Finance minister promises a budget 'New Brunswick wants'
Higgs government will table a new provincial budget on Tuesday
The Higgs government will begin plotting a post-COVID fiscal direction for the province with the tabling of a new provincial budget Tuesday.
And after two consecutive years in which spending plans were thrown into turmoil by the pandemic, it looks like budget "stability" could mean more money for key services.
"Last year I said our budget was one that I didn't want to deliver, but that New Brunswick needed," Finance Minister Steeves said at a photo opportunity Monday, referring to last year's deficit projections.
"This year I have a budget that I want to deliver and that New Brunswick needs, and that I believe New Brunswick wants."
Steeves initially budgeted a $244 million deficit for this year, but massive federal pandemic spending and a roaring economy turned it into a projected $487.8 million surplus.
Premier Blaine Higgs said two weeks ago the roller coaster pandemic budgeting of the last two years would give way to more stable and predictable fiscal planning.
He said this year's budget would address "many of the concerns that people are having" in areas such as health care, education, social assistance and "controlling the high cost of rent."
That would represent a shift in the government's approach.
Steeves has cautioned several times over the last year that the province's booming revenues were "temporary and not really sustainable," as he put it last fall, and that meant the province had to be careful about spending more.
He was referring at the time to major COVID funding transfers from Ottawa.
But economist Richard Saillant says the revenue boom is continuing, now driven by inflation.
Rising prices on goods and services, and on homes, means more sales and property tax revenue, Saillant says.
"It's a permanent effect unless you find a way to disinflate your economy …There's plenty of money right now to address the priorities of New Brunswickers."
Steeves, dressed as a construction worker for Monday's event at a construction site, also suggested the government may reduce the extra property tax on apartment buildings as a way to address a tight housing market.
The Tories announced a reduction to the tax two years ago, but scrapped it when COVID-19 upset their budget plans. Now it may be coming back.
Steeves wouldn't comment though on whether any tax reduction would be matched with measures to freeze or cap rent increase.
"You're going to have to wait 24 hours, but you know what?" Steeves said. "Having us make this announcement in front of an apartment building, I would think, would be a pretty good hint as to where we're going with this."
Province looking at how to help drivers at the gas pumps
The minister also suggested the government may have another way to provide drivers with relief at the gas pumps after the federal government rebuffed Higgs's request for a suspension of the carbon tax.
New Brunswick can't reduce the rate without Ottawa's permission, but it can take other steps, such as cutting income taxes, as it did last year.
"We're trying to find ways to recycle some of the money," Steeves said.
Higgs said two weeks ago he couldn't afford to cut the provincial gas tax because high gas prices would lead to less driving, lower gas consumption and a drop in gas tax revenue.
Saillant says gas tax revenue, charged per litre, may indeed go down because of reducing driving, but harmonized sales tax revenue, tied to the price of gas, will go up even more, negating the revenue loss.
"It is clear when prices go up, HST goes up as well," he says.
Higgs said two weeks ago the province was running "very, very close to the wire" in terms of balancing the budget.
He said it would be a $10 billion budget with a surplus at one per cent or even half a per cent of that – meaning $100 million or even $50 million.
But the Liberals are preemptively questioning the government's calculations.
Leader Roger Melanson points out the Progressive Conservatives recorded a $400 million surplus last year, and are projecting a $487.8 surplus this year despite initially pessimistic budget forecasts.
"That's a credibility issue," he said. "How can people trust their numbers?"
Despite massive deficit forecasts early on, the province had a $408 million surplus in 2020-21, and is projecting a $487.8 million surplus this year.
Melanson said with that kind of revenue coming in, the PCs should be able to spend more in areas such as health-care recruitment, affordable housing and infrastructure.