It says the oil-producing province will take "decisive actions" in a budget expected this spring after oil prices dropped.
The speech read Tuesday by Lt.-Gov. Frank Fagan, says a new approach is needed to avoid successive deficits of around $2 billion.
Newfoundland and Labrador Premier Dwight Ball arrives for the First Ministers Meeting in Vancouver, B.C., Thursday, March. 3, 2016. (Photo: Jonathan Hayward/CP)
"The choices ahead of us will not be easy," Fagan read. "Everyone will have to accept some level of sacrifice in the months and years ahead if we are to provide critical services, while restoring accountability and stability to government finances."
The alternative is to borrow ever increasing amounts at higher levels of interest, says the speech.
It says net debt would top $23 billion in just five years if the province does not correct course.
The speech says multi-year budget planning along with unspecified efforts to raise cash and cut expenses are coming.
"Everyone will have to accept some level of sacrifice in the months and years ahead if we are to provide critical services, while restoring accountability and stability to government finances."
It says without action, the province would have to borrow $15.4 billion by 2020-21 — a move that would be like borrowing more than $7 million every day or almost $300,000 an hour.
Provincial Auditor General Terry Paddon said earlier this year that the rate of projected deficit growth is unsustainable in a relatively small province of about 527,000 people.
"Bond rating agencies and major banks are watching the province closely," Fagan read. "My government is focused on protecting our credit ratings, as we do not want to be paying more for borrowing purposes."
The speech says the government will continue to seek public feedback and input.
New, all-party committee to review legislation
"People recognize the seriousness of the problem and they want to be part of the solution."
Fagan said the first piece of legislation to be introduced would set up an independent commission for government appointments.
Such hiring "should be merit-based, not politically motivated, as in the past," Fagan read.
There will also be new all-party committees to review legislation and other issues as part of a Liberal election pledge toward more accountable government.
And the speech promises to openly assess the $8.6-billion Muskrat Falls hydro project in Labrador started under the previous Tory government.
"This review will analyze the cost, schedule and associated risks of the project and is the kind of due diligence that is long overdue," Fagan read.
Efforts to diversify a heavily oil-reliant economy will include building on a seafood industry worth more than $1.2 billion last year. That means more international marketing and a new advisory council to plan "for the return of the cod fishery" as stocks improve, says the speech.
Thousands of people across the province were thrown out of work in 1992 with a moratorium — still in effect — on the commercial northern cod fishery.
Researchers say the cod biomass is improving but that a return to large-scale commercial fishing is likely a decade away.
Stocks were devastated by a complex blend of overfishing, mismanagement and environmental factors.
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