New Brunswick will receive a fiscal update when the provincial legislature returns on May 26.
At Friday’s public health briefing premier Blaine Higgs said finance minister Ernie Steeves will provide an update when MLAs return. This will give the public an idea of where the books stand in relation to the projections set out in March’s budget.
“At that time a statement and information given on exactly where we see the province at this stage,” Higgs said.
“We are monitoring this on a regular, weekly basis. You know actual costs versus our budget and no, it’s not tracking the budget I assure you that.”
No new cases reported Friday
The news came as New Brunswick reported no new cases for the ninth straight day.
One additional person has recovered from the disease as of Friday, meaning that there is only a single active case in the province.
The total number of cases remains at 120.
Deficit set to grow
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According to a report from the Bank of Nova Scotia earlier this week, New Brunswick’s deficit could top $1 billion this year.
Moncton based economist Richard Saillant says a deficit of that amount, which would be the province’s largest-ever, would be a setback but not a death blow to the province.
He expects a rebound to come, even if it takes a couple years.
“Because we were in a situation of a planned surplus before the crisis, I expect that much of the deficit that we will have been incurring during the crisis … will absorb itself gradually,” he said.
“But it could be a couple, if not a few more years, before we recover from the fiscal hit we’ll be taking.”
Saillant does think the projection is a little high, with his own model putting the deficit at more than $500 million.
But despite the frequent musings of Higgs, New Brunswick’s share of transfer payments should be relatively safe.
“I understand that the premier is concerned about federal funding when the level of debt is growing extremely fast, I personally believe that at this point it is not a likely scenario that transfers would decline in absolute,” Salliant said.
While it is possible that the rate at which transfer payments are increased ends up falling, Saillant said it’s unlikely that health transfer would be impacted.
But in order to ensure that transfer payments continue to grow, Saillant says he expects that Ottawa will have to look at tax increases, potentially raising the GST back to pre-Harper era levels.
“Health care, elder care is a provincial jurisdiction and if Ottawa is not there, the provinces will be blaming Ottawa for not being an appropriate partner,” Saillant said.
“So the idea that federal transfers would decline in absolute, I do not subscribe to that thesis.”
Where New Brunswick could see a decrease is in equalization payments, but not necessarily due to the economic havoc wreaked by the pandemic.
Saillant said the province saw a large jump in equalization payments over the last few years after Ontario stopped drawing a piece of the available money. It’s a trend that was unlikely to continue even before COVID-19 threw budget projections out the window.
“Because of the formula for equalization New Brunswick saw an increase of almost 10 per cent this year, almost 8 per cent the year before and I think 6 per cent the year before that,” he said.
“For several years before Ontario left equalization, New Brunswick was seeing no growth at all. So, in any event, we should see federal transfers fall a little bit, just because I don’t think it’s realistic that equalization payments will keep growing.”
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