Billion-dollar election platforms pose threat to 8-year streak of N.B. budget surpluses

Commitments by all parties reach far beyond official projections of available funding

 

Robert Jones· CBC News · Posted: Oct 17, 2024 6:00 AM ADT

 

 

 Progressive Conservative Party Leader Blaine Higgs has suggested a billion-dollar commitment he is making to cut the HST by two percentage points will generate economic growth that will help pay for the promise. Critics suggest the payback will be minor. (Jacques Poitras/CBC)

New Brunswick is on pace to post its eighth straight budget surplus this year. 

It's the longest streak in Canada but may be at risk no matter how Monday's election turns out, given the budget-busting election platforms being promoted by the province's three major political parties.

Over the last month, New Brunswick Liberals, Progressive Conservatives and Greens have made commitments to voters for the next four years that total, by their own math, between $1.3 billion and $3.2 billion. 

The priciest of those three belongs to the Green Party. Last week, its leader, David Coon, told reporters he had no idea how much of a deficit his party's $3.2 billion in platform commitments will generate if he is called on to form a government after Monday's election and is able to implement everything the party has promised

"It's impossible to say right now until we get into the books and work with the folks in the Department of Finance and Treasury Board and really go through the numbers," said Coon about the potential size of Green Party deficits.  

"We'll dive into that right after the election."

New Brunswick Liberal Leader Susan Holt has pledged to run balanced budgets in each of the next four years if elected. Her party says its billion-dollar platform can be paid for with money it believes the PCs are hiding inside government. (Election pool)

Coon is not pretending his party's platform will be easily affordable. But that's not the case with Liberals and Progressive Conservatives, who have unveiled billion-dollar plans of their own

With limited explanations, both parties have pledged those costs will not generate a deficit if they are elected, despite evidence New Brunswick is entering a period of tightening finances.

Last winter, long-range projections pieced together by the province's Finance Department showed that surpluses in New Brunswick are on a trajectory to narrow to $39 million and $30 million in the first two budgets following this year's election, excluding any election promises.

 

Bye-bye budget surplus

New Brunswick is in the middle of its eighth consecutive budget surplus. It's the longest streak in Canada, started by the Liberals and continued by the Progressive Conservatives. But billion-dollar election platforms are threatening an end to that fiscal achievement, no matter who wins Monday's election.

In describing what that means in his latest budget speech in March, Finance Minister Ernie Steeves warned that financial wiggle room available to the province following several years of record surpluses is rapidly shrinking.

"Revenue is not anticipated to continue the pace of growth seen in recent years, and maintaining spending growth at current levels will not be sustainable over the longer term," he said.

"I must remind New Brunswickers that we must continue to be diligent in managing our finances."

Despite that warning issued from within its own ranks, Progressive Conservatives are proposing in their platform to cut sales tax revenue and increase spending on some health initiatives by a combined $1.7 billion over a full four-year mandate. That includes costs of $763.4 million in the next two budget years.

Economist Richard Saillant says New Brunswick political parties have been 'twisting themselves in knots' concocting arguments about why their pricey platforms are affordable. (Nicolas Steinbach/Radio-Canada)

Progressive Conservative Leader Blaine Higgs argues that is affordable in part because cutting taxes will generate new economic activity and help pay for itself.

"We know with the lower HST, we're going to see more purchases of goods here in our province because we're going to be the cheapest province to do business with in Atlantic Canada," Higgs told reporters earlier this month when asked to explain how his party's platform can avoid causing a deficit.

"What we're saying is that, based on a cheaper cost in the province, we're going to increase the growth, increase the purchasing power and the ability for people to invest in our province."

But that argument is in dispute.

Last summer, the Fraser Institute, a conservative think tank, applauded the idea of cutting taxes in New Brunswick but urged the provincial government not to cut the HST because of the minimal effect cutting sales taxes is known to have on boosting economic activity.

"A sales-tax cut may be politically expedient, but it would leave ... low growth and low incomes untouched," wrote the institute's Alex Whalen.

Ernie Steeves issued official Finance Department projections as part of his March budget, showing New Brunswick's finances will be tight for the next two years just as election promises begin to be implemented. (Jacques Poitras/CBC)

New Brunswick economist Richard Saillant said his reading of studies on sales-tax cuts suggests reducing the HST by two percentage points in New Brunswick is likely to generate only enough enhanced economic activity to generate about $14 million per year in new provincial tax revenue to replace the tax reduction of $450 million per year.

"It's minor," said Saillant who reviewed the issue of how much stimulus an HST cut would deliver to New Brunswick's economy for CBC News

"I would say it would pay for a small part of its cost."

The Progressive Conservatives did not respond to a question about other plans it has to balance future budgets, if cutting HST revenue by $450 million per year does not help pay for itself through increased economic activity.

 

Higgs defends PC platform’s lack of costing details

Progressive Conservative Leader Blaine Higgs is promising a balanced budget if re-elected, despite not providing information in his platform on how much some of his election promises will cost.

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.