Finance Minister Tom Osborne says the province will be able to borrow the roughly $600 million needed for planned severance payouts in the public sector.
Asked about the money on Monday — including the estimated $250 million in payments already agreed to, as part of the contracts with the Newfoundland and Labrador Association of Public and Private Employees (NAPE) — Osborne said the government is ready to get severance off its books.
It wants to negotiate the same end to severance with other public-sector unions and management, bringing the total needed up to about $600 million.
Lenders and bond ratings agencies want to see the end of severance liability, he said.
“By paying out severance, the savings to the provincial government are $35 million a year, less the $10 million that we’re putting aside to repay the loan in order to borrow to pay out severance,” he said, “so it’s a net savings of about $25 million a year to government.”
The plan covers core government, but also those agencies, boards and commissions (ABCs) covered by the collective agreements the government negotiates, he said.
The estimates do not include a few ABCs, including Nalcor Energy.
Osborne said he is asking that Crown corporation to pursue agreements similar to what the province negotiated with NAPE, when it comes to severance.
“We’ll have to wait and see what comes out of their set of negotiations,” he said.
Osborne also clarified the options available to NAPE employees in taking the payout of their severance benefit.
“I won’t speak to any of the other collective agreements, but NAPE (members) will have an option of the next four quarters of the new fiscal year, as four options, and the fifth option of government will hold their severance (to retirement),” he said. “It doesn’t gain any interest or it doesn’t grow in value, but we’ll hold it to any future date — up to the point that they retire — that they choose, as long as they give notice to government, give us time to process.”
He said a similar move at the federal level ended with only about eight per cent of employees offered a severance payout delaying it. He expects similar numbers here, with 90 per cent or more of NAPE members taking the money this year.