P.E.I. faces difficult changes in spring budget

Published on January 19, 2016
Finance Minister Allen Roach
Submitted photo

Pre-budget consultations are nothing new for Prince Edward Island ministers of finance.  They are held each year as government listens to Islanders on spending priorities and hears suggestions on where to spend and where to cut.

It seems unsure if the federal government is going to hear from Canadians before bringing down its budget but in that case, Ottawa has signaled it will go heavily into debt as it embarks on a spending spree to boost the economy. The Liberals are intent on fulfilling expensive pre-election promises with huge amounts of infrastructure spending.

Financial plans seem somewhat defined on the federal side even without input from Joe Public. The provinces are being consulted on infrastructure, pension plans, health and other key issues through federal-provincial consultations.

But such is not the case on the Island where the provincial government is intent on presenting a balanced budget for the 2016-2017 fiscal year.

The province is hoping Ottawa will spend extra billions, allowing the province to benefit significantly on social and industrial infrastructure. At the same time, the province has hinted it plans to freeze or cut wherever possible, and has essentially usurped pre-budget consultations. Years of balanced budget projections and promises have failed and Finance Minister Allen Roach seems determined to end that string of failures this spring.

He faces a daunting task. The last fiscal update presented in late 2015 showed the deficit had leaped to $32.9 million to the end of September — from a projected $19 million — because of extra spending on education, health and pension funding.

Government forecasts still suggest that the province will achieve a surplus of $11.9 million in the upcoming budget.

Premier Wade MacLauchlan might have shed additional light on his plans during a state of the province address Monday night in Charlottetown.

In a year-end CTV television interview, the premier hinted at across the board cuts — as high as four to five per cent.

If true, and they extend to education and health — the departments with by far the largest budget allotments — then Islanders will be hit hard to achieve fiscal balance.

Government is seeking affirmation more so than ideas in the upcoming budget consultation process. Many individuals and groups making online or in person submissions will suggest that balanced budgets are a desired goal but how many are going to suggest cuts or where? It would almost be an exercise in self-incrimination.

With government’s stated intent for balance and hints of cuts, it will be brave indeed for individuals or groups to appear and demand spending increases — in direct opposition to the province’s goals.

Minister Roach is still hoping for ideas and suggestions on trimming, efficiencies and better ways of doing things. Government won’t be very interested in listening to demands for spending increases even though the needs are great in many departments.

“We need input on what programs and services are most important to them, where savings can be found, and how we can increase revenue and grow our economy,” intones Minister Roach.

Unless Islanders make a strong and convincing case to keep what they have, cuts are looming.

 Government wants to hear how we can reach a balanced budget.

Mr. Roach wants suggestions on cuts, not spending. If government is serious on holding the line on front-line programs, at best it could mean a freeze or the most minimal increases in health and education.

Government isn’t offering Islanders much advance help. Opposition financial critic Darlene Compton makes a good point by contrasting what is happening in New Brunswick. She says the N.B. government has launched a public engagement process, laying out a variety of spending and tax proposals in advance of seeking public feedback. That resulted in more than 1,300 citizens’ and stakeholder groups participating in some 20 sessions on specific spending and tax proposals.

To move from $32.9 million in the red to $11.9 million in the black in one fiscal year on P.E.I. will require innovative, herculean efforts.

Difficult decisions will have to be made.