Fiscal Framework Review of 2005-06
Mr. Speaker, before considering our detailed fiscal plans and
expectations for 2006-07 and beyond, let us reflect on the year
we are about to conclude.
A year ago, in Budget 2005, I laid before this House a plan
which forecast a deficit of $492.5 million. Mr. Speaker, I am
pleased to report today that I now expect the province will
report a surplus of $76.5 million for the year 2005-06. This
represents an improvement of $569.0 million. This surplus
reflects a benefit from the Atlantic Accord 2005 of $322.3
million. Without the successful conclusion of negotiations by
the Premier, the province would be facing a deficit of almost
$250 million.
This surplus is fully consolidated and, as such, includes the
projections of each and every organization included in the
government�s reporting entity. During the 2005-06 fiscal year,
our government made a decision to include the operations of
Memorial University as part of the consolidated group, the last
organization needed to complete the full consolidation process.
These revised projections now fully report on the government�s
stewardship of taxpayers� money.
The improvement in financial position from budget is
predominately the result of increased revenues. The increase
results from rising oil prices and the reclassification of
2004-05 Atlantic Accord revenues to 2005-06. Of the $545.6
million increase in revenues, $367.2 million is directly
attributable to oil revenues and $133.6 million is due to the
accounting reclassification. Because of responsible fiscal
management, expenditures generally remained on track with the
budget.
Forecast for 2006-07 and Beyond
Mr. Speaker, I am pleased to report that for the first time in
our history the province is budgeting a surplus on a fully
consolidated basis. The expected surplus of $6.2 million
reflects revenues from our strengthened economy, including a
growing resource sector, the benefits of the Atlantic Accord,
reduced expenses related to debt servicing and the impact of the
recent health accords and equalization arrangements, and
includes substantial investments in the social and economic
fabric of the province.
Beyond 2006-07, the benefits of a strong economy, the Atlantic
Accord and strategic investments indicate surpluses in the
foreseeable future.
We are particularly pleased that, as a result of responsible
budgetary decision making, we will this year be allocating a
significantly smaller percentage of our resources to service our
debt, and our debt burden as a percentage of the province�s
economic activity is significantly reduced. The province�s debt
servicing expense as a percent of total revenues is now 13.7 per
cent, a reduction from 23.3 per cent in 2003-04. Our debt-to-GDP
ratio is expected to be 47.9 per cent, a reduction from 63.4 per
cent in just three years. This is marvelous news and a testament
to the effectiveness of multi-year fiscal planning. These
positive indicators clearly demonstrate that, by continuing to
walk a responsible fiscal path, we are leading Newfoundland and
Labrador steadily upward from the quagmire of debt that has been
holding us back for so long from economic sustainability and
self-reliance. We are on the right track, we are making
tremendous progress, and we are prepared to stay the course.
|