Newfoundland and Labrador forecast a $351 million deficit in its spring budget tabled Thursday, forecasting a significant drop in oil royalties for the 2022-23 fiscal year at a time of soaring oil prices.
Provincial net debt is expected to reach $17.1 billion, which equates to about $32,700 per person in the province of about 522,500 people.
The 2022-23 budget shows the province’s deficit in the previous fiscal year was $400 million, a notable decrease from the $826 million estimated in last spring’s budget.
Titled “Change is in the air,” this year’s budget unveils a commitment to amalgamate the province’s four regional health authorities and increase spending on health and education.
Finance Minister Siobhan Coady summed up the budget in one word: “Balance”.
With no tax increases and a 50% reduction in vehicle registration fees, the budget is balanced between reducing the provincial debt and helping residents with the rising cost of living, said Coady to reporters.
“We don’t want austerity budgets,” she told a news conference in St. John’s. “We want to get to a place where Newfoundland and Labrador is sustainable.
The province has long struggled with staggering debts and deficits, but Coady said Thursday his government is on track to achieve a surplus in the 2026-27 fiscal year. That forecast “is only going to get better,” she said, as the province hammers out a deal on the benefits of a controversial new oil project approved by Ottawa.
On Wednesday evening, federal Environment Minister Steven Guilbeault gave the green light to Equinor’s offshore development project in Bay du Nord, despite vehement opposition from climatologists and environmentalists.
The company initially estimated that there were about 300 million barrels of recoverable oil at the project site, located about 500 kilometers off St. John’s. But other discoveries have been made and industry experts say there could be more than 800 million barrels there.
Meanwhile, the budget projects some of the lowest oil revenues the province has seen in years. Oil royalties, at about $866 million, will represent just 10 per cent of the province’s revenue in the 2022-23 fiscal year. That’s down from $2 billion in 2011-12.
The drop in oil revenues is the result of a drop in production, which Energy Minister Andrew Parsons has largely attributed to the maintenance and planned shutdowns of the province’s four oil fields.
Parsons told reporters discussions were still active over whether his government would buy a stake in the Bay du Nord project if it went ahead, but he played down any enthusiasm about it.
“We’re going through COVID, we’re going through a battered industry…do you want to bet on that or not?” he asked, referring to the pandemic-related hammering inflicted on the oil sector and its subsequent recovery, as the war in Ukraine sends fuel prices skyrocketing.
Health Minister John Haggie said the decision to merge the four provincial health authorities into one is driven in large part by a desire for efficiency and better care.
“It’s about improving frontline services and spending our money wisely,” Haggie told reporters. He couldn’t put a figure on how much money the province could save from the merger, which he said is expected to happen within the next 18 months.
He admitted there could be job losses, but insisted it was not about “mass layoffs”.
The budget provides $14 million for recruitment and retention efforts for nurses and doctors, and it includes $10 million for renovations to the emergency room at St. John’s.
The Newfoundland and Labrador Medical Association said about 90,000 people in the province do not have a family doctor.
The province is seeing an increase in the number of K-12 students for the first time in decades, with an expected increase in enrollment of about 1,000 children. The budget allocated an additional $11.6 million for education services to meet this demand.
Coady said the population had jumped by about 2,800 people – a large number in a province used to residents leaving for better jobs and deaths exceeding births. Pandemic-related remote work options allowed some of those people to return home, she said.
With $1 million in the budget for “immediate supports” for Ukrainian refugees who choose to settle in Newfoundland and Labrador, she said the government hopes that number will increase.