Newfoundland and Labrador update shows $479-million surplus, thanks in part to oil
By the time the Newfoundland and Labrador government reports on the second half of 2013, the province will have posted a $479-million surplus, thanks in part to the record oil price and lower-than-expected government spending.
But while the New Democratic Party government is celebrating its first budget surplus in 12 years, it will have to borrow between $7 million and $10 million to meet all three of its operating departments’ commitments.
And the province could struggle with the additional $22-million deficit that the latest economic update says will require an additional $18-million in borrowing.
The two-year surplus for the first half of the year is the province’s best since 2009, when the previous Progressive Conservative regime was also operating in surplus.
While the fiscal year 2014 budget that the P.E.I. government is preparing for the provincial cabinet is already a surplus, the New Democrats say it’s an indication that “when we’re ahead, people come running.”
“We were on a different path before. We were working every day to try to keep going in the right direction, and now we’re headed in a different direction all together,” said Finance Minister Danny Williams, who was sworn into his position this month.
“Families are working harder, seniors are working harder than ever before.”
The new government budgeted for an increase in overall tax revenue by 5.6 per cent over the coming years, after growing by 4.7 per cent in 2012 and 2012-2013. The province’s total tax revenue grew by 4.6 per cent, while tax rate increases were in line with the forecast.
However, the government has forecast lower tax revenue in fiscal year 2014-2015 than it did in the 2014-2015 fiscal year, partly because the oil price is expected to drop as much as 50 per cent by March 2015.
The government’s forecast is based on estimates of the impact of the oil glut on oil production, as well as the impact of lower demand and lower prices for services, he said.
The oil production forecast was conservative, but it has been revised down from $65 per barrel to $60 on average by the time the 2015 fiscal year is complete, Williams admitted.