ST. JOHN'S, N.L. - Premier Danny Williams is ushering in an era of unprecedented economic independence for Newfoundland and Labrador, forecasting a surplus of $544 million in a budget that trims taxes, boosts education and health care spending while paying down some of its whopping debt.
Fuelled by the soaring price of oil, the surplus budget marks a symbolic turning point for the province as it prepares to get off equalization next year for the first time since it joined Confederation six decades ago.
"We were always the poor cousin of Confederation," Finance Minister Tom Marshall told a news conference before tabling the budget.
"Many of you, I guess like me, when you travelled the country, you would hear comments about people in this province ... being on welfare and other provinces having to provide us with revenues. Those days are over."
The province is poised to receive only $18 million in federal equalization payments this year.
The provincial government has hiked total expenditures to $6.4 billion and intends to slash its accumulated debt to $10 billion, down from $10.3 billion the previous year.
But pegged at roughly $20,000 for every man, woman and child, that's still the highest per capita in Canada.
"It's never been my thought to reduce the entire debt. It was always my thought to deal with it in a reasonable and responsible way, to get it down," Marshall said.
"It's not how quickly we do it. It's the fact whether we get it right or not."
About $3.7 billion will be spent on education and health care, an increase of about $200 million from last year.
For months, education and health-care groups have called on the government to improve the state of the province's mouldy schools and aging hospitals.
An ongoing public inquiry into botched breast-cancer tests has also highlighted the need to upgrade outdated medical equipment as well as address a glaring shortage of nurses and doctors.
The budget also contained a revised surplus of $1.4 billion for 2007-08, more than four times what it projected last year.
At the time, the provincial government based its projections on a US$58 barrel of oil. It has now revised that to be US$87 a barrel for the coming year.
Marshall brushed aside suggestions the government was downplaying its estimates.
"We have to be prudent," he said. "I don't want to be low, but if we are low and the prices are higher, well the worst (that) happens, we have more money. I would hate to be wrong on the other side."
Marshall noted that the current downturn in the U.S. economy and rising food and energy costs are still having an impact on the everyday lives of residents, as well as the province's forestry, manufacturing and fishing industries.
"No government can insulate or isolate all people from rising costs of food or oil out there," he said.
"I fill up my car as well. I know what's going on. I know how people are hurt by this."
Cuts in personal income taxes in the budget will make Newfoundland and Labrador the province with the fourth lowest average tax rates in Canada. Two years ago, it had the highest.
The surplus marks a stunning turnaround of the economic situation Williams inherited after he was first elected in 2003.
At the time, the Conservative government faced a deficit close to $1 billion and the prospect of slashing public services.
But now the province is facing a decline in offshore oil production.
Last year, output from its three projects dropped by 31 million barrels, and that decline is expected to continue for the next several years.
The budget comes one day after Statistics Canada reported that the province's economic growth last year was 9.1 per cent, more than triple the national rate.
The surplus was largely expected.
Even Opposition Liberal Leader Yvonne Jones joked Monday at the legislature that she felt like a child on Christmas Eve in anticipation of the budget, calling the finance minister Santa Claus.
Highlights of the 2008-09 Newfoundland and Labrador budget tabled Tuesday:
- Expenditures amount to $6.4 billion; with the surplus projected to be $544 million.
- Net debt will to fall to $10 billion, down from $10.3 billion in past year.
- $167 million will be spent renovating aging hospitals and replacing outdated medical equipment.
- $89 million is allocated to build new schools and repair current educational facilities.
- Personal income tax is cut by one percentage point, making Newfoundland and Labrador the province with the fourth lowest average tax rates in Canada.
$12.4 million will be spent to help fulfil an election promise for a $1,000 baby bonus.
