Premier's memory of scary financial precipice disputed by those in know

A startling new claim by Premier Brian Gallant that New Brunswick was close enough to defaulting on its financial obligations in 2014 that Ottawa prepared contingency plans for how to deal with a bankruptcy is being questioned by key players involved at the time.

Former federal finance minister thinks someone would have told him if New Brunswick was on verge of disaster

Premier Brian Gallant sent a letter to Saint John Mayor Don Darling suggesting the province was so close to defaulting on its financial obligations in 2014 that Ottawa prepared contingency plans for how to deal with a bankruptcy. (Rachel Cave/CBC)

A startling new claim by Premier Brian Gallant that New Brunswick was close enough to defaulting on its financial obligations in 2014 that Ottawa prepared contingency plans for how to deal with a bankruptcy is being questioned by key players involved at the time.

"I was never presented with a formal contingency plan nor did I ask for one," former federal finance minister Joe Oliver said Tuesday from New York when asked if his department was preparing for the possibility of New Brunswick's insolvency during his term.    

"I'm not aware of any specific contingency plan prepared by the department." 

Oliver was the federal minister of finance for 20 months in 2014 and 2015, including the first 13 months of Brian Gallant's government. 

Saved from disaster

Last week, Gallant sent a letter to Saint John Mayor Don Darling expressing sympathy with the city's budget problems and suggested he too had faced serious difficulties but managed to steer the province away from the edge of financial disaster.  

Darling released the letter to reporters Monday evening. 

"We faced a similar situation provincially when our government took office just over three years ago," Gallant wrote, comparing Darling's budget problems to his own.  

"The federal department of finance was considering contingency plans in the event that New Brunswick could no longer pay its bills."

Former federal finance minister Joe Oliver says he was never presented with a formal contingency plan to help the province.

Oliver said that alarming scenario is news to him.  

He conceded the Finance Department is always studying the implications of a wide range of possible future events and he cannot say for sure any province's possible insolvency has not been looked at.

But he also believes he would have known if New Brunswick's problems had been urgent. 

"It's the responsible thing to do," Oliver said of studying various disaster scenarios.

"I'm not precluding the possibility that the department had looked into that but clearly it wasn't of a level of risk that they felt they had to elevate it to my office." 

No discussions

Opposition Leader Blaine Higgs, who was the provincial finance minister immediately prior to Gallant taking office, also disputed Gallant's story of New Brunswick being in danger of not paying its bills and Ottawa developing a plan to deal with that.

"We had no discussions of that at all [with Ottawa] because that was not the case," Higgs said.

Opposition Leader Blaine Higgs, who was the finance minister before Gallant became premier, says there were no discussions with Ottawa around New Brunswick not paying its bills and Ottawa developing a plan to deal with that. (Jacques Poitras/CBC)

The provincial Department of Finance and the Premier's Office did not immediately respond to requests for more details on how close the province was to default and what kind of communications took place between the province and Ottawa about that possibility.

Concern about New Brunswick's deteriorating financial condition has been expressed multiple times by various critics, academics and financial experts over the last several years.

The province's debt has more than doubled since 2007, growing by $7.4 billion during the last three provincial governments.

The rate of growth has slowed considerably since Gallant took office late in 2014, but New Brunswick's debt has still expanded by more than $1 billion over the last three years.

Debt still a worry

In November, Auditor General Kim MacPherson expressed concern the debt is still growing and suggested worries about the province's solvency have not been addressed or resolved 

"The long-term net debt growth is not sustainable, and continued action is required to address this problem," wrote MacPherson.

"It may eventually impact the Province's ability to meet its existing financial obligations, both in respect of its service commitments to the public and financial commitments to creditors, employees and others." 

About the Author

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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