Analysis

Brian Gallant's government endures 2 years of money struggles

Massive financial miscalculations in its 2014 election platform continue to reveal themselves and force the government to break election promises and pile on tax increases in a way Brian Gallant himself used to ridicule.

Despite 10 tax increases in 2 years to bring in $500M, Liberals haven't delivered on 2014 platform

Brian Gallant's government has struggled with financial affairs since taking office two years ago. (CBC)

As the Gallant government approached the second anniversary of its provincial election win this month it found itself running afoul of Auditor General Kim MacPherson.

She was objecting to the government's use of a "contingency fund" in its budgeting that she feels obscures the size of the province's deficit and violates professional accounting standards.

Generally, accounting disputes like that make for pretty dry political controversies, but for the Gallant government, trouble with numbers has been an ongoing problem from its earliest days.

New Brunswick Liberal Leader Brian Gallant campaigned in 2014 on a promise to balance the books and increase spending through a combination of spending cuts and two tax increases. There were 10 tax increases and the province still spends more than it brings in. (Jacques Boissinot/Canadian Press)
Massive financial miscalculations in its 2014 election platform continue to reveal themselves and force the government to break election promises and pile on tax increases in a way Gallant himself used to ridicule.

Liberals won the provincial election in 2014 with what looked like a detailed and predictable plan to govern.

Brian Gallant proposed to voters during the September election campaign that year a package of new capital and program spending totalling at its height $340 million per year.

To pay for that and eliminate a predicted $387-million deficit Gallant confidently proposed a combination of spending cuts and two tax increases — neither of which average citizens would have to pay.

That, along with economic growth, would balance the books with a $70.6 million surplus in four years according to Liberal figures, or at worst six years if unexpected financial troubles hit.

The plan was straightforward and simple to follow.  And when Gallant presented it at a press conference in Moncton on Sept. 8, 2014, he assured voters they could believe in it.

"We are going to be very honest with New Brunswickers and we're going to keep our promises by making promises we can keep," he said.

But the math behind the Liberal platform fell apart almost immediately and it has been forcing Gallant to govern in a way he used to criticize.

The problems began with revenue.

Tax increases

Roger Melanson delivered the Gallant government's first two budgets, which failed to eliminate the deficit as promised in the 2014 campaign. (CBC)
The two tax increases put forward in the Liberal platform to deal with the deficit — a $30-million income tax on those making more than $150,000 and a $30-million property tax increase on businesses, were quickly imposed but generated only a fraction of the money the platform realistically needed.

To compensate Liberals raised the gas tax ($18 million), diesel tax ($10 million) and tobacco taxes ($50 million).

But even that wasn't enough. They also raised corporate income taxes ($34 million), property transfer taxes ($10 million), taxes on banks ($3 million) and raised the provincial portion of the HST ($300 million).

To generate even more revenue Liberals eliminated tuition tax credits for university and college students ($21 million) and imposed a number of fee increases on things like vehicle and land registrations ($7 million).

Instead of two tax increases totalling $60 million to fund the election platform the Gallant government instead imposed 10, that when added to fee increases, take in more than $500 million.

Platform promises unfunded

Gallant has yet to fulfil a campaign promise to increase subsidies to those using daycare and expand daycare spaces. (CBC)
But incredibly, despite all that new revenue, there was still not enough money. Large portions of the Liberal platform, some promised to voters last year, remain unfunded.

Worse, the long-range projection for when the deficit will be eliminated has deteriorated, not gotten better.

Promises to increase subsidies to those using daycare by $15 million beginning last year and to spend $40 million on expanding daycare spaces this year are so far both unfulfilled.

Another big ticket item, a $15 million promise to provide tax credits for those looking after seniors or disabled adults at home also awaits money, despite election promises to begin last year.

Still in February, government announced the expected $70.6-million surplus in 2018-19 detailed in the platform (not including the disputed contingency fund) is now projected to be a $117-million deficit.

Gallant's promises

The numbers are especially difficult for Gallant.

During his run for the Liberal leadership in 2012, Gallant often commented on the importance of making realistic proposals to the public and living up to them when the time came, the same point he made to voters during the election.

"The best way to be accountable is for a government, for politicians for a leader to make promises they can keep — that's how your going to keep your promises," he told a roomful of Liberal supporters in May 2012.

But more than that as opposition leader Gallant often ridiculed the Progressive Conservative government of David Alward for breaking promises from their 2010 election platform, including raising taxes and regularly missing deficit targets.

"He made a bunch of problems to get elected, he had no plan to fulfil those promises," said Gallant in May 2014, in one of his final question period skirmishes with Alward.

"How does he expect New Brunswickers to believe anything that will be in their platform in the coming election?"

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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