Gallant promises 50-50 split between spending cuts, tax hikes

Premier Brian Gallant provided some hints of what is to come in his government's second budget on Tuesday during his state of the province speech Thursday night.

"As New Brunswickers we spend more on interest payments on our debt than we invest in universities, colleges, and financial aid for students combined," Gallant said in the opening of his address.

"This startling fact best illustrates what I want to talk to you about tonight."

The government is looking for $600 million in spending cuts and increased revenue as it tries to rein in the deficit and Gallant says he is taking a balanced approach.

"One of the principles that has guided the choices was that 50 per cent of the monies should be found by expenditure reductions and 50 per cent should be found by increasing revenues ... and I can tell you that the decisions at the end of the day will be about 50-50," Gallant said in the speech.

He went on to promise that of the six large areas under consideration, which include cuts to the civil service, raising corporate taxes, increasing the HST, introducing highway tolls and cuts to health and education, he had to choose three or four of them to move ahead with.

"I'm not going to tell you which ones are going to be chosen but I'll tell you this, I've made it very clear that our government will not reduce the deficit by slashing into health care and education and in fact, we are going to ensure that we be the government that invest the most in health care and the most in education in the history of our province.

"So you can probably guess some of the other decisions."

Cuts to civil service unclear 

In the government's `Choices' report that followed public consultations as part of the its strategic program review, low-end estimates of increasing the HST, increasing corporate income taxes and bringing in highway tolls add up to an increase in revenue of $247 million. On the high end, the estimates total $380 million.

If, as Gallant says, the split is 50-50, that means the civil service and government spending could be facing cuts totaling roughly the same amount.

In the report, reshaping the civil service is an option that would save $45 million, while other options including administrative efficiencies and consolidating customer contact centres and non medical laboratory services would save at most $24 million.

Education key to future

In his speech Gallant went back to the importance of education, innovation and training several times but also touched on the importance of developing natural resources.

"We have to work together to ensure we do it right, we do it safely, but we get the jobs. We make sure we do it right, we ensure that we diversify our exports and get the Energy East pipeline to Saint John."

While looking at a slide that showed the top 10 infrastructure projects in Canada, which are worth $157.9 billion, Gallant asked the audience, "Do you see New Brunswick and PEI ... it's in white. Our percentage is zero of the 100 largest infrastructure projects."

Gallant says it is clear New Brunswick needs a stronger education system and promised to invest in improvements.

Gallant announced a new fund in his speech which he calls the 'education and new economy fund.'

He says it will ensure a wide range of benefits ranging from identifying learning disabilities early in schools to providing post-secondary education to those who can't afford it.

"One of the worst things we did was taking the trades out of the schools, well we're going to ensure that we support trades and that they're there and thriving in our schools," he said of the new money.