Budget puts N.B. $748M further in debt
Published Wednesday December 2nd, 2009
Politics | Liberals blame economy for ballooning deficit
The provincial government is going further into debt to pump record spending into health care, education and senior care.
Spending in the operating budget will climb by 1.6 per cent to almost $8 billion, including a $400-million, five-year plan to add hundreds of nursing home beds, said Finance Minister Greg Byrne in his budget speech Tuesday.
But the deficit for 2010-11 will be $748 million. That's on top of the revised deficit for 2009-10 of $753.7 million.
The Liberals are also abandoning their one-year-old plan to return to balanced budgets by 2012 and will violate the Fiscal Responsibility and Balanced Budget Act, which requires budgets be balanced over a four-year cycle.
"This government had a difficult choice to make," said Byrne.
He said balancing the budget in four years would require cutting $513 million out of the budget by 2012-13.
That's the equivalent of the collective budgets for the departments of Post-Secondary Education, Training and Labour, Transportation and Agriculture and Aquaculture for one year, said the finance minister.
"The government ... made the conscious decision to return to balanced budgets over a longer period rather than commit to sweeping reductions in programs and services," said Byrne.
He said the provincial budget will be balanced by 2014-15 - two years longer than initially planned.
Byrne forecast that between 2010-11 and 2013-14, the government will run up another $2.245 billion in debt, bringing the total provincial net debt to nearly $12 billion.
The two extra years to balance the budget will add more than $800 million to the net debt.
The government is forecasting a modest surplus of $42 million in 2014-15.
"Once the province returns to balanced budgets, it will focus on reducing the province's debt," said Byrne. "The government remains committed to the principles of balanced budgets and reducing the net debt-to-GDP ratio as set out in (legislation)."
To fight the debt problem, the government is creating an agency to provide common internal services and make government function more efficiently. The civil service is also moving into the second year of a two-year wage freeze.
"For 2010-11, a total of $69 million in savings have been identified through this process and the second year of wage restraint that was announced in the 2009-2010 budget," said Byrne.
He said the government doesn't expect to have any reductions in the civil service.
The government said last year it wanted to cut 700 civil service jobs, but those were done through attrition, said Byrne.
The details of the savings will come out in each department's estimates, he said.
The government will spend $400 million over five years on a renewal and replacement plan for nursing homes, he said.
Some homes will be replaced and others will be expanded, which will fulfil the government's 2006 election promise to increase the number of nursing home beds in New Brunswick by 700, said Byrne. But only $6 million has been budgeted for the first year.
He also said the building plan will be done based on a professional study, not politics.
In addition, the low-income seniors' benefit will be increased to $400 a year in 2010.
It was $100 a year when the Liberals were elected and the latest increase keeps another election promise, said Byrne.
Health spending will climb by $82.8 million to a record level of $2.46 billion.
"This includes increased funding levels for the New Brunswick Prescription Drug Program and hospital services," said Byrne.
The Department of Education's budget will reach almost $1 billion and will include $3.4 million to fully implement the revised French second language program and $5.7 million to follow up on the report of the Commission on Francophone and Acadian Schools.
The Department of Social Development is getting an extra $35 million, for a total of $986.7 million, including $15 million to begin implementing the government's new anti-poverty strategy.
"In this first year of the plan, new investments will be made in early learning and child care, promoting community schools and affordable housing, and increasing access to post-secondary education," said Byrne.
As previously reported, the social assistance rate for single, employable clients is being boosted by 80 per cent and the household income policy that prevents persons on social assistance from living together will be scrapped.
Also as previously announced, university tuition will be frozen for a third year at a cost of $6.1 million, and the operating grant for universities is being increased by three per cent.
Tuition for community colleges will be frozen for the fifth consecutive year.
Total revenues in the provincial operating budget in 2010-11 will be $7.247 billion, up 1.8 per cent.
The Department of Finance is projecting real GDP growth of 1.7 per cent in 2010, up from the 0.5 per cent decline in 2009.
Private-sector forecasters are calling for New Brunswick's GDP growth to average 2.1 per cent, said Byrne.
"Employment gains are anticipated to be moderate following a steady performance in 2009, with little change expected in the provincial unemployment rate," he said.
The government is pressing ahead with its plan to lower taxes.
"Our plan for lower taxes has been nationally recognized as improving the simplicity and efficiency of the tax system and leading to increased competitiveness and prosperity," said Byrne.
He said the first stage of the tax reduction last year put $144 million back into the pockets of New Brunswick residents and businesses.
The second stage of the tax cut begins Jan. 1 and will provide an additional $258 million in savings for individuals and businesses, said Byrne.
By 2012-13, annual savings are projected at $380 million, he said.
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Only Shawn Graham would with one side of his mouth talk about how the debtload is crushing us while at the same time increasing the debt. This takes his share of the provincial debt over $2 billion, and we have nothing to show for it (unlike NB Power's debt which comes with assets and revenue).
We should finance this debt by selling the Legislature to Quebec. Nothing useful comes out of it anyway. What a disaster this government is.
This Government has to go!
"Perhaps most importantly, the province is on track to do what it said it planned in last year's budget: short term stimulus spending deficits with a clear plan to return to balanced budgets soon. It is a positive budget that sweetens the pot in crucial areas, but also stays the course for the province."
To ignore the impact of the global economic crisis on ALL jurisdictions is foolish. Everyone is being pounded. NB has been spared for the most part thanks to quick stimulus that also had the added benefit of improving critical infrastructure in health, education, post-secondary, etc...
During tough times, we have to protect the most vulnerable. This is being done with this budget.
$2.5 billion in new debt by 2014.
Remember the term "crippling" debt?
We’ve weathered the global recession here better than most, and it’s because we’ve worked to protest NBers by not slashing crucial services and by injecting money into the economy.
There’s a plan to address the deficit (it was extended by two years to prevent harsh cuts/job losses) by 2015, and there’s now a plan to address NB Power’s debt (which it services itself, but it falls on the backs of ratepayers).
someone, please tell me. Personally, raise my power rate for a bit, while we deal with managment issues (ie bonuses... and the real skinny on this NBPower sale - like where is Graham working in October of 2010)and cut the foolish pensions for the ""elected officials"".
Lets see how that works...
Government, the only occupation I know of where the employee can decide how and when and how much they deserve in compensation... boy did I ever get into the wrong profession!