Volume I - Finance - Government of Newfoundland and Labrador

UNDERSTANDING THE FINANCIAL HEALTH OF THE PROVINCE OF NEWFOUNDLAND AND LABRADOR
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Non-Financial Assets: Assets consumed in the delivery of government services, but not intended to
reduce existing or future liabilities. Non-financial assets are primarily comprised
of tangible capital assets.
Tangible Capital
Assets:
Non-financial assets which are held for use in the production or supply of goods
and services and have useful economic lives extending beyond an accounting
period. Examples include buildings, roads, infrastructure, marine vessels, heavy
equipment and machinery.
Unfunded Pension The total unpaid pension benefits earned by existing/former employees and
Liability: retirees less the value of assets set aside to fund the benefits.
CONSOLIDATED ACCRUAL RESULT
Compared to Previous Year
The difference between the annual deficit of $32.6 million for 2010 and the annual surplus of $2,350.4
million for 2009 is approximately $2,383.0 million. While additional variance analysis on the changes in
revenue and expense are included later in this report, the following provides a summary of what has
contributed to these changes. This decline can be attributed to a decrease in total revenues of
approximately $1,335.2 million combined with an increase in total expenses of $1,047.8 million.
The decrease in total revenues of approximately $1,335.2 million from 2009 to 2010 can be attributed to
the following revenue sources:
• $1,244.2 million decrease in the Atlantic Accords (1985 and 2005). This is primarily due to the
recognition of the remaining unearned balance of the Atlantic Accord (2005) in 2009, since the
Province no longer qualifies for Equalization;
• $132.1 million decrease in mining and mineral rights tax due to lower mineral prices and lower
production levels during the year;
• $117.3 million decrease in offshore royalties as a result of lower oil prices, combined with
decreased production, triggering lower royalty rates;
• $82.6 million decrease in personal income tax primarily due to tax cuts during the year; and
• A net decrease in other miscellaneous revenues of $45.9 million.
These decreases in revenues are partially offset by the following increases:
• $149.3 million increase in Canada health and social transfers resulting from growth in the federal
program;
• $101.2 million increase in Federal cost-shared programs including the continued construction of
the Trans Labrador Highway and labour market development programs; and
• $36.4 million increase in other taxation revenue.