NL Budget 2023: For Your Health

Everything old is new again—including quite a few of the announcements in Budget 2023.

The clear focus for this year’s budget is the provincial health care system—with the documents literally titled Your Health. Our Priority.: Our Largest Ever Investment in Health Care, just to make sure nobody missed it.

The government is boasting $3.9 billion in spending to tackle wait times, access to primary care and integrate services. However, many of the big budget items had been already revealed by Furey and his ministers weeks before they were announced again on March 23.

That $3.9 billion for health care represents a third of the 2023 budget.

Other touted initiatives included a few measures aimed at alleviating the rising cost of living: no new taxes or fee increases, reducing the tax on gasoline and diesel fuel by 8.05 cents per litre, eliminating the retail sales tax on home insurance, and continuing the 50 percent cut to registration costs for passenger vehicles, light trucks, and taxis for another year.

But below the big flashing arrows pointing to health care spending, Finance Minister Siobhan Coady and department officials also extended the metaphor to provincial finances. 

“This is a budget that is very positive in that it shows fiscal responsibility, financial responsibility at the same time as making strategic investments,” Coady told reporters during lock-in. “We’re in a better place today than when I was first asked to be finance minister two and a half years ago. We are moving in the right direction.”

After a few rocky pandemic years in the proverbial ICU, Newfoundland and Labrador’s fiscal and economic health may finally be on the mend—according to the Liberals, at least.

The Doctor is In

$3.9 billion is a big number. Some of that is coming from the federal government. The Canada Health Transfers were recently increased by $27 million. Minister Coady added that they also have some bilateral agreements with the federal government for various programs, meaning about $140 million is coming from Ottawa this year.

“There is a 10-year health plan that they’ve announced as well,” she noted. “So $1.2 billion will come to Newfoundland and Labrador over the next ten years.”

With $140 million coming from the federal government, the rest is coming from the province. Dr. Andrew Furey’s government is throwing a lot of money into health care related fields.

This budget has announced $23 million for the recruitment and retention of health care professionals. New drugs and treatments were also given some attention in the budget, with more than $187 million going towards the provincial drug program. This also includes coverage for 12 new drugs, including for prostate cancer, leukemia, Wilson’s Disease, and others. And another $1.8 million is for travelling orthopaedic teams and same day hip and knee replacement surgeries—a program that is already in effect.

There’s also $9 million to consolidate 60 road ambulance services through a centralized dispatch. Osborne said they plan to bring on a contractor to advise them how this consolidation should be integrated and rolled out. He also said this direction was advised in the Health Accord, and that not all ambulance providers would come under government administration—some would stay private or community-based, particularly in rural areas.

The budget also announced the Continuous Glucose Monitoring pilot project for individuals under 18, funded through the Sugar Sweetened Beverage Tax. Osborne explained the purpose of that tax is twofold: it was meant to try to reduce an unhealthy diet as well as be used to fund services, such as the school lunch program.

Funding has also been earmarked for mental health services, with $4.4 million for Flexible Assertive Community Treatment teams and $5 million for community-based mental health and addictions services. There is also $200,000 for the Regional Early Psychosis Nurse Program in the Labrador-Grenfell Health region, as well as support for expansion of the rotational mental health counsellor model to communities in coastal Labrador.

They’re also kicking $5 million to a new virtual care program—aka telemedicine—meant to help primary care access across NL. $15 million is also being set aside for a new health information system.

Five seats are also being added to Memorial University’s Undergraduate Medical Education Program for NL students, and an additional five seats for the Family Medicine Residency Program for International Medical Graduates at the Faculty of Medicine.

New health care facilities and infrastructure are also getting funding.

Almost $450 million is heading to the construction of the new regional hospital in Corner Brook and the adult mental health and addictions hospital in St. John’s. Renovations and improvements for health care facilities plus equipment are getting $50 million. In addition, $13 million will be for the re-development of the emergency department at the Health Sciences Centre.

The budget also includes $7.8 million towards the planning and procurement of a new hospital to replace St. Clare’s Mercy Hospital—which was announced a few months ago—as well as a new Cardiovascular and Stroke Institute. The sum will also cover the demolition of the former Grace Hospital Nursing Residence.

Transportation and Infrastructure Minister Elvis Loveless said a new site for St. Clare’s replacement hasn’t been decided on, and he didn’t have a date for when the former Grace building could come down—just that he’d prefer it happened sooner rather than later.

There will also be a new provincial health authority to administer these funds.

Last year’s budget announced an initiative to amalgamate all four health authorities into a single authority. That is still going ahead and now has a date: April 1.

Minister Osborne said the amalgamation is on target to happen and they’ve been working closely with interim CEO David Diamond and executive and administration throughout the province.

He said the transition has been “relatively seamless” and that people walking through hospital doors “will have no idea that transition has taken place.”

Promising Prognosis for Provincial Finances

Besides highlighting investments in physical and mental health care, Finance Minister Coady was chuffed to boast Newfoundland and Labrador’s improving fiscal health, too.

In last year’s budget, the province projected a deficit of $351 million. But following a stronger than expected recovery from the depths of the Covid crash, the province posted a revised surplus of $784 million for 2022-23—a difference of more than $1.1 billion.

As a result, the province’s Debt-to-GDP ratio has declined to 37 percent for 2022-23. In 2020, it was over 50 percent.

The province posted this banner year due to higher-than-expected personal and corporate tax revenues (roughly $300 million and $400 million, respectively) and oil revenues (roughly $400 million). Household income increased 8.2 percent over 2021 levels thanks to higher wages and increased employment, and the province’s population grew by 1.1 percent—the largest annual increase in nearly half a century. Annual inflation for the year was 6.4 percent, and these increased costs—primarily in fuel and food costs—resulted in higher retail sales (and higher retail sales tax). The surge in corporate taxes largely came from a strong rebound in the oil and mining sectors, particularly iron ore, after the pandemic lull of 2020-2021. Coady said she expects these tax revenues to return to baseline levels this year.

All these developments contributed to higher tax revenues for 2022.

Although oil production declined by roughly 10 percent in 2022 compared to 2021, this was offset by a spike in oil prices. Brent crude oil averaged $100.93 USD/bbl in 2022, an increase of 42.4 percent over 2021. Oil revenues are expected to make up 12 percent of overall revenues in 2023-24, compared to 33 percent of provincial revenues in 2011-12.

For 2023-24, the province is projecting a small deficit of $160 million. Coady characterized this budget as a balanced budget and a demonstration that “we can have a balanced budget and still have the investments we need.”

She emphasized that public expenses were being “controlled across departments.” Indeed, new expenses for 2023-24 are only $108 million—”lower than the rate of inflation,” the highlight documents boast. (Memorial University political scientist Russell Williams, writing for The Independent in 2021, argued that holding spending for nearly a decade despite increasing inflation constitutes a kind of stealth austerity program.)

The province expects to return to surplus next year—posting large surpluses in 2024-25 and 2025-26 due to expected royalty payouts from the Terra Nova and Hebron developments—before leveling out to near-balance in later years. Expenditures are projected to remain flat for the next five years, meaning the surpluses will largely be tied to resource revenues in the mining and offshore petroleum sectors.

Natural resources did not figure as prominently in this budget as in recent years—Industry, Energy, and Technology Minister Andrew Parsons, for instance, was not part of the “parade of ministers” through the media lockup this year—but it was clear how much natural resources, especially the offshore oil and gas industry, underpinned the rosy outlook on provincial finances.

Construction on the West White Rose project is expected to resume this year, and production at Terra Nova is set to begin again later in 2023. The province expects a production level of 83.8 million barrels of oil in 2023, rising to 90.1 million barrels by 2027 as the West White Rose project comes online. Equinor continues making investments in the Bay du Nord project, and ExxonMobil, BP Canada Energy, and many other producers remain engaged in offshore exploration.

When questioned by reporters about how the push for expanded offshore oil production fit in with the province’s commitment to a green transition and “net zero by 2050,” Coady was bullish on squaring that circle.

“The world needs oil for many years to come,” she asserted. “Our offshore has some of the lowest emissions in the world [at the point of production]. Canada has stringent environmental and labour standards. As long as the world needs oil, it should come from here.”

Is the Budget Good for What Ails You?

While Dr. Furey’s government was celebrating its proposed treatment plan for the province’s health care woes, some of those on the outside wanted a second opinion.

“What you’re seeing in this budget is trying to give a little bit of good news to a lot of different sectors in our province,” Stephenville-Port au Port MHA Tony Wakeham—formerly the Progressive Conservative Finance Critic and currently running for party leadership—told The Independent. “The challenge is, you know, the failure of the Liberal government over the last seven years to really do anything.”

Wakeham said they’re spending additional money to fix things and that “there’s a lot of good money there,” but he doesn’t see a plan. He said they need to engage with community groups to craft a strategy and review income support and not just increase spending. He believes people will be left behind in this budget.

While this is being touted as the largest ever investment in NL’s heath care system, Wakeham said that speaks to the fact the Liberals haven’t had a heath care plan. He said we’re now seeing money being put into projects, but he’s not convinced when people wake up tomorrow they’ll have access to a family physician.

Wakeham also pointed out that many of the initiatives getting money in this budget have been floated before. He said the allocation for a new information management system was put on the agenda in 2015, and the proposed new ambulance system was a report on the minister’s desk when he took office in 2015.

St. John’s Centre MHA and interim NDP leader Jim Dinn—who is also running to lead his party on a permanent basis—had similar concerns. 

“After two years hammering away on these issues, it seems that the government has finally listened,” he said. “There are still issues though. With all these announcements, how are they going to play out?”

He cited the social determinants of health as a major issue, adding they’ve had to fight tooth and nail to get the guaranteed basic income committee off the ground. 

“Where’s the commitment down the road to this?” Dinn asked rhetorically. If the government is not putting in the hard work to deal with the social determinants of health, then we’re going to be ‘fixing the system’ again in another five years.

Dinn isn’t sure if the government has the stomach to address the social determinants of health, “because they’re not as glamorous as the announcement of a new St. Clare’s or the new cardiac care centre.”

“The nuts and bolts for a lot of people is that they’re struggling to make ends meet, and that includes seniors who are on fixed incomes, retired people or those on minimum wage,” Dinn explained. “Or people making modest incomes and finding their income being whittled away by inflation.”

Recently Dinn was talking to a doctor who told him if you want to fix the health care system and hospital care, he said there are a lot of people in hospitals who should be in long term care—and that moving them to long term care to free up space and resources in hospitals. But he said there isn’t sufficient long term care staff to do that, and fixing that isn’t as glamourous.

“You have to look at this holistically,” Dinn concluded. “It’s great there are signing bonuses, but in two years time what’s going to be done so the doctors stay there? Or that people can eat healthy or don’t end up in hospitals or can age in place?”

Meanwhile, Newfoundland and Labrador Medical Association president Dr. Kris Luscombe said they’re happy to see there’s a significant investment in health care, and that such a large investment is necessary.

“We’ve had a health care crisis,” Dr. Luscombe told The Independent. “We have a significant shortage of family physicians. We have issues, obviously, with regards to surgical access. And just a substantial shortage of physicians.”

Though he said they have only seen preliminary details, the budget’s investment in family care teams is something the NLMA has been requesting for years. He said they’re hoping that it will be designed and implemented correctly so doctors will want to participate in it. But the investment is encouraging, and he’d like to see it developed and implemented appropriately with input and guidance from physicians.

The investment in health technology infrastructure is also overdue, he said.

From a physician/surgeon perspective, Dr. Luscombe called it “remarkable” that there’s infrastructure investment to address surgical backlogs, like the travelling orthopaedic team.

“Overall, this is a good budget for health care,” Dr. Luscombe concluded. “We hope that it’s going to meet some of the needs that exist in the system. In particular we have to acknowledge that many of the problems in the health care system include not only physicians but many other allied health professionals and other care providers in Newfoundland and Labrador.”