A former finance minister who steered a province through difficult financial times says New Brunswick should be making tougher spending cuts now.

Janice MacKinnon was the finance minister in Saskatchewan in the early 1990s when that province was facing bankruptcy.

The province's poor credit rating led banks to warn they would stop lending it money.

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Janice MacKinnon was the finance minister in Saskatchewan when that province faced uncertain financial times in the early 1990s. (cbc)

Saskatchewan turned things around by, among other things, closing hospitals and raising taxes.

New Brunswick's net debt is forecast to increase by more than $530 million in the 2014-15 fiscal year, pushing it to $12.2 billion. That represents almost 38 per cent of the province's gross domestic product.

A new book by University of Moncton professor Richard Saillant warns the province is heading for bankruptcy.

Finance Minister Blaine Higgs says he hopes "never to find out" what would happen if New Brunswick becomes bankrupt.

MacKinnon says she wouldn't be surprised if Ottawa already has plans for a potential bankruptcy by New Brunswick because it would reflect badly on the entire country.

MacKinnon says with New Brunswick's spending patterns, bankruptcy can't be ruled out — and the federal government is probably already planning for such a scenario.

"I don't know this, but I would assume in Ottawa there is: 'This is what would happen. Here's what we would expect from a province if they come and they need help because they cannot borrow money,'" she said.

"I would not be surprised to find that finance ministers across Canada, with the federal finance minister, would have that conversation."

MacKinnon says if a province did go bankrupt, Ottawa would step in — but with strings attached.

"The federal government would have to deal with the situation, pay the debt, get the money borrowed, but then the province would be told what sorts of cuts you'd have to make," said MacKinnon.

"You don't want to go there. Nobody's ever gone there."

MacKinnon says it's better for a province to make those decisions itself when it can, but she warns it can only take a couple of years of credit downgrades for things to deterioriate quickly.