New Brunswick Budget 2019-20: Pay down now to save later

Finance Minister Ernie Steeves tabled the 2019–20 budget on Tuesday, March 19 with a projected $23 million surplus and $49 million set aside to pay down New Brunswick’s $14.1 billion debt—a first in 13 years.

Topline insights

• There are no real surprises with the PC’s first budget. Premier Higgs campaigned on fiscal responsibility and paying off the debt. He committed to reduce the debt by $125 million a year, which might have proven unrealistic once in power and with a minority government.
• The budget protects essential services for future generations by lessening the debt load to reduce the province’s yearly interest payments of $677 million.
• Overall, the business community has expressed support for the budget and the focus on debt reduction with no new taxes.
• The People’s Alliance has committed its three members to vote in favour of the budget, which means it should pass in this minority government situation.
• The Green Party and Liberals have expressed support for debt reduction, but concern at what expense it might bring, especially with less funding going to affordable housing and social assistance.

By the numbers

• Seven of 19 departments faced significant budget cuts: Post-Secondary Education, Training and Labour, Opportunities New Brunswick, Tourism, Heritage and Culture, Energy and Resource Development.
• Restrained spending in the four biggest departments: Health, Education and Early Childhood Development, Social Development, and Transportation.
• Social Development saw a slight increase, but less money made available to programs including Child Welfare and Disability Support Services, Income Security, and Housing Services.
• 100 civil servant jobs will be cut, mainly through attrition.
• The government will spend more than $16 million to increase wages for home support workers.
• Minimum wage went up to $11.50 (up 25 cents).
• $2.4 million will be spent in 2019-20 to recruit and retain more nurses in NB.
• The government is increasing the annual budget for the auditor general by $1 million.
• The language commissioner received a 25 percent cent funding increase, or $136,000 a year.
• Revenue is expected to grow at 1.5 percent.
• $10 million in revenues and taxes are projected from Cannabis NB.

Reactions

Although the overall tone indicates that the people of New Brunswick are cautiously optimistic about the impact the budget will have on the bottom line and taxes, there are concerns about cuts to social programs, housing, and income security.

More reactions should be expected as more details are revealed and departments show how they will implement the changes and prioritize initiatives.

Moving forward

New Brunswick is home to Canada’s oldest population (16 percent of the population is over 65). This is an expensive demographic to maintain when also confronted with a shrinking population and tax base. The Finance Minister did state the province would request support from Ottawa to assist with the growing healthcare challenge the province is facing and the associated financial costs.

Labour shortage is another challenge, with nearly 25 percent of the workforce aged 55 or older. The ability to attract and retain workers will play a significant role in the province’s economic future.

Time will tell if the short-term pain results in long-term gain. This is an approach that is not typically taken by New Brunswick governments of late.

As the province works to confront its economic challenges, it is also an opportunity for organizations in the private sector to show leadership, pitch solutions, and find common ground with this government. The Premier continues to express interest in hearing and implementing ideas to get results.

At NATIONAL, we will be working with our clients to build strategies to align with government priorities. We help organizations to be top of mind and to make the most of the current opportunities. If you have an idea and want to be part of the conversation, our Public Affairs team can help.

More on the budget can be found here.