On Tuesday, March 27, Newfoundland and Labradors’ finance minister, Tom Osborne, delivered his first budget, Building for Our Future. Safe and pragmatic, Budget 2018 continues to lay the foundation for a more economically diverse and prosperous future amidst a fragile and uncertain economic reality. Despite large annual deficits projected for the next three years, government claims to be on track to return to a surplus position in 2022–23. Government says they have a plan, they’re sticking to it, and it is working—but it’s clear that the heavy lifting required to achieve balance will likely take place following the next election.
As we move into a pre-election period, it’s not surprising to see the government continue to “lead by example”, through internal cost-cutting measures and a reduction of the public service and associated labour costs. Building for Our Future echoed previous commitments to a leaner government structure, supported by numerous proof points of a reduction in government spending across all departments, boards, agencies, and commissions.
Overall, voters were left largely unscathed, with no new taxes or fee increases; in fact, the budget includes significant investment in priority areas, such as health care, education, and skills training. Moving forward, controlling rising electricity rates will continue to challenge the current government and we can expect this issue to rise to the forefront as we draw nearer to an election. The budget speech was definitive—government’s vision does not support the doubling of electricity rates.
The announcement that Nalcor’s oil and gas subsidiary will transition to a stand-alone Crown corporation may play to populist sentiment, but the carving out of oil and gas is a testament to government’s strategic commitment to position NL as the preferred location for global oil and gas development. This vision is articulated in Advance 2030, an action plan developed in partnership with industry to accelerate growth and enhance competitiveness in the province’s oil and gas sector.
Government’s commitment to economic diversification through agriculture, aquaculture, and advanced technology industries will require a shift in thinking to prepare our youth for employment in these emerging industries. To that end, this budget makes significant investments in skills development and education, including continuation of a freeze on tuition and an independent review of the province’s post-secondary education system.
With mixed public reaction, the budget has earned relatively little media coverage, compared to previous budgets. We’ve tracked much lower levels of online conversation, no doubt the outcome of a successful “don’t rock the boat” strategy. Despite reassurance that government’s plan is working, Budget 2018 leaves us with a sense that there is more to come—a fiscal cliffhanger subject to the whims of an unpredictable global market economy and volatile oil prices.