Ghiz warns cuts could be deeper than expected

Teresa Wright
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Islanders must adjust expectations for government spending and brace themselves for cuts that could be deeper than expected, said Premier Robert Ghiz during his state-of-the-province address Monday night.

Speaking to a crowd of 200 business and political leaders during the annual dinner of P.E.I. Rotary clubs, Ghiz spoke at length about the economic hits P.E.I. has taken since his first state-of-the-province speech in 2008.

As a result, his government must cut everything except health care by three per cent to make up for losses and continue to try to pay down P.E.I.'s $73-million deficit.

But Ghiz told The Guardian some areas could be cut even more if world stock markets continue to struggle.

"It's a first step in terms of getting our fiscal house more in order - one three-per-cent (cut). But maybe more," he said.

"You heard me talk about the stock market tonight. It has to do with the low stock market and our pension liability that we need to put money into."

That's why the province plans to weather shaky economic times by reducing spending and focusing on protecting services already in place, Ghiz said.

If a government program truly meets the public's needs, it will be maintained, but with no increases. And, if a service no longer serves the needs of the Island, it may be discontinued, the premier said during his speech.

"Our project for 2012 is this, we will protect what we have, we will resist the temptation to grow as a government and we will act with purpose and discipline and any increase in spending will be very rare."

Ghiz spoke at length about how the world economic downturn changed the state of the province's finances and its priorities in just a few short years.

Now, cuts being rolled out by the federal Conservatives will be even more damaging to the province's economy, Ghiz said.

Dwindling equalization payments and the recent recalculation of the Canada Health Transfer will be deeply felt by Islanders.

And it's disproportionate, considering the Island's diminishing share of federal dollars compared to a lion's share being doled to Alberta, Ghiz said.

"In 2014, the province of Alberta, the richest province in the country by a long shot, will receive an additional $1 billion in health-care dollars at the expense of every other province across this country."

Nonetheless, P.E.I. must keep working toward a balanced budget and a stable economy. Savings must be found and cuts must be made, Ghiz said.

"While I continue to remain optimistic that the federal government may adjust its position, it's important to prepare ourselves for a negative outcome. And that means embracing the challenge that's in front of us."

Despite the fact Ghiz's rhetoric on spending cuts is similar to that being put forward by the federal Conservatives when explaining their need for downsizing transfers, Ghiz put the onus on the feds to protect taxpayers from having their services cut by multiple levels of government.

"It's up to the federal government to offer each province a level playing field," he said.

"But with a cap on equalization and changes to the health-care formula that's not going to help any other province except for Alberta, there's a lot of work to do there."


Organizations: Canada Health Transfer

Geographic location: Alberta

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Recent comments

  • Guy Cousineau
    January 31, 2012 - 15:08

    Cuts are necessary. It is not en enviable task to cut costs without adversely affecting service. But the reality is that we can not continue to support deficit budgets. Only two things can happen: Increase revenues or decrease expenses. I am sure the uproar would be greater if the proposal was to increase taxes. I also agree with Beavis that salary cuts should be one of the considerations.

  • SJP
    January 31, 2012 - 09:49

    So, does that mean he will be giving back the raise him and his friends received after 30 days in office?

  • Beavis
    January 31, 2012 - 09:09

    SO, does this mean that the MLA's, other gov't officials and Ghiz himself will take a 3% cut in their big fat salaries too? There would be a HUGE saving there, why cut services for people to keep their wallets fat, come on here....