After two years of seeing modest budget projections balloon into record breaking surpluses, Opposition critics say they’ll have a hard time trusting the headline numbers when New Brunswick’s budget is released next week.
“The minister himself says that he’s always going to take a cautious approach so he’s going to be overly conservative I think again, because that’s what the modus operandi has been for the last five years,” said Liberal finance critic Rene Legacy.
The 2021-2022 budget projected a $244-million deficit, which turned into a record-breaking $777 million surplus by year’s end. This year, a modest $35-million surplus has grown even larger, with latest estimates projecting the province to be $862 million in the black once the year is over.
In both cases strong growth and an elevated level of inflation fuelled stronger than expected growth in revenues from HST as well as personal and corporate income taxes.
Missing the mark on projections by so much has led to questions over the province’s budgeting process, including from Green finance critic Kevin Arseneau, who says he’ll have a hard time putting much stock in the numbers when the 2023-2024 budget is released on Tuesday.
“If you judge by actions and not by what someone is saying … I have absolutely no confidence in the numbers that we’ll be seeing and I have absolutely no confidence that they’ve tried to fix the problem,” he said.
“I haven’t heard or seen anything that would point in that direction.”
When speaking with reporters after the release of updated projections each quarter, finance minister Ernie Steeves has frequently said that the province doesn’t expect the strong revenues of the last few years to continue. He’s said that the province is looking to avoid adding long-term spending to the books and has preached fiscal prudence to prepare for the spectre of a possible recession.
But Arseneau says that he worries that thinking will lead to continued conservative revenue estimates and a lack of spending on things like health care and housing, which have been strained as the province has grown.
“It’s like a house,” he said. “When your roof is leaking if you don’t change the roofing right away, you don’t fix the problem, well then your trusses start rotting and the frame of the house starts rotting.”
With the inflation rate as high as it is — 6.4 per cent in 2022 — Legacy says that simply increasing spending won’t be enough to move the needle on key files.
He says he’ll be looking for new programs to directly address issues in health care and housing, not just budget increases to keep up with the pace of inflation.
“Obviously spending is going to increase, everything costs more,” he said.
“Inflation affects government spending also. So that new spending, will it actually be new initiatives or just doing the same thing but it costs more?”
Steeves will table the Higgs government’s fourth budget on March 21.