N.L. avoids layoffs, tax hikes in stay-the-course budget

Newfoundland and Labrador's Liberal government has laid out a stay-the-course budget in 2017-18, rolling back some politically-damaging decisions from last year and stressing that its plan to fix the province's fiscal problems is on track.

"We have taken a smart, focused approach," Finance Minister Cathy Bennett said in her budget speech, delivered at the House of Assembly Thursday afternoon.

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"The measures we are taking will benefit future generations — our actions today will help realize our long-term potential."

Those measures do not include any additions to the punishing series of tax measures and fee hikes in the Ball administration's maiden budget last year.

Bennett stressed that there are no new taxes this year.

In fact, the government is throttling back on an unpopular 16.5 cent per litre extra tax on gasoline introduced last year.

The tax will drop by 8.5 cents per litre on June 1, and another four cents per litre on Dec. 1. The remaining four cents will be reviewed this fall.

No civil service layoffs in budget

There was also no news on any potential cuts to the civil service.

"This budget does not include an announcement of mass layoffs, as has been the practice in the past," Bennett told reporters at a media briefing.

"We are methodically and responsibly working through identifying how to more efficiently deliver services to the people of the province."

We are methodically and responsibly working through identifying how to more efficiently deliver services to the people of the province.- Finance Minister Cathy Bennett

Bennett would not be further drawn into a discussion about what that could mean for civil servants. Most unionized public servants are now without a contract, and their unions are at the collective bargaining table.

She did highlight the fact that the province plans to reduce spending by more than $300 million this year.

"Let me be clear: we have a $8.4-billion spend as a government, this year it's $8.1-ish billion," Bennett told reporters.

"To shift and analyse and review and make changes takes a lot of energy, and a lot of thinking, and a lot of analysis. You cannot change the culture of spending that we have seen in this province over a decade and expect to be able to responsibly make choices quickly and sharply."

Shift in tone from 2016 budget

The 2017 budget had a marked shift in tone and content from the year prior.

The last fiscal plan included a buffet of increases on everything from income tax to the HST to a 15-per-cent retail tax on insurance. An additional 350 fees were hiked or introduced.

Last year's budget was tough but necessary, Bennett said in Thursday's speech to the House of Assembly.

"Without the measures taken our province would have faced serious challenges with rating agencies and banks," Bennett said in her budget speech.

"Some believed that it could have even led to bankruptcy. Our government made hard choices and asked taxpayers to dig deep into their pockets so we could close the gap between our revenue and our costs. We are on a path to gain control of our finances and strike the balance of better spending controls and valuable investments in communities, people and the economy."

Even with all of those "revenue actions," the province initially projected a $1.83-billion deficit for the just-ended 2016-17 fiscal year.

The actual number came in at $1.1 billion, largely due to a big boost in oil royalties.

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The deficit for the coming 2017-18 fiscal year is projected at $778 million.

The province will no longer have a $125-million buffer that was included last year in case oil prices cratered.

Bennett says the province is on track to eliminate the deficit by 2022.

To do that, the government expects to spend almost exactly the same amount five years from now that it does today.

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