New Brunswick

Province will pay down some debt for 1st time in 13 years, projects $23M surplus

The New Brunswick government will pay down some of the province's accumulated debt for the first time in 13 years.

Finance Minister Ernie Steeves delivers minority PC government's first budget

Finance Minister Ernie Steeves delivered the first budget of the PC minority government on Tuesday. (Maria Jose Burgos/CBC)

The New Brunswick government will pay down some of the province's accumulated debt for the first time in 13 years.

Progressive Conservative Finance Minister Ernie Steeves is projecting a $23 million surplus in 2019-20.

And thanks to the cancellation of several major infrastructure projects that would have been added to the books in coming years, the debt will drop by $49 million.

It's the first time the debt has come down since 2006-2007.

"Successfully reducing the debt will allow us to consider future tax reductions and improved services for New Brunswickers," Steeves told reporters at a news conference.

But that fiscal milestone comes because of a PC budget that restrains the growth of spending — and in some cases slashes it.

Two departments — Tourism, Heritage and Culture and Post-secondary Education, Training and Labour — will see their funding reduced, as will Opportunities New Brunswick.

And while the Department of Social Development is getting a small funding increase of 0.5 per cent, several key programs will lose money at a time when the department's programs have been in the spotlight.

Among them:

  • Child welfare and disability support services will be cut from $316.7 million to $313.9 million.
  • Income security, which covers social assistance payments, is cut from $239.4 million to $229.8 million.
  • Funding for housing services is slashed from $100.2 million to $91.4 million.

Despite the reductions, Steeves said the department is getting funding "to begin implementing" two independent reports commissioned in the wake of a high-profile case of child neglect in Saint John.

But he wasn't able to explain where that money would go and said that would emerge when the department presents its detailed spending estimates to the legislature in the coming weeks.

"I'm going to have to refer you to Minister [Dorothy] Shephard on that one," he said.

Social Development Minister Dorothy Shephard's department will see a small increase in funding, but several programs will lose money. (CBC)

In January, Shephard told reporters: "I can't imagine that the department could lose any amount of money without hurting services."

Green Party Leader David Coon said he was alarmed at the reduction.

"We're talking about one of the most vulnerable populations in the province, so this is going to be very significant," he said.

Steeves said in his budget speech that with employers facing labour shortages and some social assistance recipients "willing and able" to work, the government would look for "areas of the social assistance system that could be reformed to help people transition to the labour force."

These are the key takeaways. 1:11

Social Development is seeing funding increases in some areas: there's an additional $21 million for seniors and long-term care services, including $16 million for wage increases for home care workers.

The budget sets aside funding for wage increases for 18 union contracts that have expired or are expiring, but there's no word if that includes extra money to reach an agreement with nursing home workers.

They've been without a contract since 2016 and are locked in a legal battle with the province over whether they have a right to strike.

Education sees 2.9% increase

Meanwhile, the Department of Education and Early Childhood Development will see a 2.9 per cent increase over what it's spending this year, while Health funding will grow by 1.8 per cent.

Economist Richard Saillant said even with some reduced spending and slower growth, the budget doesn't include any sweeping changes to how the government spends money.

Essentially, we can thank the federal government for our positive fiscal situation.- Richard Saillant, economist

He said most of the surplus can be attributed to a big, one-time increase in equalization payments from the federal government.

"Essentially, we can thank the federal government for our positive fiscal situation," he said.

But Steeves told reporters that "there's going to be some changes in Health" that will address how that department spends money.

The Liberals took credit for laying the groundwork for the PC surplus with their own fiscal management and said the budget represented "continuity."

But MLA Roger Melanson said he was also concerned with the cuts to Social Development programs.

People's Alliance Leader Kris Austin, whose party has committed to supporting the PC minority government in the legislature for the first 18 months, said he agrees with the focus of balancing the books and paying off the debt. (CBC)

People's Alliance Leader Kris Austin, meanwhile, said there was nothing in the budget that would change his party's decision to support the PC minority government during confidence votes.

"Overall, it's pretty good," he said.

In last year's election, the PCs promised to cut the deficit or reduce the debt by $125 million per year. But the four-year projections included in Steeves's speech show no such reduction in the near future.

"It's coming eventually but it's not coming this year," he said.

Tax cuts postponed

The government also postponed promised tax reductions, including the elimination of the small-business tax and the extension of a property-tax exemption to apartment and cottage owners.

The minister said the Higgs government is still committed to reducing taxes but will instead "take a broader look" at the tax system.

Steeves also announced that the Tories will review the Liberal-created tuition access bursary, the so-called "free tuition" program, with a view to it expanding to cover students at private universities and colleges.

They will also bring back a tuition tax credit created by a previous PC government and cancelled by the Liberals.

Although the long lineups on Day 1 of recreational cannabis sales at Cannabis NB locations like this one in Rothesay subsequently subsided, the provincial budget predicts $1.6 million in profits. (Julia Wright / CBC)

The budget also forecasts the first full year of legalized cannabis sales in New Brunswick, predicting $1.6 million in profit from retail stores and $8.3 million in tax revenue.

Steeves also announced that $2.4 million will be set aside in the Regional Development Corporation that will be "directed" by individual members of the legislature to projects "important to the fabric of the communities they represent."

That translates into $50,000 per MLA. Steeves promised that there would be oversight to ensure the money is spent responsibly.

"There's all sorts of rules on that," he said.

The province's capital budget in December cancelled two phases of a planned Route 11 upgrade between Shediac and Miramichi, but Tuesday's budget included a glimmer of hope for some of that work.

Steeves said the province will twin remaining sections of the road between Shediac and Bouctouche if Ottawa agrees to exclude twinned bridges from the project design.

"I can't see the feds getting bent out of shape on that," he said.

About the Author

Jacques Poitras

Provincial Affairs reporter

Jacques Poitras has been CBC's provincial affairs reporter in New Brunswick since 2000. Raised in Moncton, he also produces the CBC political podcast Spin Reduxit.

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