Auditor general shows impatience over province's bleak debt picture
Government's budget for 2019, plans for $14.5B in net debt, with a deficit of $189M
New Brunswick Auditor General Kim MacPherson has renewed warnings the province has spent itself into a dangerous level of debt and called for the Gallant government to take the issue more seriously.
"I again encourage government to set targets to eliminate deficits and reduce net debt," MacPherson said in a presentation to the legislature's public accounts and Crown corporations committees Tuesday.
"I remain concerned the province has no immediate plan to address the continuing fiscal decline."
- 'Hope and pray' budgets will haunt future taxpayers, economist predicts
- Liberals choose election-year spending over deficit cutting as budget presented
- New Brunswick's projected deficit drops to $115.2M
MacPherson outlined how New Brunswick's debt has grown by nearly $7 billion over the last decade — a more extreme deterioration in its financial health than other smaller provinces have allowed.
She pointed out that New Brunswick's debt per capita, which was 26 per cent lower than Nova Scotia's in 2008, is now 16 per cent higher, and she criticized the province for significantly raising tax revenue, then spending most of it on new programs.
"Despite governments actions such as tax increases, program changes and reducing civil service benefits, deficits and increases to net debt continue," she said.
No end in sight
MacPherson's bleak assessment of New Brunswick's financial position and downward direction are in stark contrast to the government's own view that it has been fiscally responsible and is reducing over-spending fast enough.
Since the 2014 election, the New Brunswick Liberals have twice pushed back their target date for eliminating the deficit — currently giving themselves three more years — with no stated plan yet to begin paying down debt.
Obviously, my concerns I have been stating year after year after year have not hit home.- Kim MacPherson, auditor general
Last month, Premier Brian Gallant graded his government's financial management as a success.
"I don't think a lot of people four years ago would have thought we could have got our finances under control, reduce the deficit by more than half and not cut the bottom line of education and health care," Gallant said.
"We accomplished exactly that."
MacPherson expressed concern with that record.
"Government's budget for 2019 plans for $14.5 billion in net debt, with a deficit of $189 million. This will be the eleventh year of consecutive deficits. As I have reported repeatedly, this trend is not sustainable."
Trouble is coming
Under questioning from Opposition Leader Blaine Higgs, MacPherson expressed frustration that similar warnings are issued by her every year and ignored even though signs are everywhere that trouble is coming.
In particular, she said, she was discouraged that negative outlooks issued by national credit rating agencies after the last provincial budget didn't cause government to change course.
"If there is no signal to tell the government they need to do something to prevent a downgrade I don't know what it would be," said MacPherson.
"Obviously, my concerns I have been stating year after year after year have not hit home," she said.
"When people start to try and get a handle on this problem it's going to be like turning the Titanic. It's going to take time. There's a problem on the horizon. They need to take note that it is there and address it."