In our 2019-2020 pre-budget brief to the provincial government (available on our website), we urged Finance Minister Steeves to focus on what is and what is not a core area of government as a way to make it more apparent what is a government ‘investment’ and what is a government ‘spend’. This focus will then allow the government to be leaner and more targeted and produce a cohesive tax-debt-economic development strategy.
We also encouraged government to make decisions with a business lens – allowing for and supporting economic growth. This is the only way our province can prosper – if business can continue to grow – which creates employment, supports other businesses in the supply chain, and provides revenue to all levels of government. Ultimately – growth and economic prosperity in our communities also makes New Brunswick a more attractive place to live and work.
New Brunswick’s provincial finances and economy are in a precarious position and their symbiotic relationship means that government decision-makers will have to make thoughtful, deliberate and frequently difficult decisions in the coming years. This kind of restraint is required not only to provide the services that New Brunswickers need and deserve, but also to be able to create the competitive business environment that business needs to thrive. Without consistent and sustainable economic growth, any other positive decisions made by government will be for naught.
In other words, the relationship between the Province’s finances, its ability to deliver services and economic development are symbiotic and inextricably linked. It’s one of the reasons our organization’s vision is Stronger Community Through Business Prosperity – a concept that we believe is equally applicable provincially. The Province must carefully balance its current short-term revenue needs with its long-term growth needs – viewing decisions (at least in part) through a business lens.
This relationship also means that tax policy is the best economic tool we have available. When viewed in this context, every dollar spent by your government is relevant to the business community. The less the Province can spend today, the more breathing room it has to improve business conditions both now and into the future (and to reduce debt and provide services).
New Brunswick not only needs to be open for business – it has to let the world know. Between our high taxes, an unwillingness to develop natural resources and the lack of private sector capital investment is a signal from companies that there are better places to do business. This has to change. And change dramatically if New Brunswick ever hopes to be a “have” province. We are too far behind other jurisdictions economically to aim for average, we have to do much better than that in order to close the gap.
Some of the highlights for the business community include:
The province’s net debt currently sits at almost $14.1 billion for a population of 767,000 people. The net debt is projected to decrease by $49.2 million by 2020. This will mark the first time in thirteen years that the net debt will decrease.
- However, GDP growth expected to be 0.6% (worst in Canada); spending increasing by 1.3%; revenue increasing by 1.5% due to an equalization bump (~$200M)
- No provincially-controlled tax/fee increases or decreases (carbon tax begins on 1 April 2019).
- Minimum wage increasing $0.25 to $11.50 (in line w/ CPI) – we made a submission in late 2018 reiterating our position that this was our preferred minimum wage mechanism.
- Nearly 50% cut to workforce development
- Cut in funding to ONB (~$5M) and Cyber NB (from $1.8M to $400K) – details at committee
- Comprehensive tax review (budget speech stated rather than piecemeal approach, gov’t will take broader look at tax system w/ view towards improving conditions through lower taxes)
- Gov’t intends to seek ‘one-time demographic weighted health care agreement with feds
We were encouraged that the 2019-2020 provincial budget recognizes the urgency with which New Brunswick must act to get its fiscal house in order. Sustained restraint is required not only to provide the services that New Brunswickers need and deserve, but also to be able to create the competitive business environment that business needs to thrive. As with any budgeting process, the details – as they become known over the next year – will tell the whole story.
It has the potential to be a foundational budget that stabilizes the provinces finances and gives NB a starting point to make real progress on debt reduction, which is needed to lower taxes, grow the economy and provide the services that New Brunswickers need in the future. Our chamber and the business community at large have identified debt reduction as a top priority for the province – making real progress with a projected $49 million payment on our $14 billion debt is a precursor to being a sustainable province.
Particularly encouraging is the recognition in Minister Steeves’ budget speech that the province must have a strong private sector, it must be an attractive location for investment dollars, and it must be fiscally responsible to make it happen. The transparency measures promised in this budget are also part of the fiscal responsibility needed – that includes more detailed quarterly reporting and an increase to the auditor general’s budget.
We are currently seeking more details in several areas, including budget reductions to Opportunities New Brunswick / Cyber NB. As the key economic development organization in the province and host of Cyber NB – ONB’s activities have a major impact on the business community.
Cybersecurity is an important economic opportunity for Fredericton and the province as a whole, and it is important that both the public and private sectors are behind its development as a key sector in New Brunswick. The significant decrease in these two budgets will need to be explained more fully to gauge the impact on economic activity and business growth and attraction.
We have written to the government on the following:
- More information regarding reductions to NB’s Tourism budget
- To further advocate for a comprehensive tax review and red tape reduction efforts
- To advocate for a long and predictable notice period for minimum wage increases
Overall, we’ve asked government to make fiscal responsibility a priority, and the 2019-20 budget is a start down that path. This is the only way our province can prosper – if business can continue to grow – this creates employment, supports other businesses in the supply chain, and provides revenue to all levels of government allowing them to provide needed services to our citizens.