$1.5-billion crunch: Ross Wiseman on N.L.'s budget plight
Public input sought to deal with low oil prices, finance minister says
Newfoundland and Labrador Finance Minister Ross Wiseman says revenue shortfalls for the coming fiscal year will amount to $1.5 billion, thanks to a prolonged slump in world oil prices.
With provincial cabinet ministers set to fan out across the province next week for annual pre-budget consultations, Wiseman says Newfoundland and Labrador could be facing as many as five years of deficits.
"We need to prepare for that new reality," Wiseman said Monday.
"We can't fix, in one 12-month budget cycle, the challenges that have been laid upon us since the drop of oil prices in July."
Looking to the public
Wiseman said the cabinet wants to hear from people around the province about ways to save money or boost revenue.
"We've come to realize that in the last six months, oil will not be rebounding overnight to $105 again," he said, referring to the average price of Brent crude used in last spring's budget.
"So we need to readjust to that new reality."
Wiseman and Premier Paul Davis have said nothing is off the table as government tackles the financial shortfall.
Wiseman and the premier have both said that the government is planning for the long term as it waits for oil prices to rise and for the market to correct itself.
He said while the government is prepared to take steps to offset the lost revenue, the public should also be engaged in the process.
"As a government, we have a mandate to provide the leadership through this process," Wiseman told CBC News.
"But everybody who lives in the province has a role to play in contributing to the discussion, to help us map out a way forward for the next five years."
Correction in the market
Wiseman insists that even while looking for ways to offset revenue losses this year, the government is still focused on the longer term.
"The future for Newfoundland and Labrador is still bright," he said.
"We're just doing an adjustment in how we do business as a government, in the same way there's an adjustment taking place in the oil industry around the price of oil."
He said that those adjustments don't change the fact that the province is still rich is resources, even if those resources are currently in a slump.
"There may be a slowdown in the mining industry but the minerals are still in the ground in Labrador," he said.
"Let's not lose sight of that as we go through this adjustment period."
Housing Prices
The government is not alone in being affected by the slump in oil prices.
A recent report by TD bank predicted housing prices in Newfoundland and Labrador could fall by about 10 per cent this year. The report blamed the impact of low oil prices for the troubling forecast.
Wiseman agreed with the assessment, and said he expects the slump to hit several areas of the province.
"We'll see some shrinkage in that economy in the next year or two," he said.
"We might see some impacts on retail sales, [and] we may see some impact on housing prices."
Wiseman said his budget won't be able to simply cut its way out of financial problems.
He said cutting a $1.5 billion from the provincial budget would have the ripple effect and would damage the province's economy.
WIth files from Peter Cowan