Firstly, Capt. Bartlett was incorrect to state that government hasn’t lowered the province’s debt. On the contrary, we have reduced net debt, by approximately $4 billion, from a peak of almost $12 billion in 2004-’05 to $8.2 billion in 2009-10.
Capt. Bartlett also incorrectly suggests that we are running multiple budget deficits. The province, in fact, recorded four consecutive surpluses from 2005-’06 to 2008-’09, totaling over $4 billion. Our latest forecast is for another surplus this fiscal year, making it the fifth budget surplus in the last six years. Newfoundland and Labrador is one of very few provinces in the country expected to post a fiscal surplus this year.
The Auditor General, in his most recent report, acknowledges the significant surpluses and reductions in net debt and the substantial improvements in the province’s financial position and fiscal capacity from 2006 through 2009.
Furthermore, the modest deficit of $32.6 million in 2009-’10 was a direct result of the worldwide recession — a time when just about every jurisdiction saw major deficits, and from which many have yet to fully recover. Our modest deficit was still a marked improvement from the $750 million deficit initially forecast for 2009-’10. The recession forced us to alter our expectations. Real GDP dropped by over 10 per cent, revenues were squeezed and stimulative spending was required to spur economic activity and employment to get us through the global storm while maintaining the momentum that the province’s economy had been gathering prior to the downturn.
That was a deliberate and strategic choice on the part of government to help create jobs and opportunities for Newfoundland and Labrador families — it was the right choice and it was good public policy.
I would also like to remind Capt. Bartlett that all major credit rating agencies have raised Newfoundland and Labrador’s rating in recent years. And we are becoming more self-reliant financially — approximately 80 per cent of the province’s revenues now come from our own sources, as opposed to years ago when we relied much more heavily on money from the federal government.
We are no longer a “have-not.”
Employment in the province rose to record-high levels last year. And our population increased for the second consecutive year, after 16 years of decline previously.
Capt. Bartlett stressed the point that the money our province receives from oil is temporary and we must “use some of our new found wealth to pay down the debt,” so that we don’t saddle our children with it all. I agree, and we have been doing exactly that.
Our government has lowered net debt, lowered taxes, and renewed infrastructure. We will continue to diversify the economy to lessen the province’s reliance on oil, including advancing our plan to use non-renewable oil revenues to leverage our investment in renewable hydroelectric energy from the Lower Churchill and also renewable wind energy.
All of this benefits not only Newfoundlanders and Labradorians today, but future generations as well.
It is important that the people of the province have the facts. Thank you for the opportunity to provide this information.
Hon. Tom Marshall
Minister of Finance