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January 23, 2006
For immediate release

Public Accounts 2004/2005

Provincial Treasury

Provincial Treasurer Mitch Murphy is pleased to announce the release of the 2004/05 Public Accounts. As was indicated in the Fall session of the Legislative Assembly, the 2004/05 annual deficit was $33 million. It should also be noted the Statement of Financial Position from the Public Accounts reports an increase in Net Debt of $17 million. This amount represents an $8 million improvement over the $25 million increase in Net Debt from the 2004/05 Forecast in April 2005. Many financial statement users, including the Province’s bondraters, consider the change in Net Debt to be the more accurate measure of financial performance as it indicates where we are today compared to one year earlier.

The 2004/05 final results compare favourably the original Budget Estimates from March 2004 ($33 million deficit) and the April 2005 Forecast ($39 million deficit). While there have been variances along the way, the overall goal for 2004/05 was achieved. If incremental revenues became available, they were used to accommodate additional needs that arose during the year. Given the financial situation facing government in previous years, significant emphasis was placed on developing a long-term plan towards financial sustainability without placing undue hardship on existing programs or services.

Our debt per capita of $10,869 is lower than the provincial average of $12,132, thus ranking us 4th best among the provinces. As well, fewer dollars are being used for debt servicing (interest-bite) thus freeing-up additional resources for other programs.

In many ways, 2004/05 was a transition year as government needed to address several financial realities and develop viable solutions. As a result, an on-going program review process was initiated to ensure the Province is doing the best with what it has in order to ensure essential services can be maintained. To this end, the Workforce Renewal Program was initiated to lessen any hardships from the changes that were required. The level of participation in the Workforce Renewal Program exceeded original expectations. While this caused a $14 million charge to 2004/05 final results, it is expected to have long-term positive results in achieving Program objectives.

To put into perspective, if the effects of the Workforce Renewal Program $14 million were backed out, the 2004/05 deficit would be only $19 million. Similarly, the increase in Net Debt would have been $3 million. Overall, this reflects the direction we want to take and is consistent with the budgeted 2005/06 increase in Net Debt of $9 million.

In general, the 2004/05 results are encouraging given the effects of the Workforce Renewal Program, the impact from accounting standard changes, additional assistance provided to some Crown entities, and continuing financial pressure from program expenditures.

Media Contact: Island Information Service
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