Higgs fires back at critics of New Brunswick government’s revenue estimates

Premier Blaine Higgs devoted several minutes of his budget speech Friday to take aim at criticisms of the government’s revenue projections, pointing to missed projections in other jurisdictions.

Speaking to reporters after his speech, Higgs said he felt he needed to set the record straight.

“We seem to be the only ones looking across the nation and seeing the volatility in budget forecasts in revenue and expenses so somebody had to do it,” he said.

The government has faced criticism for the revenue projections in this year’s budget, which expects revenues from personal and corporate income tax to fall, along with the money brought in from the HST, even as household spending and inflation are expected to each rise by nearly four per cent.

Some of the loss of revenue can be explained by about $150 million in tax cuts, along with another $200 million in carbon tax revenue the province is losing as it moves to the federal backstop.

But some have remained skeptical that revenues would fall by the amount forecasted in the budget. On budget day economist Richard Saillant said that the revenue assumptions in the budget were hard to believe and predicted the $40-million projected surplus to grow.

“In terms of fiscal forecasting this government has lost the little bit of credibility it had before. Frankly, it is coming up with a surplus number that is well below what we can realistically expect,” he said.

“I think that with a budget such as this one, we’re likely on track to generate a surplus that is comparable to what we’ve seen in the last two years.”

For two years in a row, the province has seen either a deficit or modest surplus turn into record surpluses, as population growth and inflation have fueled growth in tax revenues. In 2021-2022, a projected deficit of nearly $250 million turned into a $777-million surplus. The story is much the same for the last fiscal year, with a modest $35-million surplus now projected to be $862 million.

Higgs said that New Brunswick is not alone when it comes to missed projections. In his speech, he said that the province did better than eight other provinces and territories with its projections for 2021-2022. After the latest round of fiscal updates, the province is the middle of the pack when it comes to how much results have varied from budget predictions in 2022-2023.

Higgs also said that of the nine provinces and territories that have released their budgets for this year, six of them predict a similar slowdown in revenues.

But those arguments aren’t swaying opposition parties. René Legacy, MLA for Bathurst West-Beresford, said the government should have adjusted how it is forecasting after a few years of missed projections.

“I don’t know if you’ve noticed, but the volatility is always that we’re going to get more revenue. Like, we’re not talking about a short period of time of three or four months. It’s been over three years and always the revenue is higher,” he said.

Legacy added that while similar issues have cropped up in other jurisdictions, many haven’t used them as an excuse to hold back spending — a charge he levels at the premier.

“Yes they may have missed the mark on revenue, but they’ve also been more aggressive on social programs and putting programs out there for their population,” he said.

Green party finance critic Kevin Arseneau said he doesn’t see how budgeting processes have changed to ensure a more accurate projection.

“We’re not talking about a million dollars off, right? So nothing he said was good enough to convince me that the numbers that we have are right,” he said.

“I mean, they’ve been wrong year after year after year after year.”

Higgs acknowledged that revenues might grow and the province could announce tax cuts or top-ups to social programs mid-year. But he says he prefers to be cautious and not commit to multi-year spending just because revenues have been sky-high over the last few years.

“The philosophy that we have as a government is we don’t rush out because this year we have money to do so because next year we don’t know if we’ll have that same revenue,” he said.

“It’s like what we should do every day in our household is, you know, ‘I may have a had a good year this year, but I have no predictability that next year is going to be the same.'”