencies further reduce their operating budgets by $11 million and defer $9 million of capital expenditures. The Newfoundland and Labrador Hydro Corporation will remit an additional $2.9 million in dividends from that originally estimated in the budget.
The plan I am presenting today represents an important step in maintaining the province's financial credibility. We face major fiscal challenges next year. The general economic outlook for the province in the near term, as well as the stance of the federal government with respect to transfer payments and other expenditure areas, indicate the need for a fundamental review of our spending programs for 1996-97. In particular, the federal government's $100 million reduction in transfer payments for health care, post-secondary education and social services dramatically affects our ability to continue our current levels of service to the people of the province.
The adjustments we are announcing today will allow government to balance our budget for this fiscal year. To continue to do so next year and thereafter will require resolution of fundamental questions about the essential services which the people of this province want, expect, are prepared to pay for and the manner in which they are to be delivered. Government will put in place a process for an orderly and well planned approach to restructure government's services.
Over the medium term, the province expects brighter economic prospects. We are committed to meeting the challenge of maintaining a sound financial position in the interim. We believe this to be in the best interest of all Newfoundlanders and Labradorians.
1995 12 05 2:05 p.m. ct