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Earlier this week, New Brunswick Finance Minister Ernie Steeves delivered the government’s 2021-22 budget almost exactly one year after COVID-19 restrictions were first implemented in the province. The government is projecting the provincial economy will grow by 2.9 per cent this year, after shrinking 3.5 per cent in 2020 because of pandemic restrictions. Deficits above the $200 million mark are expected for at least three years, largely based on spending increases of 3.4% and expected revenue growth of 1.2%.  

Of course, any deficit running into the hundreds of millions should be a concern for all of us, but given the global economic realities of the pandemic, governments across the world are facing fiscal shortfalls. Over the past few years, getting the provincial deficit under control has been a top policy priority for our chamber, but being too aggressively balanced-focused at this time would do more harm than good in the long run. If anything, we were hoping for more direct help for business – especially in the hardest-hit sectors.  

As Minister Steeves has stated, there is a lot of uncertainty with these figures as the pandemic rolls on through the fledgling stages of the vaccination process. One just has to look back at the government’s deficit projections over the past year. In May they were expected to be $299M in the red. By June it had risen to $344M and in November dropped to $183M. This week? $12.7M.  

This isn’t a criticism of the smart and hard-working folks at the Finance Department – it’s a reflection of the instability of the past year and the situation remains dynamic and it is important to remember that by definition, the pandemic is a global crisis and so the economy will remain unpredictable until most of the world is back to “normal”. This means that there will remain many unknowns, which makes accurate forecasting next to impossible. I think we expect life to be different on the other side of the pandemic, but what does that look like in reality? Will people travel less? More? Will they go to restaurants like they used to? Will downtown employees get back to their offices? When? 

However, there are some things we do know, and focusing on these may be instructive as we think about the province’s finances while the circumstances continue to shift. Here are three that our chamber is thinking about as we see some light at the end of the tunnel with the Atlantic Bubble reopening and the current expectation of all New Brunswickers receiving a vaccination by July. 

First, the fundamental issues that New Brunswick was facing prior to the pandemic are still there and, in many cases, have been exacerbated. Population growth, access to primary health care, renewing infrastructure, literacy rates and housing are a few that immediately come to mind. These are long-term, interconnected problems that need thoughtful, long-term policy solutions, not only more money. 

Second, the economic crisis will lag behind health crisis. Some of the hardest hit sectors are already thinking about 2022, 2023 and beyond as recovery years more so than 2021 – regardless of the effectiveness of the vaccine rollout. Other industries with long sales cycles are only starting to feel the effects now, and the lost opportunities over the past year will not come back for some. It will also take some time to figure out exactly how consumer habits and confidence will respond over the next while.  

Finally, economic growth is needed to close the gap between 3.4% increase in spending and 1.2 % increase in revenue to avoid austerity cuts. Deficits cannot go on indefinitely and there isn’t room to increase taxes, so something has to give. The deficit projections for the next three years underscores that government revenue is generated by business and there is a need for private-sector stability and growth in order to avoid future cuts to services – but until we are fully in recovery – we can expect to see deficit budgets. In other words, as long as business is hurting, government revenues will as well.  

Particularly for these last two points, we would have liked to have seen more in the budget targeted at economic recovery and business support. The idea that vaccinations will serve as the de facto recovery plan is misplaced – that’s just a starting point. Government has stated that they cannot save every business and the jobs that go with it and while that is undoubtedly true – we must save as many as we can. 

Krista Ross is CEO of the Fredericton Chamber of Commerce, a nationally accredited organization with more than 1,000 members, is an active business organization engaged in policy development and advocacy that affects the competitiveness of our members and the Canadian business environment. The Chamber’s vision is ‘Stronger Community Through Business Prosperity’. 

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