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Newfoundland and Labrador’s new Progressive Conservative government has unveiled the fiscal plan for its first full year in office, following through on promises made during last fall’s election but revealing grim projections for the province’s finances in the near future.
“We campaigned on the promise that we would not balance the province’s books without first helping families balance their own,” Finance Minister Craig Pardy said during his budget speech in the House of Assembly Wednesday afternoon.
“This budget takes great strides in helping the people of this wonderful province achieve that balance through lower taxes and numerous affordability measures. But, make no mistake, we will manage the province’s fiscal future responsibly.”
Pardy’s financial blueprint has measures that echo the Tory trinity of promises from the fall election campaign — lower taxes, better health care, and safer communities.
The PCs present their first budget, after 10 years of Liberal rule in Newfoundland and Labrador.
The budget follows through on a number of cost-of-living initiatives.
Those include raising the income threshold before having to pay provincial income taxes, expanding the child benefit, and hiking the seniors benefit.
There are three planned reductions in the small business tax rate between 2026 and 2028.
A tuition freeze will be implemented at Memorial University and College of the North Atlantic this fall.
Earlier this year, the education minister announced the province would be reinstating a tuition freeze for MUN.
There are plans for more police, prosecutors, judges, and court staff.
And the province projects record spending on health care — $5.4 billion, about 42 cents of every dollar spent.
Billion-dollar-plus deficits loom in years ahead
But all that comes with a cost. Government projections show that the provincial balance sheet is expected to get worse in the coming years.
“I am not going to sugarcoat it,” Pardy said. “Your government has inherited a serious fiscal challenge that will require time, effort, and energy to fix.”
The deficit for last year — 2025-26 — came in at $729 million. That’s better than had been expected as of last fall, largely thanks to a recent boon in oil revenues sparked by the conflict in the Middle East.
The deficit for 2026-27 is projected to come in at $688 million.
But the finances are expected to deteriorate after that, with billion-dollar-plus shortfalls forecast until 2030.
“We are confident in our fiscal framework’s ability to pay for the commitments in this budget, and we owe it to the people who voted for us to follow through on our campaign commitments,” Pardy noted in the budget speech.
The province expects to spend more than $11.5 billion this year, on revenues of $10.8 billion.
Those revenues include an expected influx of $2 billion in volatile offshore oil royalties. That’s based on projected oil production of 96.7 million barrels, at a price of $79 US a barrel of Brent crude and an exchange rate with the loonie at 74.1 cents to the American dollar.
Pardy stressed that the financial forecast does not include potential benefits from a future hydro agreement in Labrador.
“Let me be clear, not a dime of assumed revenue from a Churchill Falls deal will be included on our books until a deal is signed,” the finance minister said.
Newfoundland and Labrador’s net debt is expected to break through the $20-billion barrier this year, up to $20.8 billion.
