Paul Davis: Budget cuts, HST hikes and a fall election

Newfoundland and Labrador Premier Paul Davis says the upcoming provincial budget, set to be released by the end of April, is heavily dictated by declining oil prices — and government will have to trim some financial fat. 

Davis joined host David Cochrane for a feature interview on this week's episode of On Point.

Davis said government consulted with financial advisors in the fall while waiting for word from the Organization of Petroleum Exporting Countries (OPEC).

The global oil cartel has significant influence on oil prices and held a meeting in November. Davis said the consensus at that time was that the price of oil would regain ground within one week to 10 days. 

"We really still don't know where [the prices] are, and it's a bit of an anomaly in many senses," he said.

Davis said that Newfoundland and Labrador relies on oil more than any other province in Canada.

"We either have to deal with revenue, find new ways to increase new revenue. We have to reduce our spending, our expenditure. We have to increase our debt, or we have to borrow more money. That's the options that are available to us," he said.

Cutbacks

"It's going to be a tough budget," he said. "But we're also cognisant on so many areas." 

In the House of Assembly earlier this week, Davis discussed how social programs like Choices for Youth and Stella Burry Community Services might be impacted.

According to Davis, government partners with a number of private organizations provide upwards of $70-million in core funding. 

While these organizations won't be affected, Davis said those that receive funding on an application-based basis, may very well see a cut. 

"Very likely there's going to be an impact on application-based funding," he said.

HST hike

As for a possible increase in the Harmonized Sales Tax, Davis said government is looking at the province's entire taxation regime. 

The province's competitive tax rate, he said, has been an incentive for outside investors

"We don't want to be out of step with the rest of Canada."

Public versus private

The premier said there are a number of instances — such as ferry services, and long-term care services — in which the private and public sectors work together successfully. 

"If we're not willing to try and find better ways to deliver programs and services, we're going to end up in the same place that we have been for decades ... But I'm also very respectful of our public service," he said.  

Davis said he's heard there may be some pushback from Jerry Earle, the newly elected president of NAPE, but he's hoping the two can establish a good working relationship despite a difference in opinion over privatization.

Fall election

Davis said he's confident there is enough time to reduce the number of seats in the House of Assembly before a fall election.

"If parties want to do this, if they truly want to get this done, there's no reason why they can't do it," he said.

The premier said work is already being done behind the scenes to prepare for an upcoming election.

"It's not like we as a party cannot do anything until we get the legislation finalized," he said. 

"We're going to have an election this fall." 

You can watch David Cochrane's full interview with Premier Paul Davis in the video player above.