New Brunswick

4 things to watch for in Tuesday's provincial budget

From spending choices to deficit reduction and the likelihood of new taxes, there’s plenty to discuss before the budget speech.

Liberals still have some outstanding promises from the 2014 election campaign

A flag flaps in the fall breeze in front of the legislative assembly in Fredericton, where the 2018-19 provincial budget will be announced Tuesday. (Daniel McHardie/CBC)

Tuesday's budget address by New Brunswick Finance Minister Cathy Rogers will be the Gallant government's fourth since its election in 2014 and last before the next election this September.    

It's the final chance to make good on old campaign promises, demonstrate prudent financial management or to lay the groundwork for new voter-friendly initiatives, not all of which are compatible.

Will the Gallant government opt for spending or restraint? Here are four things to look for in the budget:

1.  Election-year spending likely

2.  Deficit could go up, down or sideways

3.  Old promises require a final decision

4.  New taxes are unlikely

New Brunswick Premier Brian Gallant delivers the state of the province address on Jan. 25. In the address, Gallant announced $20 million for business support. (Stephen MacGillivray/Canadian Press)

1.  Election-year spending likely

Pre-election budgets have a reputation for being padded with extras to put voters in a good mood and Finance Minister Cathy Rogers has made no secret she plans to spend heavily in the coming year — at least in key areas.

"I can confirm that health and education will be increasing as well tourism," she told reporters in Fredericton on Monday.

"That's what I will confirm. We will be investing more in these areas. They are very important."

The Gallant government has tended not to disclose much detail in its budget speeches.

It's unclear yet which way Finance Minister Cathy Rogers and the Gallant Liberals will take the deficit in the 2018-19 budget. (James West/Canadian Press)

In 2016, free tuition was introduced for low-income university students, but funding was buried in budget documents so deeply the program wasn't disclosed until two months later. Even MLAs who voted on the budget that year did not know the free tuition plan was part of what they were approving.

Rogers said not to expect much detail this year, either, although government has already pre-announced some big new spending plans — like a revamping of preschool education and boosting of child-care subsidies for low- and middle-income families. But there could be any number of other items that will not show themselves for several weeks

The province already delivered the capital portion of Tuesday's budget late last year with a substantial $69.6 million (9.3 per cent) increase in spending on paving and constructing and renovating things. But governments like to announce actual projects one at a time for maximum exposure so details almost always come later.   

The projected size of the deficit may be the only major clue to whether the budget contains election related projects or not.

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2.  Deficit could go up, down or sideways

The Gallant government has been promoting its record as a deficit cutter — and red ink on the province's books has been drying up on its watch.  

The last budget of David Alward's former Progressive Conservative government ended with a deficit of $361.4 million and through their first three years Liberals have cut that by two thirds.

But it is unclear how much progress, if any, will be made on that issue today given spending plans and the fact Liberals have offered three deficit targets for this budget already over the last four years.

In 2016, former Liberal finance minister Roger Melanson set a long-range projection for the deficit for today's budget — the government's fourth — at $117 million.   

The problem for Liberals is they have made much more rapid improvement than Melanson was expecting and, if Rogers holds to a $117-million deficit target in today's budget, it will represent the first deficit increase in four years and raise questions about whether progress on balancing the books has stalled.

Former finance minster Roger Melanson projected in 2016 the deficit for the 2018-19 budget would be $117 million. (CBC NEWS)

Last year, the deficit in New Brunswick from the Gallant government's second budget was $118.9 million. On Friday, Rogers announced the expected deficit this year will be $115.2 million — both well ahead of what Melanson predicted back in 2016.  

That makes it politically tricky to stick with the $117-million deficit target. Not only would it be higher than the deficit this year, but it would be only slightly better than the one two years ago. .

But if Rogers wants to do better, she has two other deficit targets previously promoted by her party she can aim for instead.

In their 2014 election platform, Liberals originally proposed their fourth budget would produce a $79.4-million deficit — at most.  

That number was a worst-case scenario that included the full spending of a long since abandoned $150-million contingency fund. With the contingency fund removed, the real target Liberals set for Tuesday during the election campaign was a surplus of $70.6 million.    

If Rogers picks one of those earlier targets promoted by the party, she'll strengthen her hand considerably in the debate over whether she and her government making real progress toward balancing the books.

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3. Old promises require a final decision

New Brunswick Liberals said they would keep their 2014 election promises to voters by "making promises we can keep." Still a number of election pledges remain unfunded and today's budget is the last chance to put money aside to make them happen

The largest promise still to be kept — and the one to watch for Tuesday — is a $15 million-per-year pledge to provide $1,275 tax credits for people who are looking after dependant adult family members in their own homes. That includes elderly parents or adult children who are not capable of living on their own or looking after themselves.   

The idea was called a "no brainer" by Brian Gallant during the election and Liberal campaign documents suggested it would help 12,000 people in the province. Those documents also claimed it would be funded in a Liberal government's first budget, but it has been a no-show in each of the first three with one more chance to make good.

New Brunswick spends $15 million per year subsidising the cost of daycare for lower income parents to help free them up to enter the workforce. (CBC)

The government has been hustling recently to attack campaign commitments still stuck in limbo, including pouring millions into helping parents pay for daycare and offering $1,000 grants to help fund legal costs for parents who adopt.  

But other election commitments — like special student loan relief to young parents who have a new baby remain and tax credits for families caring for dependant adults — remain untouched.   

In each case, Rogers will have to decide which will cost her government more: breaking an old promise or keeping it.

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4.  New taxes are unlikely

The Gallant government has not been shy about raising taxes to generate revenue. Yet, it imposed no new ones in last year's budget and, with an election just eight months away, they're unlikely to touch anyone's wallet Tuesday.

Elected on a platform that included two proposed tax increases back in 2014, the government has instead raised nine in its first two budgets, or up to eleven if the cancellation of tax reducing credits are counted as well.

Finance Minister Cathy Rogers is applauded after tabling the 2017-2018 provincial budget. (James West/Canadian Press)

Income taxes on the rich were increased soon after the election as were property taxes on business — both campaign commitments. But then gas and diesel taxes went up, property transfer taxes were boosted, tobacco taxes jumped twice, corporate income tax went up as did a special tax on banks. Most significantly, the provincial portion of the HST was increased two percentage points.   

Tax credits for tuition and a special income tax deduction for debt-ridden student graduates were also both cancelled.

But look for none of that this year.

In fact, the Gallant government has been fighting hard not to impose a carbon tax even though it has been mandated by the federal government. Given that fight — and New Brunswick's approaching election — the possibility of any new taxes being announced today is remote.

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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