Blaine Higgs warns spending restraint must continue

The New Brunswick government cannot afford to let up on its spending restraint even after the provincial deficit has been eliminated, according to Finance Minister Blaine Higgs.

Standard and Poors Rating Servicesdowngraded New Brunswicks credit ratingto AA-minus from A-plus last week.

Higgs said the agencys decision todowngrade the provinces credit rating shows the need to tackle the province's massive debt.

The provinces debt is expected to reach $10.8 billion by the end of the fiscal year.

Higgs said it will be important to build debt payments into the budget after 2014, when the Progressive Conservatives expect to have the deficit eliminated.

"You make a debt repayment as part of your overall budget plan, and you get agreement on that, so the public sees it, no matter what government is there, they see it as a plan going forward," he said.

The New Brunswick government does pay a minimum amount every year on its debt costs.

In the latest budget, $672-million was set aside for service of the public debt, which is the third highest government expenditure after the department of health and the department ofeducation and social development.

New Brunswicks debt has skyrocketed in recent years because of a series of major infrastructure projects, such as the twinning of the Trans-Canada Highway.

Debt is increasingly important

New Brunswicks deficit is expected to be $183 million by the end of 2012-13, according to the latest budget.

The provincial governments plan is to have it eliminated in 2014, but a credit rating analyst said the plan must go further.

Mario Angastiniotis, an analyst with Standard and Poors, said many governments eliminate their deficits and then start spending again without paying off their accumulated debt.

"Once you achieve balance, that's great, but I think from our perspective the debt is increasingly more and more important," he said.

Angastioniotissaid Standard and Poor's could eventually upgrade New Brunswick's outlook from "stable" to "positive" if the province makes a serious attempt to tackle its debt.