|6. MAKING THE
Our First Three Year Plan
Government is considering implementing a three year budget plan for the Province. Resolving the situation for only 1997-98 does not address the full scope of the problem, which is clearly multi-year in nature. A three year plan would provide greater certainty about the level of public programs and services. It also should result in more efficient Government operations and bring greater job stability to the public service.
Making the right choices requires all of us to make an assessment of where we are as a Province and where we should be going over the next three years. The economy will be weaker in 1997, but will begin to improve in late 1998. This should continue into the foreseeable future, led by petroleum and mining developments, and helped by our economic policies. The financial situation of the Province, however, shows increasingly large deficits for each of the next three years. Declining federal transfers, a weak economy and growing expenditure pressures all contribute to this situation.
Economic growth does not have an immediate positive impact on government revenues since major resource developments have to recover their costs before paying substantial royalties. As well, federal Equalization payments decline as tax revenues increase. While the Province and our people are better off as the economy strengthens, this will not translate into a substantially better financial situation for the Provincial Government for some time. Our capacity to borrow more money is limited, and borrowing by itself is not a long term solution. We need to deal with our financial situation now, commencing with a sound and realistic three year budget plan.
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