Appendix III
PRE-BUDGET CONSULTATIONS

On January 23, 1997 the Government of Newfoundland and Labrador released the pre-Budget document Making Choices, which provided background material for the Province's second pre-Budget consultation process. The document gave an overview of our sources of revenue, the programs and services we provide, our public debt and fiscal position, the economic challenges we currently face, and our outlook for the future. The document also raised important issues and questions for the consultation process. The Government of Newfoundland and Labrador reaffirmed its commitment to consultation because we believe the views of Newfoundlanders and Labradorians are important and we benefit from their advice. The people of this Province will continue to have the opportunity to participate in making choices with Government for our future.

People were encouraged to participate in the process through several means. A small committee made up of local MHAs and chaired by the Minister of Finance held a number of meetings across the Province. Individuals and groups were given the opportunity to make presentations followed by a brief question and answer period. These meetings were held in late January and early February with 115 presentations being made at Corner Brook, Wabush/Labrador City, Happy Valley-Goose Bay, Grand Falls-Windsor, Clarenville, Marystown, Gander and St. John=s.

A toll-free 1-800 number was set up for individuals to obtain the consultation document, request other information, or leave comments. The document was accessible through an Internet site. People could also respond through E-mail, a dedicated fax line, by mail, or by returning a completed questionnaire from the document. To facilitate the involvement of individuals with disabilities, the consultation document was available in alternate formats including audio cassette, computer file format, and braille.

The overall response to the process was quite satisfactory. The diversity of the participants and genuine interest that many people displayed demonstrated the worthwhile nature of the process. It is clear that many Newfoundlanders and Labradorians care greatly about our Province. The suggestions of the participants aided Government in making the choices for this Budget.

Many respondents recognized that the Province is in a difficult financial situation. Many agreed that Government is limited in the options which it can realistically pursue to improve our fiscal position. People frequently identified a common group of essential services that Government should provide, and often discussed a similar set of financial issues. In general, participants held a wide range of views on many non-essential services but tended to agree on most essential services.

TAXES AND FEES Most participants indicated they were at the point where they could not afford further tax increases. It was suggested that if extra revenues had to be raised Government look to so-called "sin" taxes on liquor or tobacco, or increase revenues from fees paid by service users. Non-business groups typically put forward that the business community should pay more taxes, particularly large, profitable corporations. The business community held an opposing view, stating their members were already paying more than their fair share of taxes. In general, there was no broad support for significant tax increases.

SPENDING Many people recognized that Government will have to reduce expenditures. Most people suggested that this be done in a manner that would minimize job losses, although, most respondents also recognized that some job losses would be unavoidable. Some suggested that Government provide a wide range of services on a cost recovery basis. A frequent theme was that all expenditures be carefully reviewed and efficiencies sought. Government's program review exercise was referenced in many responses, with people complementing Government for this undertaking. A number of people said that they would reserve judgement on the exercise until the results were released.

BORROWING The issue of borrowing was often raised in conjunction with issues such as the total public debt, our economic prospects, and the need to maintain essential services. Many people were dismayed at our level of debt and the resources devoted to servicing that debt. Others downplayed the magnitude of the situation. Some participants did not see our low credit rating as major concern, stating that Government must do what is necessary to provide essential services - including borrowing whatever is needed. Many people suggested that the Province may be in a position to borrow based upon future revenues from large resource projects. In contrast, a number of people stated that any borrowing whatsoever would be unacceptable, often further stating that Government must live within its means and work toward paying down the accumulated debt. Overall, participants felt that the Government must carefully manage our deficit position - generally indicating that Government has to balance deficit reductions against the responsibility of providing essential services.

HEALTH CARE Health care was consistently viewed as the Government's most important service. Many people also felt that our health care system is under considerable pressure and that further cuts imposed on the system would threaten services. A number of people applauded the Government=s three year funding commitment to health care. Many people stated that we must become more efficient and innovative in the delivery of health care services. The move toward greater community-based programs was identified as one option that should be pursued. Community-based care was also viewed as a way to maintain acceptable levels of care in rural areas.

EDUCATION Many respondents emphasized the important role the education system has in the future of the province. People supported Government in its efforts to reform our school system. There was recognition that our education system can become more efficient, particularly in light of the sharp decline in enrolments. Government's role in post-secondary education also was addressed by participants. Opinions on financing post-secondary education varied considerably from proposals to eliminate some tuition fees to other suggestions that users pay a larger share of the actual costs. Overall, the education system was viewed as an integral part of communities, as an asset that must be managed and utilized effectively. Likewise, many participants urged that our public libraries be viewed as community resources and that acceptable funding levels be maintained.

SOCIAL SERVICES The provision of social assistance programs to people in need also was viewed by many as an essential function of Government. Some participants asserted that there was considerable abuse of the social assistance program and that great effort should be made to ensure we provide benefits only to those people truly in need. A number of people felt that social assistance benefits were not adequate to cover basic needs, while others felt that benefits were too generous in certain instances. A number of participants proposed greater coordination between different Government departments to develop better social programs. It was suggested that several departments now provide services to the same people, and that a coordinated approach would result in a more efficient system . The need for stronger links between employment programs and social assistance was cited. A number of participants made reference to the Social Policy Advisory Committee and stated that the recommendations of that group should play an important role in shaping social programs in this Province.

JUSTICE Our policing system received considerable attention during the consultation process. Adequate policing was recognized as an essential service and identified as one of great interest to communities. Many participants showed support for the RCMP, stating a preference that the Royal Newfoundland Constabulary not replace the RCMP in many areas because of the satisfactory longstanding relationship that has been built up with the Mounties. Other people stated that if it could be demonstrated that the Constabulary would be equally effective at a lower cost then that force should be given more responsibilities in the Province. In general, people indicated that the effectiveness of police services should not be compromised for budgetary reasons.

GOVERNMENT Participants repeatedly stressed the need for efficient Government. Many people stated their belief that Government could become more efficient while maintaining essential services. Some respondents indicated the public remains to be convinced that there is, still, not too much bureaucracy in Government. Others said Government should concentrate on providing essential services, while becoming more selective in the provision of services that are not core responsibilities. Public-private partnering was cited as one means to achieve this goal. Some participants urged a cautious approach to the privatization of service delivery, emphasizing the need to ensure quality services are maintained.

OUR ECONOMY Many participants stated that Government must foster a positive economic climate conducive to business growth and job creation. People recognised that the development of our natural resources holds great promise and Government should ensure the maximum benefits are derived for the people of the Province.

CONCLUSION The people of Newfoundland and Labrador told Government to become more efficient at delivering essential services without compromising their quality and to focus on core responsibilities, particularly social programs. People recognised that important and difficult choices have to be made now, in order to put the Province in the position to make the most of our opportunities. Many people expressed optimism about the Province=s future, encouraging Government to make the right choices now.

Questionnaire Results

The Pre-Budget consultation document Making Choices asked the people of Newfoundland and Labrador to respond to a series of questions. The results of the questionnaire are presented below. The questionnaire was intended as a means for the people of the Province to bring their views forward to Government. The questionnaire was not a survey, its results cannot be said to represent public opinion. The results simply represent the opinions of those who responded.

Question 1 The idea that Government should consult with the public before preparing the Budget is a good one, and it should become a feature of the annual budget process.

Question 2 Right now it is more important to make progress toward balancing the budget - progress towards not spending more than we take in and not adding to our debt - than it is to maintain all our present programs and services by borrowing more money.

Question 3 Although taxes on average families are already high, they should be increased to reduce our projected deficits and prevent some severe cuts.

Question 4 If taxes have to be increased, I would prefer to see:

A) small increases in many taxes adding up to the amount needed,

Question 4 Continued b) or, larger increases in only a few taxes, such as,

Question 5 Government should have more and higher fees for services not everyone uses, particularly commercial services, so the people benefiting pay more of the cost.

Question 6 Government spending must be reduced because our projected deficits are too high and we cannot increase taxes to make up the difference.

Question 7 Rather than cutting all services across the board, Government should establish priorities and provide a greater level of funding for some services than others.

Question 8 One way Government could reduce spending is to have some services delivered by the private sector rather than Government, as long as service quality would be maintained.

Question 9

There are 3 ways to address budgetary shortfalls - raise taxes, cut spending or increase our debt load. To deal with a shortfall of $100 million, what amount would you choose for each one of these options [the three should total 100]?

Question 10 A three year budget plan should lead to more efficient program and service delivery and better management of the Province=s finances.

WHO RESPONDED

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