Employee benefits contributing to P.E.I. deficit

Increases in hospital, drug costs largely to blame

The government of Prince Edward Island is projecting a deficit of $78.6 million in 2011-12, according to Finance Minister Wes Sheridan and covering the costs of employee benefits is largely to blame.

The deficit — which was projected last year to be $42 million — is largely attributable to substantial increases in hospital and drug costs; rising costs of disability support, social assistance and support for children in care; and an increase in public sector pension costs, he said.

The biggest portion of the $36 million increase comes from covering shortfalls in government pension funds and other costs of employee benefits.

As a result, the government had to put $16 million more than budgeted into employee benefits in 2011-12. The situation is not expected to improve in the coming year. A further $10 million has been added to that budget line for 2012-13, according to CBC.

The government is planning on entering consultations with public sector unions regarding pensions and benefits, said Sheridan.

Latest stories