New report to show $35M improvement in New Brunswick’s projected deficit

New figures show cost-cutting measures by the New Brunswick government are improving the province’s finances.

The province will release a first quarter report Friday and government sources tell The Canadian Press it will show a $35 million improvement in the deficit projection for 2017-2018.

The deficit is now projected at $156 million, as compared to $191.9 million when the budget was released in February.

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Donald Savoie, the Canada Research Chair in public administration at the University of Moncton, said “the arrow is pointed in the right direction” and it’s important to keep moving towards surplus over the next few years.

“The difficult years are ahead, not behind us, in the sense that the demographic challenge, the aging population and the added cost on health care is going to add a lot of pressure,” Savoie said Thursday.

A government source says much of the fiscal improvement is the result of cost-cutting measures that resulted from the government’s Strategic Program Review.

Savoie said it’s important that government continue to look for savings because the province should not consider increasing taxes to boost revenue.

“Our local economy has to be competitive. If we tax businesses higher than neighbouring states and provinces do, then we’re going to create a challenge for the business community,” he said.

“Whether it’s income tax, whether it’s HST, whether it’s property tax, I just don’t think there’s much room left.”

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According to a government source, the quarterly report will also boost the province’s projection for real GDP growth in 2017. It’s now projected to grow by 0.8 per cent – up from the 0.6 per cent projection in February.

Savoie said the province’s economy has been on the rebound, particularly in a couple of key sectors.

“There’s a great deal of potential in the food sector and this region is extremely well situated to grow its food sector. There’s a great deal of potential in tourism and we’re starting to see life in both sectors,” he said.

Savoie said it’s important parties not make extravagant spending promises during next year’s provincial election that would stray from efforts to balance the books.

“I would hope that leaders of all parties would be sensible, knowing that the arrow is pointing in the right direction, don’t turn it around. That logic applies to all party leaders,” he said.