New Brunswick has continued adding population at record levels through the second part of the year, but without the proper investments to support that growth it could fizzle, economists say.
The province grew by 8,725 between July and October, according to population growth estimates from Statistics Canada. That is down slightly from the 9,199 net gain the province saw in the second quarter, but still well up from the 5,453 gain over the same period last year.
Overall, the province has added about 25,000 people in the last year, which has helped pad provincial revenues, but also increased demand on services already stretched thin.
“The premier calls it growing pains and I agree with him, but when we have growling pains, we need to take our medicine and invest,” said economist Richard Saillant.
“The medicine to me is to invest in the infrastructure required to deal with such a massive influx of newcomers.”
After years of stagnant growth in population and economic activity, as well as relatively little health-care investment, the population boom has contributed to a crisis in housing and health care.
Vacancy rates were already falling prior to the pandemic and staffing shortages across the health-care system were beginning to hit critical levels. The challenge now is moving from a low-growth era to responding quickly to the boom.
“If you think about what governments don’t deal well with, it’s sudden unanticipated changes. Either a big drop in something or in this case a big surge in need and demand,” said Herb Emery, the Vaughan Chair in economics at the University of New Brunswick.
“Which is basically the pandemic story overall. We had a health-care system unprepared for a surge in need; we now have an economy and social services unprepared in a surge of population growth.”
In early 2020, as a response to challenges in the health-care system, the government and both health authorities proposed a bold plan that would have seen emergency rooms in six rural hospitals close overnight. The change was scrapped after large protests and public outcry, but yet many of those same emergency rooms have seen weekend or overnight closures over the past two years anyway.
“Now with our shortage of staff, that was the outcome that the health authorities were projecting, that we weren’t going to be able to staff those facilities, we wouldn’t have the capability and now we’re forced into it. That’s the reality,” Premier Blaine Higgs said when recently asked about the abandoned plan.
The difference from that time, nearly three years ago, Saillant says, is the province’s fiscal position. A booming population has brought with it increased tax revenues and federal transfers have continued to rise, further padding provincial coffers.
Last year the province posted a final budgetary surplus of $777 million, the largest ever. After the first two quarters of this year, a modest $35-million projected surplus has already ballooned to $774 million and could reach a billion by the end of the year.
“It’s hard at times to shift mindsets overnight, but fundamentally our fiscal position in New Brunswick has probably never been this good in decades,” Saillant said.
Higgs has consistently preached economic restraint since forming government in 2018. His government quickly slashed capital spending just weeks after being sworn in and has often preached that the province needs to sort its priorities into needs versus wants.
He believes the current fiscal situation is partly due to that discipline.
“We were in trouble, books were over the cliff,” Higgs said.
“But now what are we seeing? We’re the number one province in the country for fiscal management. There’s been a major step change and the only way that that gets eroded is if politicians during elections throw the book at promises and people buy it, people say, ‘Oh, I’ll elect you because you’re promising me everything.'”
In the last year, the Higgs government has responded to some of those pressures, boosting health-care spending in this year’s budget and announcing $100 million for the first public housing project in decades.
But with an aging population and a housing market where construction is still lagging behind need, that may not be enough, Saillant says.
“The pressure to ramp up services is going to ramp up dramatically,” he said.
And there is a danger if the government doesn’t respond well enough to the pressures that come with a growing population.
“If we don’t do this right, we’re going to kill off whatever growth we have right now,” Emery said.
“The long-run projection for the region is we’re either going to go to a million people if we do it well or we’re going to go back to 500,000 people if we don’t do it well.”