Liberal government turns deficit into $67M surplus heading into election
Jacques Poitras | CBC News | Posted: August 21, 2018 1:25 PM | Last Updated: August 21, 2018
Audited statements show dramatic improvement since $191M deficit was forecast for last year
New Brunswick's Liberal government injected a new dynamic into the looming provincial election campaign Tuesday with the release of audited statements showing a budget surplus in 2017-18.
The statements, audited and verified by Auditor-General Kim MacPherson, show a surplus of $67 million for the fiscal year that ended March 31.
That's a dramatic improvement on the original forecast of a $191.9 million deficit.
It also adds a new twist to the campaign narrative. Progressive Conservative leader Blaine Higgs has built his election strategy on a promise to better manage the province's finances after four years of Liberal overspending.
The statements show the province raked in more revenue in taxes and federal transfer payments, while spending less than expected on job-creation subsidies, debt payments and pensions.
Rogers compares herself to Higgs
Finance Minister Cathy Rogers used the numbers to draw a contrast with Higgs less than 48 hours before the official start of the election campaign.
"We are seeing positive economic and fiscal results," she said, noting the Liberals have beat their deficit-reduction targets in the first three of their four budgets.
"This compares favourably to the previous four years, when the New Brunswick economy shrank by one per cent and fiscal targets were continuously missed."
Economist Richard Saillant, who has warned repeatedly that the province's high spending and debt load are sending it toward a "fiscal cliff," tweeted that the surplus is "great news."
But he said the revenue growth in the audited statements is not sustainable and the province's debt is still $1,000 higher per New Brunswicker than in 2015.
Tax revenue up, spending down
The harmonized sales tax, corporate income taxes, property transfer taxes and insurance premium taxes all yielded more revenue than expected.
Meanwhile, economic development spending was $38 million lower than planned, a variety of government programs spent less than budget, and--thanks to low interest rates--the cost of servicing the public debt declined for the second straight year. It was $34.4 million lower than planned.
She said despite the good results, the Liberals will stick with a four-year plan that projects deficits in the next three years and a surplus again in 2021-22.
"We have an existing multi-year fiscal plan laid out," Rogers said. "We can't necessarily attack the deficit faster at the expense of very important social programs, so we'll continued to take a balanced approach."
Higgs accepts numbers
Higgs, who was finance minister in the previous PC government, told reporters at a campaign event in Fredericton that he accepted that the numbers were valid because of the auditor-general's signoff.
But he accused the Liberals of low-balling their revenue and expense expectations when the 2017-18 budget was tabled in February 2017 to create seemingly unexpected good news just in time for the election.
"I'm sure it was politically planned," he said, pointing out his last PC budget also forecast a surplus for this year.
'Last year's numbers'
Higgs said the long-term spending trend is still a problem.
He dismissed the 2017-18 surplus as "last year's numbers" and "a hollow document," saying it does not reflect the blitz of spending announcements the Liberal government has made in the current 2018-19 fiscal year, where it's projected a $187.3 million deficit.
"What's going to protect next year's numbers if this government gets back in power? More taxes?" Higgs asked.
"Because the amount of spending that's already being done, currently being done, projected to be done, will nowhere near reflect the numbers that are being proposed there."
PCs promise more transparency
Higgs made his comments at an announcement of the first PC promises of the coming election campaign. He committed to a series of changes to increase government transparency.
They include bringing back the previous PC government's Fiscal Accountability and Transparency Act, a law the Liberals repealed in 2015. It included financial penalties for individual cabinet ministers when the deficit wasn't reduced by at least $125 million a year.
In a Blaine Higgs government, no MLA will be penalized for voting their conscience - Blaine Higgs, Progressive Conservative leader
He also promised to toughen the conflict-of-interest rules for MLAs, though he wouldn't say if he'd banned "perceived" conflicts as the province's conflict commissioner has recommended.
"If a roomful of people says it just doesn't smell right, chances are it's not right and it should be banned," Higgs said. But he acknowledged perceptions can be subjective.
"It's difficult to put in the law. I appreciate that."
The PC campaign released a list of Liberal moves that they said harmed accountability, including reducing the number of regular sitting days at the legislature in favour of more committee sessions.
Fewer sitting days than ever
Higgs would not make an absolute promise to reverse that, saying only, "I can't imagine we would stay at the level that is the lowest sitting days that have ever been in the legislature."
He also promised to let PC MLAs vote more freely on legislation other than spending bills and platform promises.
"In a Blaine Higgs government, no MLA will be penalized for voting their conscience," he said.
In 2010, the PC campaign promised to let MLAs cast free votes on amendments to government legislation, but under Premier David Alward, there was never an example of a Tory member breaking ranks.
"I wasn't premier," Higgs said when he was asked about that. "This time I'm running to be premier, and the changes we need will be made."