New Brunswick

AG Kim MacPherson raises concerns over debt, deficit

Auditor General Kim MacPherson has issued another stern warning over the provincial government's escalating debt and deficit levels.

Provincial government must ramp up its efforts to cut the structural deficit and net debt

Auditor General Kim MacPherson issued her annual report on Thursday and it warned the provincial government to control the province's growing debt and deficit levels. (CBC)
Auditor General Kim MacPherson has issued another stern warning over the  provincial government's escalating debt and deficit levels.
Premier Brian Gallant has said tough choices will need to be made to clean up the province's fiscal house. (CBC)
​MacPherson released her annual report on Thursday. She will be presenting her findings and taking questions from a committee of MLAs on Thursday morning.

The financial watchdog said the provincial government needs to make "significant changes" to fix the province's financial health.

Her report points out the deficit stood at $498.7 million, the sixth consecutive deficit.

The auditor general also pointed out the net debt has increased by $4.7 billion since 2006, an increase of 69 per cent.

“The new Fiscal Transparency and Accountability Act includes targets to decrease net debt. To achieve these goals, the government will need to demonstrate more fiscal diligence,” said MacPherson in a statement.

The auditor general called the rise in the net debt a "disturbing trend" and said it could trigger a reduction in the province's credit rating. When credit rating agencies downgrade the province's credit rating, it can make it more expensive to borrow money.

She also indicated the provincial government needs to ramp up its efforts to control the structural deficit and ballooning net debt.

MacPherson also noted the recent change in government. She raised Premier Brian Gallant's campaign commitment to erase the deficit in six years.

"We are hopeful the commitment to returning to a balanced budget state in the near term will continue. However, the achievement of these goals will require increased fiscal diligence," she said in her report.

Liberals focus on finances

The province's finances have turned into a top priority for the Premier Brian Gallant's Liberal government.

A nuclear turbine had to be recovered from Saint John Harbour in 2008. MacPherson said poor planning contributed to the accident. ((CBC))
In November, Finance Minister Roger Melanson released the Gallant government's first quarterly update that showed a projected deficit of $377.2 million for 2014-15, down about $14 million from the previous projection.

Last week, Health Minister Victor Boudreau, the minister responsible for the strategic program review, said the province's structural deficit had grown to $400 million.

The program review is hoping to find upwards of $600 million in savings, whether through program cuts or increasing revenue.

The provincial government has tapped Michael Horgan, a retired federal finance official, to lead an advisory council for the program review.

In MacPherson's previous report, she warned the former Alward government that the growing net debt was "very concerning."

MacPherson noted in that report that New Brunswick's net debt has grown by 45 per cent since 2009, putting the province in a tie with Saskatchewan for the greatest increase over that time. Since 2007, the debt has grown by 63.3 per cent.

"This pace of net debt growth is not sustainable in the long term and significant changes are required to address this problem," MacPherson said in 2013.

AG analyzes Point Lepreau refurbishment

The auditor general's report also reviewed the data centre crash from last June. (Courtesy
​The auditor general also released several other reports into how various government programs were managed.

NB Power's decision to refurbish the Point Lepreau Nuclear Generating Station also came under the auditor general's microscope.

She addressed overtime costs, the tendering process and an accident that saw a turbine fall into Saint John Harbour.

“The accident probably could have been avoided with better planning, more active risk assessment, and subcontractor oversight by NB Power,” said MacPherson in her report.

Poor planning was also raised when addressing the delay in restarting the nuclear reactor.

“It is reasonable for NB Power to attribute the majority of the overtime usage to system deterioration,” said MacPherson.

Christian Couturier, the province's chief information officer, said the provincial government is working to minimize risks to IT infrastructure in November.

“But in planning for the restart, it should have accounted for the possibility that systems would deteriorate more than anticipated during the extended outage.”

​Thursday's auditor general report also reviewed the data centre power outage from last June. 

MacPherson's report did not mince words when describing the issues her office found with back-up capability for the province's technology system.

“Access to government services is essential. Back-up systems must be able to take over when power outages occur in the province,” MacPherson said in her report.

“The current exposure to risks that we observed during our work is not acceptable.”

In November, Christian Couturier, the province's chief information officer, said the $1.6-million data centre crash could have been avoided had risks been addressed.

But MacPherson pointed to structural problems within the bureaucracy that could be hindering progress in moving ahead with changes to improve the IT infrastructure.

She said Couturier's office does not have the authority to order departments to adhere to government-wide strategic goals when it comes to IT infrastructure.

“It is unclear where central authority lies to implement government-wide upgrades to IT systems and equipment. Without an explicit directive from government, significant changes to IT infrastructure may not be possible,” said MacPherson.

About the Author

Daniel McHardie

Digital senior producer

Daniel McHardie is the digital senior producer for CBC New Brunswick. He joined in 2008. He also co-hosts the CBC political podcast Spin Reduxit.