December 5, 1995
(Finance)
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