03/07/2013 01:02 EST | Updated 05/07/2013 05:12 EDT

Government and opposition tussle as Newfoundland legislature resumes sitting

ST. JOHN'S, N.L. - A new sitting of the Newfoundland and Labrador legislature got off to a screaming start Thursday over accusations that the Progressive Conservative government has mismanaged provincial finances.

The government has already frozen members' wages and cut dozens of public-sector jobs as it faces major revenue shortfalls.

Finance Minister Jerome Kennedy says projected deficits over the next three years will total almost $4 billion.

It's a dramatic turnaround for an oil- and mineral-rich province that has seen surplus budgets in six of the last seven years.

A global economic slowdown has cut commodities earnings, putting a big dent in the provincial treasury as payments from the Atlantic Accord expired. The joint offshore management program with Ottawa put $536 million in provincial coffers in 2011.

Liberal Opposition Leader Dwight Ball accused Premier Kathy Dunderdale of poor planning and reckless spending.

"It is clear that the premier had no plans to get this budget mess under control," he said over government heckles during question period.

"For years, she spent hand over fist with no regard for fiscal responsibility. So I ask the premier: how much money are you looking at saving by cutting vital services to Newfoundlanders and Labradorians?"

Kennedy shot back that the province was nearly bankrupt in 2003 when the Tories formed government after years of Liberal rule. Windfall cash from rising oil prices in recent years was used to increase investments in public service wages, health care, roads, construction projects and to deliver sweeping tax relief, he said.

"We have reduced debt by 25 per cent," from a high of almost $12 billion in 2004, Kennedy said.

"But now Mr. Speaker, we're at a situation where as a result of our tax reductions, our loss of the Atlantic Accord money, no equalization, that we're in a situation where our revenues now don't equal our expenditures."

Spending will be brought in line with a sustainability budget that's expected in coming weeks, although Dunderdale declined to confirm the date.

Question period became increasingly raucous as she threw back opposition suggestions that her government squandered lucrative oil profits.

"Tell us where we were frivolous," she bellowed as at least one Liberal member yelled retorts. "Should we not have put schools in Labrador? Should we not have put hospitals in Labrador? Should we have not done the Trans-Labrador Highway, Mr. Speaker?"

The government is looking for savings across departments as anxious civil servants, particularly those on short-term contracts, await their fate.

Dunderdale said it's never pleasant to trim jobs. But she said the deficit is worse than expected and that the province won't likely be back in the black before 2015 or 2016.

Former Finance Minister Tom Marshall in last April's budget had forecast a return to surplus of about $44 million by 2014-15 but Dunderdale seemed to forget.

"It's news to me that anybody predicted in 2014-15 that we'd be back in the black," she told reporters.

"But you know, it is what it is. When over 30 per cent of your budget is reliant on commodities, on the price of oil, then you're going to have these kinds of fluctuations."