04/25/2012 08:51 EDT | Updated 06/25/2012 05:12 EDT

10-year N.L. plan aims to rein in government spending

After warning about using a cleaver on this year's budget but opting instead for a scalpel, the Newfoundland and Labrador government now says it will launch yet another review aimed at carving out unnecessary spending in the future.

The next review — called a “core mandate analysis” — will be part of a decade-long process to get the province’s books in order, according to Finance Minister Tom Marshall.

“We have to know that our spending is going to get down to a level [where] our spending is going to be sustainable,” Marshall said.

The province’s top politicians, including Premier Kathy Dunderdale, have been hinting for months about cuts to come in what they were portraying as an austerity budget.

But most of the bad news didn’t materialize on Tuesday.

The hundreds of job losses — a potential 800, at one point — instead became 45.

And a review identified just $38.8 million in savings, or 0.6 per cent of overall program spending. Several areas, such as health care, were “ring-fenced” and exempted from examination.

After months of tough talk about belt-tightening, Marshall defended the relatively light touch. The deficit is expected to be $258.4 million in 2012-13.

“We could have done it in one year,” he told reporters Tuesday morning, before delivering his budget speech. “We could have cut $258 million, and cut a lot of jobs. We decided that we’re not doing it in one or two years. We decided that we’re going to have a 10-year plan and that we’re going to get where we have to be over that time.”

The new core mandate analysis will look at all areas of government, including those previously excluded from review. The recommended savings could be implemented as soon as next year's budget, Department of Finance officials said.

“We want them to direct the non-core spending into what their priorities are, into the core,” Marshall said.

He said the initiative could also free up capacity to invest in priority areas that will help grow and diversify the economy.

Retirements looming

Marshall indicated that some savings could be realized through attrition. He noted that 24 per cent of the core civil service will be eligible to retire over the next five years. Other workers, he said, will depart of their own accord for the private sector.

“We will take advantage of those voluntary retirements and those voluntary resignations in order to manage the size of our core public service so that it’s sustainable over the long term,” Marshall noted.

But there are few hard numbers available on the initiative. In fact, the 10-year plan did not appear to be referenced at all in the reams of budget documents tabled Tuesday. It instead came up when Marshall was questioned by reporters.

While there are currently more than 9,000 people employed in core government departments, Marshall said there are no targets involved.

“Nobody is fired; nobody is let go,” he said. “But we still will accomplish our objective to reduce the size of the public service.”

He pointed towards the importance of oil, which is a lucrative — and non-renewable — resource whose volatility complicates government budgeting.

As CBC News reported this week, Newfoundland and Labrador deficit and surplus estimates have been off by an average of $800 million a year since 2004, largely because of petrol price and production fluctuations.

Restrain growth

The ultimate goal of the 10-year plan, Marshall said, is to restrain growth in program spending to the rate of inflation, and reduce Newfoundland and Labrador’s debt level to the all-province average.

There has been some progress on both issues. The net debt is down to $7.8 billion — a decrease of more than $4 billion from its peak but that number is projected to increase again in 2013.

And after an aggressive ramp-up that saw a 54 per cent climb in program spending over just the past six years, this year’s projected growth falls under the inflationary benchmark, at 1.7 per cent.

While there are no targets, per se, Marshall said government departments will be asked for input as the next stage of the review unfolds.

“Obviously, our 10-year plan will recalibrate from time to time,” he said.