New Brunswick Finance Minister Ernie Steeves is once again defending the revenue projections in the government’s latest budget.
Steeves spent Tuesday facing questions from opposition parties at the legislature’s estimates committee, many of which focused on how the government arrived at the revenue assumptions found in last month’s budget.
Some have criticized the budget over its revenue projections, which expect tax revenue to fall across the board, even as household spending and inflation are expected to rise. Steeves said the projections are based on an end to non-recurring spending in the form of tax revenue payments from prior years, as well as a weakening fiscal picture and a suite of tax cuts.
“We’re not hiding anything, we’ve been very transparent where we believe the revenues will be stronger, where they will be less, with some tax reductions that will take a chunk out of the revenues,” he said.
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 fuelled growth in tax revenues. In 2021-22, 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.
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Steeves said last year’s surplus was mostly driven by about $500 million in prior-year adjustments to tax revenue, which are unlikely to reoccur.
Premier Blaine Higgs has said that if the government’s projections are off once again, the government will spend the money. But Liberal finance critic Rene Legacy says the government has shown an inability to do just that over the last two years.
“Government is not very nimble in getting that money back into the system,” he said of the growing surpluses of the last two years.
Legacy says he’d like to see the government be more aggressive with its projections in the budget, then backing off if they were overly optimistic.
“They obviously take a very pessimistic view of revenues. They got very, very conservative, very low,” he said.
“You could take a more aggressive view of what the revenues are going to be … and if after quarter one or quarter two those revenues are going to be lower, you readjust with your departments, you don’t get everything done that you wanted to do.”
But Steeves says the government is spending, pointing to the 5.2 per cent increase in expenditures in the budget, adding that he’d rather err on the side of caution when it comes to projecting where revenues are going to be.
“Spending is certainly up and we’re spending it where it needs to be done, but the pattern of this government and this minister is to be fiscally prudent,” he said.
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