Facing increased deficit, NB Finance talks about shale gas11/2/2012
FREDERICTON – Finance Minister Blaine Higgs is signaling that tough decisions are ahead as New Brunswick’s projected deficit is expected to double to $356 million this year.
The deficit growth is being driven in large part by falling revenues. The province says revenue is $123 million below budget – the bulk of that due to lower income tax, harmonized sales tax and corporate tax revenues.
“This reinforces the need to … live within our means. We can’t count on revenue buying our way out of this,” Higgs told reporters. The numbers released Thursday come at the halfway point of the province’s 2012-2013 budget which covers until March 31, 2013.
Higgs had projected a $183-million deficit in his budget.
On Thursday, the Atlantic Provinces Economic Council predicted weak job growth in the province this year and a marginal increase in its economy.
“The economy is slowing across the country and we aren’t immune to that. Our projections for growth are significantly down from where they were,” Higgs said.
In recent weeks, the government has signalled increase scrutiny over spending.
Higgs said it reinforces Health Minister Ted Flemming’s decision to clamp down on spending in his department.
“(Health spending is) 40 per cent of our spending, so it has to be a focus area on what we can do in that category.”
Higgs also pointed to the increased scrutiny of school budgets.
“(Education Minister Jody) Carr is really – and I applaud him for it – trying to see how we spend the money.”
Donald Arseneault, the Liberal critic on the finance portfolio, said the situation is of the government’s own making.
He accuses the government of failing to focus on growing the economy.
“You needed to focus on the economy to grow that economic pie. Now it’s pretty clear from the numbers - $157 million less revenue from personal income taxes and corporate taxes, we’re at an 11 per cent unemployment rate. There are fewer people working in New Brunswick and that is squarely on the shoulders of David Alward.”
He said the government has failed to adequately invest in the economy and in businesses.
“We need to give small and mid-size businesses more access to capital,” he said.
Green Party Leader David Coon said the Liberals are the ones who bear much responsibility here. But he says Higgs’ talk about cost-cutting ignores the real issue – that New Brunswick cut taxes while it knew demand for services would grow.
Coon says Higgs has to return taxes to where they were in 2008 – a move he said would return $240 million to government coffers through personal and corporate taxes.
“We have a revenue problem, not a spending problem, so he needs to restore the revenue we lost when the Liberals recklessly cut taxes in their 2009 budget,” Coon said.
“The Liberals made a terrible mistake in 2009 thinking they could get services for free. We’ve got to face up to reality here, not make deeper cuts to health and education.”
NDP leader Dominic Cardy said Thursday that the loss of revenue from income taxes shows New Brunswick’s economy needs a jump start.
He’s calling on the government to implement the NDP’s plan for a new jobs tax credit that would provide a tax break for every job created instead of providing financing to companies to create jobs.
“The province’s deficit proves the Alward Conservative’s inability to manage the province in a time of crisis,” Cardy said.
Higgs said the automatic increases that departments have been used to just don’t add up for the province as it is in need of increased revenue.
“The message is we still need to think about how we can impact the money the government spends.”
He said that means he’ll continue to press departments to look for efficiencies, whether they are one per cent savings or five per cent saving in an effort to find a better way of delivering services government needs to deliver.
Higgs said the economic situation also reinforces the need for the province to continue looking for new opportunities.
“We want to continue to look at the shale gas as a potential and what it could mean for the province, the pipeline could be a win, the forest sector has a future – be it in clothing or in value-added sectors like tissue.”
The province’s deficit for 2011-2012 was $260.6 million – $188.2 million less than what it had forecast.
At the close of 2011-2012 the province’s net debt stood at $10 billion.