Pre-election New Brunswick budget stays the course on taxes, health spending

The Higgs government has delivered a stand-pat provincial budget that avoids new spending measures, tax cuts or other gimmicks that might curry favour with voters ahead of the election this fall.

Finance Minister Ernie Steeves has opted to stay the course rather than slash taxes or throw huge new sums of money at the health-care system.

That leaves him projecting another small surplus for 2024-25 of just $41 million.

Steeves has vastly underestimated the surplus in each of the last four years, but this year he is again repeating his warning that higher-than-expected revenue for the government is bound to come to an end.

"Revenue is not anticipated to continue the pace of growth seen in recent years, and maintaining spending growth at current levels will not be sustainable over the longer term," he said in his budget speech delivered in the legislature.

"The fiscal plan I have outlined today reflects the needs of a growing province, recognizes the volatile times we find ourselves in, and considers the need to remain fiscally responsible over the longer term."

Notably, the health budget is nudging up by only $1.6 million over the province's revised spending figure this year.

That is despite several increases including:

• $70 million more for regional health authorities.
• $22.9 million for new technologies, including improved electronic medical records and other new systems and tools.
• $20 million to continue expanding collaborative primary care centres.

Steeves said those new items are offset by one-time costs this year that won't repeat in the coming year, including the large amounts paid to private companies providing travel nurses to fill staffing gaps.

The new amounts are still far from the $600 million in new spending recently demanded by the New Brunswick Medical Society and the New Brunswick Nurses Union.

They were looking for $70 million for primary care clinics, an amount they said would be enough for 50 such centres around the province.

Medical society president Dr. Paula Keating said the organization was "somewhat disappointed" because it's not clear how many clinics the $20 million will create.

Opposition leaders weigh in

Opposition party leaders said the money falls short of what's needed.

Liberal Leader Susan Holt said there was nothing in the budget that "transforms" the system.

"It sounds to me like they're moving money around without having put new money into the system," she said.

Green Leader David Coon called it "really quite shocking, given the crisis that we face."

Steeves told reporters at a news conference that there could be "considerable" additional spending when the province negotiates a new wage contract with nurses in the coming months.

Another stay-the-course element was a repeated commitment first made in October 2022 to spend $102 million building or upgrading 380 public housing units.

WATCH | CBC's Jacques Poitras on what's in the budget:

New Brunswicks stay-the-course budget unveiled

7 months ago

Duration 1:08

In the last budget before the next provincial election, the New Brunswick government projects a small surplus and opts not to cut taxes or spend large, new sums of money on the health-care system.

Steeves said work on "nearly" half of those units will start this year, indicating little to no work has been done in the 17 months since the initial announcement.

The budget includes $68.9 million for the New Brunswick Housing Corporation, a 54.1 per cent increase over the current year.

It also includes new spending in education, such as $18.6 million to help school districts cope with enrolment growth and $24.3 million for rising energy and transportation costs.

There's also $7.8 million to try to improve literacy and numeracy scores, which have been dropping.

No tax cuts for now

The minister underlined several of the tax cuts and affordability benefits the government has announced in the last year, but his budget included no new measures aimed at helping New Brunswickers cope with the cost of living.

Asked if new tax cuts could be announced before the election campaign, Steeves did not answer directly but said he was speaking to his staff recently about the possibility of more reductions in the future.

"If we do a tax cut announcement, it won't be because of an election," he said. "It'll be because it's right for New Brunswick. We don't have a timeframe for it yet. We've started talking about it. We think it's a good idea."

He repeatedly encouragedNew Brunswickers with household incomes of less than $70,000 a year to apply for a previously announced $300 workers benefit.

Missed tax relief: taxpayer federation

The Canadian Taxpayers Federation applauded another balanced budget but criticized the spending increases and lack of new tax cuts.

"New Brunswickers could have gotten hundreds of millions of dollars in tax relief," said interim Atlantic director Jay Goldberg.

"Unfortunately, the spending restraint the Higgs government exercised in previous years was missing from this year's budget."

Other measures announced in the budget include:

• A new system for adjudicating child protection cases that should divert more than half of the cases from ending up in court in front of a judge.
• An increase in social assistance benefits of 3.6 per cent.
• $29.7 million for wage increases for employees working in sectors including special care homes, group homes, home support, community residences, attendant care, family support and specialized placements.

Robert MacKay of the Common Front for Social Justice said the increase in social assistance rates reflects a required hike to match inflation and isn't enough.

"That would not be going up," he said. "It's not an increase. It's treading water."

Steeves's small surplus projection and his hesitation to spend large amounts of new money follows four straight years of budgets that ended up wildly off-target, with much larger surpluses than forecast each year.

The most recent fiscal update projects a $247.4 million surplus by the end of the current fiscal year of 2023-24, well beyond the $40.3 million Steeves predicted last March.

That followed unexpectedly large surpluses of $400 million in 2021, $769 million in 2022 and $1.01 billion last year.

Earlier this year,Steeves blamed the missed targets on the federal government for underestimating how much income and sales tax revenue it would collect on behalf of the province.

Economist Richard Saillant, who has criticized the inaccurate forecasting in the past, said he believes this year's budget is more realistic in its estimates.

The cumulative provincial debt will increase by $315 million this year after several years of decreases. But it will continue to shrink as a percentage of the province's economic output.

Steeves and Premier Blaine Higgs have bragged that reducing the debt has also reduced the amount the province must spend on servicing interest charges on the debt.

But the higher debt forecast in the new budget means debt servicecosts are also forecast to increase in the coming year by $65.6 million.