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Finance Minister Blaine Higgs released the 2011-12 financial statements on Tuesday. ((CBC))

The Alward government's ability to reduce departmental spending for the first time in more than a decade allowed the deficit to come in below expectations, Finance Minister Blaine Higgs said on Tuesday.

Higgs released the audited financial statement for 2011-12 on Tuesday, which showed the deficit came in at $260 million, which is $188 million lower than expected.

Higgs was sworn into office as New Brunswick's Finance Minister 22 months ago. He inherited a $700 million deficit that's been reduced 60 per cent in his first full year, according to the latest figures.

"We're seeing the trend is right. It's extremely encouraging but it can't be seen as 'oh we're out of the woods,’" Higgs said.

Higgs received support to the tune of more than $120 million in unexpected revenue from the federal government and NB Power, but he also dramatically changed course.

Under former Premier Shawn Graham government, spending in New Brunswick was growing by an average of $425 million every year. 

This year, spending fell for the first time in 11 years as Higgs cut everything from road construction to health spending. Higgs also convinced the Conservatives to kill key election promises made by Premier David Alward on taxes and health.

"We still need the public to think about the part they play in the demands they make and help us make better decisions as politicians," Higgs said.

Debt remains

"By initiating the government renewal process and coming in under budget in 2011-12, we are demonstrating our commitment to rebuilding our province's finances," Higgs said in a statement.

The financial statement showed the Alward government spent $128.8 million less in 2011-12 than the previous year.

Higgs said in his statement that several departments, including health, economic development and education and training, all spent less than budgeted.

Even though the provincial government was able to reduce overall spending, New Brunswick’s debt still increased by $430 million to $10 billion.

The finance minister said the provincial government is still spending too much to service its debt. The provincial government will spend $672 million this year on debt payments.

"Although we have managed to slow the growth of the debt, it remains a lasting reminder of the need for government spending that is sustainable relative to our revenue," he said in a statement.

"There is a definite need to return to balanced budgets and a targeted debt reduction plan."