Budget Address 2016Introduction
Mister Speaker, I am honoured to present and table the 2016-2017 Operating Budget for the Government of Prince Edward Island.
Our budget plan is consistent with our pledge to grow the economy, spend public dollars wisely and provide enhanced opportunities for future generations of Islanders.
Notre plan budgétaire est conforme à notre engagement de stimuler l’économie, de dépenser les deniers publics de façon judicieuse et d’offrir davantage d’occasions intéressantes aux générations futures d’Insulaires.
Over the last ten months, we have worked together across Prince Edward Island and across our Government to increase opportunities for engagement and prosperity for all Islanders. Today is one more step forward in that process.
The budget we present today will focus on growing the provincial economy and providing critical services, while respecting our commitment to spend public dollars in a prudent and responsible way. Islanders have spoken about their priorities, our Government has listened, and we have set a course to build sustained prosperity. Against the backdrop of a slow economy – both at home and abroad – we have made some difficult choices.
Our fiscal plan for the upcoming year will make necessary investments in core service areas – healthcare, education and social programming – while, at the same time, positioning Prince Edward Island for long-term and sustainable economic growth.
As our Premier is fond of saying, the people of Prince Edward Island are its greatest asset. And in this budget, they are our primary focus. A budget cannot, however, just tackle the priorities of today. It must also lay a solid foundation for the future. The investments and decisions we make in this budget will be guided not by what is best for our Government, but rather by what is in the best interests of our Province and its people.
Identified Priorities and Careful Decisions
Mister Speaker, Islanders have much to be proud of. In 2015, our Province was an economic leader. For the second year in a row, we led Canada in export growth. Prince Edward Island was also the national leader in wage growth. Our total labour income exceeded $3.1 billion – an historic high. And closer to home, we led the Atlantic provinces in population growth. These are successes to be celebrated, as they underscore the potential that exists in this Province.
At the same time, we must remain mindful of the continued volatility in the global economy. Vast fluctuations in the pricing of resources and other market conditions have placed pressure on government and private industry alike. These pressures, in turn, have impacted both personal and public finances. We, as Islanders and as a Government, are not isolated from these economic realities.
One of the most important tasks of our Government must be to support and encourage growth. Our social and economic prosperity depends upon a strong Island economy. And while the challenges may be greater for us against the weight of slower economic growth both nationally and internationally, our Province will confront these challenges in this budget and build a solid foundation for the future of all Islanders.
This year, we are projecting modest growth in our economy of 1.2 percent based on private sector estimates. That is a significant downward revision from 2015. And while our forecasting does show a modest improvement in growth through to 2017, with real GDP advancing by 1.4 percent in 2016 and by 1.4 percent in 2017, this is not the growth we expected when our budget was presented in June 2015. As a result, we have had to find new revenue to make the investments that Islanders have been asking for in core public services.
Mister Speaker, true engagement means listening to different viewpoints, adjusting to realities, and re-examining objectives. With the change in growth projections, we have had to change our fiscal plan.
Our overall plan projects that a balanced budget is achievable. Allowing for increased and sustained spending in critical public services, the budget projects a deficit of $9.6 million this fiscal year with a surplus of $9.2 million next year.
But Islanders have told us that a balanced budget should not come at the expense of essential public services, such as healthcare and education. More investments are necessary to sustain these critical services. And it is for these reasons that we have decided to increase our Harmonized Sales Tax by one percent, effective October 1, 2016.This change will result in additional revenue of $11 million in 2016-2017 and $22 million in 2017-2018. These revenues will go directly to the areas that are most important to Islanders, their current security, and our future prosperity:
- an additional $18.2 million to ensure sustained health and wellness;
- an additional $7.1 million to improve education and invest in youth and prosperity;
- an additional $2.6 million to support those most in need; and
- an additional $7.1 million to help grow employment and our economy.
Our Government is doing its part to spend public funds carefully. We have embraced prudence and fiscal responsibility in our own operations, and will continue to find savings, where possible. While investing in critical front-line services, we will continue on the path of smarter and more cost-efficient public administration. This will include reviewing future benefit arrangements in the public sector, including the existing service gratuity, and following through on our commitment to bring forward proposals to reduce the transitional allowances for MLAs. Islanders expect government to lead by example and rightly so.
We will also work with our new Federal Government to ensure that Island families and communities have the supports they need, and that we collaborate in ways that spark economic growth in our region. Transfers from the Federal Government to support provincial public services and infrastructure comprise 38.5 percent of our total revenues this year. It is our single largest revenue source at $658 million.
In the coming year, Mister Speaker, we will continue the important work of ensuring that our expenditures are focused on the priorities identified by Islanders and that our investments are aimed at growing the economy.
While our Government remains committed to the goal of a structural balance of our annual revenues and expenditures, current economic conditions tell us that this is better achieved over the next two years.