• 66 cents is spent in the social sector, which includes health care, education, social assistance, policing, housing and supporting municipalities
• 16 cents goes to pay the interest on our debt
• 12 cents provides for the general government sector, which includes maintaining roads and ferries, collecting taxes and managing Crown lands, and
• 6 cents is spent in the resource sector, encouraging economic development, managing our natural resources, protecting the environment and promoting tourism and culture.

Government spending has been restrained for some time. However, we still do not have adequate revenues to continue to provide the same level of programs and services. To address this, in 1996 Government initiated a process of program review, the results of which will be incorporated into the 1997 Budget.

Reducing services will inevitably result in some reduction in the number of public employees, whose wages make up 65 percent of the cost of providing services. How should we balance the social and economic costs of staff reductions against the alternatives of increasing our debt or taxes?

Program Review

Program review is a key component of our efforts to introduce multi-year financial planning to Government. Program review comprehensively evaluates all of our programs and services to establish priorities, and determine the most efficient delivery methods. Three tests are applied to all government programs:

1. a public interest test - does the program continue to serve a valuable public purpose?
2. an efficiency test - how can this program be provided most efficiently and effectively?, and,
3. an affordability test - is the program still affordable?

Program review recognizes that to achieve any reasonable deficit reduction over the next three years it is essential for the social sector - education, social services, justice, municipal affairs and housing - to bear a significant share of the expenditure reductions. This is unavoidable when this sector now consumes 66 percent of the Provincial budget.

Last year, in response to the pre-budget consultations, the Department of Health was given a three year budget that was actually increased slightly from the previous year. It was the only department not subject to spending reductions in the 1996 Budget. It also is excluded from the expenditure reduction aspect of program review. Even though this department has the largest budget, it is Government's intention to maintain this three year funding commitment.

The Department of Education has the second largest budget. Accomplishing expenditure reductions without lessening the quality of education requires creative solutions. Could one possible approach be to have some reduction in school board budgets, while giving the boards more autonomy in decision making? This would involve transferring decision making responsibility for many school board activities from the Department of Education to the boards, while giving the boards more flexibility to spend money as they see fit.

There are other alternatives. This Province has one of the lowest pupil-teacher ratios in the country. Other provinces with stronger economies and better financial positions have more students per teacher than we have. In light of our financial situation, can we afford to retain a pupil-teacher ratio that is one of the lowest in the country?

To what extent should taxpayers subsidize Memorial University? Are there greater efficiencies to be found in the university's operations? How should these be achieved? Should tuition, which is low compared to other universities, be increased?

The Department of Social Services concludes that there needs to be more co-ordination in service delivery. To accomplish this, should certain functions of the Department of Social Services be aligned with those of other departments? Could social assistance programs be combined with employment and labour market programs? Should the remaining community services of the department be integrated with the community health programs of the Department of Health? We are experiencing a reduction in federal support for social programs, like social assistance, through transfer payment cuts. Should these cuts be passed on to social services recepients through reductions in basic social assistance benefits when our benefit rates are already among the lowest in the country?

The Royal Newfoundland Constabulary and Royal Canadian Mounted Police are both excellent police forces. Both have given proven service to the Province in their respective jurisdictions. However, can one expanded force with an expanded mandate operate more efficiently than two? Or, as an alternative, should the geographical areas which each force now serves be redistributed to increase efficiency?

The resource sector - forestry & agriculture, mines & energy, fisheries, environment, development & trade and tourism & culture - has two mandates: to manage the Province's natural resources, and to stimulate economic activity. To offset the cost of managing resources, should a broader range of charges be implemented, such as a license for trout fishing? Should Government continue to operate commercial or recreational ventures? Should it provide financial and other support to business in light of the difficulty we are having maintaining essential services?

What are the core functions of government? Could enterprises such as parks, laboratory services, marine service centres and arts & culture centres be more efficiently run by the private sector? Should Government charge more for some of the services it continues to provide, particularly when current charges do not recover the costs of the service? Should all taxpayers subsidize the cost of services that benefit only a few, particulary services which are largely utilized by business?

Can our public buildings, roads and ferries be maintained more efficiently? Is it possible to reduce any of our service levels? Is there a greater role for the private sector in providing public services? Should Government own public buildings when adequate space could be rented from, and maintained by, the private sector?

Program review must focus on the sustainability of essential programs and services for the people of the Province, while stabilizing our public service at an affordable level.

Our Strategic Social Plan

The Strategic Social Plan document will set out the long term policy direction and priorities for social programs such as health care, education, social assistance, employment programs and child protection. The social plan consultations are bringing the scope and complexity of the social policy challenges the Province is facing into a sharper focus. The budget plan will set out the financial framework to implement the social plan. The Strategic Social Plan process illustrates how Government is approaching major issues of importance to everyone in the Province in an organized and comprehensive manner.

We are all concerned about the problem of child poverty. The provinces are working with the federal government to develop a National Child Benefit program. This program should enable both levels of government working together to provide harmonized benefits to families living in poverty, including the working poor.

Our Choices

Considering the impact current spending levels have on our financial situation, the deficits we are facing, the essential nature of so many of our programs and services, and the effects of spending cuts

• Can we avoid significant cuts in program and service spending?
  If so, how?
• How far can we cut spending before we start to hurt ourselves more than we help ourselves?
• Should any program or service be excluded from further cuts, or not cut as much as other areas?
  If so, why? Which areas could be cut more to make up the difference?
• Should any cuts be across-the-board ­ that is, at the same level for all services ­ or should Government set priorities, with spending for some programs and services affected more or less than others?
• If priorities need to be set, what services should be reduced or eliminated? What services need to grow?
• Should we consider co-operation between Government and the private sector, if that arrangement will deliver the same quality of service at lower cost?

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