N.B. budget: Debt keeps rising as Liberals spend on education, tourism

CTV Atlantic: N.B. Liberals table third budget The third budget from New Brunswick's Liberal government may be just as notable for what's not in it, as what is. Laura Brown explains.

FREDERICTON -- New Brunswick's government is piling on more debt in its 2017-18 budget as the Liberals opt for targeted spending increases rather than a quicker assault on the deficit.

Finance Minister Cathy Rogers' $9.4 billion budget released Tuesday hikes spending by just under four per cent despite the province's fiscal challenges.

"New Brunswickers want their government to get our finances in order, but not at the expense of our social programs," she said in her budget speech.

The deficit is projected to be $192 million by the end of March 2018. The total debt is rising to $14.4 billion -- up almost $1 billion from last year's net debt, although some of that is due to an accounting change.

Bruce Fitch, the Tory finance critic, said the government has squandered a chance to stop bleeding red ink after raising sales taxes last year.

"They could have balanced the budget this year, but instead they decided to spend it in order to win back ... some of the popularity that they've lost," he said.

Robert Kavcic, the senior economist at BMO, noted that with debt rising toward 42 per cent of GDP this coming fiscal year, the province has "one of the more challenging fiscal environments in Canada."

The Liberal government says it is still projecting to balance the budget by 2020-21, with Rogers referring to her progress as "a steady, responsible way."

The budget hikes spending on both health and education.

It includes an additional $56 million for education, and a funding increase for the daycare assistance parents that the Liberals say will bring the annual total to $20 million, about double levels in 2014.

The Liberals say they will also spend $45 million over four years to help universities, with details yet to be worked out after meetings with the four publicly funded institutions.

Overall, education spending is set at $1.19 billion, up from $1.14 billion last year.

The population of the province crept up less than a per cent to 756,780 people last year, and the province says it is going to spend $2.5 million on various initiatives to boost it more significantly.

The budget contains relatively few taxation changes other than a small reduction for small business, which will see its corporate tax rate lowered from 3.5 to three per cent.

The province has also committed to bringing in a carbon tax as part of its climate change strategy, but the budget doesn't reveal when this will happen or how much it will be.

The province says about half the hike in total debt is due in part to an accounting change that adds nursing home debts to the provinces' books, but the government also to plans to spend more on highways and other infrastructure as federal matching funds become available.

David Coon, the Green Party's leader, said he was alarmed at a $2 million cut to the Environment Department -- one of few agencies to see their funding sliced -- even as the province is hammered by storms he links to climate change.

"There's nothing in the budget related to hardening our infrastructure to better protect New Brunswickers or help us reduce our reliance on expensive fossil fuels," he said.

Economists have been warning for several years that last year's two per cent rise in sales tax -- which the minister said has added about $300 million in revenues this year -- won't sustain the province's rising costs over time, as baby boomers age and drop out of the workforce.

Health care spending is continue to climb to care for the aging population, growing 3.3 per cent -- the largest increase in five years -- to a projected $2.7 billion, about a third of the total spending.

However, Rogers said a recent health accord with the federal Liberal government will help fund the rising costs.

Rogers said the province will be adding an extra six positions to train doctors through its agreement with the school of medicine at Dalhousie University.

She also said she was to able expand the vaccination program for the human papilloma virus to include boys.

As the population ages, the province is continuing to spend on nursing homes, committing to about $58.2 million for construction, maintenance and improvements over three years.

The past year has been a difficult one for the province's economy, with the shutdown of a large potash mine in Sussex and sluggish export sales.

Nonetheless, the budget makes optimistic predictions of a turnaround, noting employment has grown by about 5,300 people since June.

By the end of March 2018, the province expects interest payments on its debt will be $701 million, the province's fifth largest expenditure.

The debt is about $19,000 for every man, woman and child in New Brunswick.