N.B. grossly underestimates budget surplus — again

The New Brunswick government has once again vastly underestimated its budget surplus. 

In March, Finance and Treasury Board Minister Ernie Steeves estimated the budget surplus at about $40 million. On Monday, he said projections for the 2023-24 fiscal year show a surplus of $199.6 million. 

But Steeves said Monday that he's treating the surplus cautiously. He said he's not seeing the same early signs of windfalls that were seen in the last few years.

Last year at this time, the government projected a $135.5 million budget surplus for the 2022-23 fiscal year, which eventually ballooned to $882 million, while the projected deficit of nearly $250 million in 2021-22 turned into a $777-million surplus. 

Liberal MLA and finance critic René Legacy said he's not as concerned about the government's inability to accurately predict surpluses as he is about its lack of planning. 

Once a surplus is predicted in the spring, he says officials should immediately begin talking about how to spend that money.

"Yet what we're hearing is, 'Well, we'll start discussing it in the weeks to come.' This isn't new. This has been happening pretty much since they got elected," said Legacy on Monday after the government's announcement. 

Economist Richard Saillant said he fully expects the projected surplus to grow beyond $199.6 million, which is what happened with projections made last summer when a conservative estimate ended up being a record $882 million. 

"It looked somewhat as a repeat of the scenario from last year, but I'm not willing to claim at this point that we'll end up with another record surplus. But I do feel that … the year-end surplus that is currently being forecasted is probably on the conservative side."

Saillant said regardless of the size of the surplus, the province has ample flexibility to invest more in health, education, housing and to address the cost of living crisis.

"We could have started spending more as soon as the pandemic hit us. We were the province that spent the least on pandemic relief in Canada — by far. And we have improved our fiscal position — the fastest-ever witnessed in history and the fastest among Canadian provinces. We are now the least indebted province east of Saskatchewan."

Speaking to reporters after the release of the quarterly report, Steeves defended the ballooning surplus. He said with a $12.2-billion budget, he's satisfied with being off by 1.6 per cent.

 "It's an honest try to be as accurate as possible, and I think 1.6 off is certainly understandable," said Steeves.

Revenue estimated $151M higher, expenses $8M lower

According to documents released by the province on Monday, total revenue is projected to be $151.3 million higher than budgeted, while total expenses are projected to be $8.1 million lower.

"The net debt is projected at $11.7 billion, an improvement of $145.9 million from Budget," said the report, titled Fiscal and Economic Update for the first quarter.

A government news release on the report said this would be "the lowest projected net debt per capita east of Saskatchewan."

According to the report, the improvement in the total revenue projected is due to "higher conditional grant revenues, reflecting the timing of revenue under several conditional grant agreements, and higher Disaster Financial Assistance funding. Stronger-than-anticipated growth in the economy is positively impacting personal income tax revenue and harmonized sales tax revenue."

A sign of strong economy, Steeves said

Steeves said the financial results for first-quarter of this fiscal year "demonstrate the continued strength that the province's economy has shown for several months."

This, he said, has allowed the province to "invest in areas with the greatest need."

The news release said this spending included:

• $500 million over three years to the province's housing strategy "in current and previously announced projects."
• $47 million this year to support projects under the Climate Change Action Fund.
• $33.3 million to reflect the impact of a growing population on the education system.
• A development agreement with Neqotkuk (Tobique First Nation) that will provide more than $22 million over five years to support housing and road repair.
• $2.1 million for better diabetes management.
• $2.5 million over six years to support vulnerable children and their families through Bee Me Kidz.

The first-quarter numbers also project "real GDP growth of one per cent in 2023, comparable to the average among private sector forecasts of 1.2 per cent," the report said.