Keep books balanced: Board of Trade

A prominent business group wants the Newfoundland and Labrador government to show why it may need to run a deficit, even with relatively high oil prices.

Premier Danny Williams said Tuesday night that the government is planning for a deficit for the coming fiscal year, with details to emerge in the March 29 budget.

Williams said the government would have to launch a severe program of spending cuts to balance its books.

St. John's Board of Trade president Derek Sullivan said while a deficit may be necessary in tough economic times, the government should be focused on debt reduction when oil revenues are rolling in.

"The government has made some good moves on debt repayment. We understand they can't do that every year," Sullivan told CBC News.

"But we certainly think these days are the times when we have oil revenues, and when we have a high price of oil we look to see those revenues in long-term debt reduction and long-term investments for the province."

Sullivan said he wants to see the full budget before deciding if the deficit is warranted.

While the governing Progressive Conservatives slashed spending in their first year in office, they have benefited from surging oil revenues. Since 2004, the provincial budget hasgrown from $5.2 billion to $6.7 billion.

Before pre-budget consultations, Finance Minister Tom Marshall warned that government spending must become sustainable.