Budget faces fiscal challenges, invests in job creation and families31 March 2015
FREDERICTON (GNB) – The provincial government tabled its 2015-16 budget today which focuses on the government’s three key priorities: creating the conditions for job creation, facing our fiscal challenges and helping families.
“We must face our fiscal challenges together so that we can continue to provide the key services our residents count on,” said Finance Minister Roger Melanson. “At the same time, this budget is guided by the principle of fairness, ensuring that those with the greatest ability to pay contribute more when it comes to addressing our fiscal situation.”
For 2015-16, the provincial government is projecting a deficit of $476.8 million. This is higher than the 2014-15 projected deficit due largely to one-time revenues in 2014-15 that will not recur, and includes a $150 million contingency reserve in 2015-16 that will protect the province against unforeseen circumstances. If this reserve is not required, the deficit will be $326.8 million.
An improving economy combined with a number of new measures will result in revenues reaching $8.308 billion in 2015-16, a 0.6 per cent increase over revised 2014-15 estimates. Expenses will grow by only 1.5 per cent, an increase of just $125 million over revised 2014-15 estimates. This includes a number of measures designed to address fiscal challenges.
“Over the past six months, our government has met extensively with New Brunswickers from all walks of life and all regions of the province,” said Melanson. “They are well aware of the challenges we face as a province and they want to help. In the months ahead, we will look closely at the findings of the Strategic Program Review, continue to engage New Brunswickers and take the tough decisions to advance our shared priorities.”
Creating the conditions for economic growth and job creation is the government’s number one priority. The 2015-16 budget contains the following measures which will help to foster a job-friendly business climate:
- Funding for the new economic development agency Opportunities New Brunswick which will combine the best business expertise from the private and public sectors.
- Increasing the Small Business Investor Tax Credit rate for individuals from 30 per cent to 50 per cent, effective for investments made after March 31, 2015. The enhancement will increase the maximum tax credit from $75,000 per year to $125,000 per year for New Brunswick investors who invest in eligible small businesses in the province.
- Investing $150 million over the next six years to renew the Northern New Brunswick Economic Development and Innovation Fund and the Miramichi Regional Economic Development and Innovation Fund to support growth opportunities, adopt new and innovative technologies, improve strategic infrastructure and advance workforce development.
- The first step in lowering the small business corporate income tax rate to 2.5 per cent, the lowest rate east of Manitoba. Effective Jan. 1, 2015, the small business corporate income tax rate was lowered from 4.5 per cent to four per cent.
- Funding for the new Youth Employment Fund which will help 1,500 young New Brunswickers each year obtain work experience and training.
- Imposing a tuition freeze on public universities in New Brunswick in order to make university more affordable and further promote a skilled workforce.
- Making additional investments in the film sector and accelerating the funding for the cultural sector in New Brunswick.
Facing our fiscal challenges
The provincial budget identifies a number of areas where efficiencies can be found in the short term without waiting for the results of the Strategic Program Review. They include:
- Ensuring that those with the greatest ability to pay contribute more to fixing our fiscal situation by increasing income taxes for the richest one per cent of New Brunswickers. A new tax bracket will be created at 21 per cent for taxable income between $150,000 to $250,000 and another bracket at 25.75 per cent for taxable income greater than $250,000, effective January 1, 2015. These personal income tax changes are estimated to raise an additional $30 million annually.
- Closing courthouses which are no longer required with the opening of the Saint John Law Courts in 2013, including courthouses in St. Stephen, Sussex, and Grand Manan. The Grand Falls court will also be closed and merged with the Edmundston facility.
- Increasing fuel taxes on gasoline by 1.9 cents per litre and on diesel fuel by 2.3 cents per litre. The cost to maintain our roads and bridges is significant and it is important that road users make a fair contribution to these costs. With prices expected to remain low for an extended period, there is room to increase gasoline and diesel taxes while having a limited impact on New Brunswick’s economy. This is estimated to provide an additional $28.2 million annually. With this gasoline tax increase, New Brunswick will have the same tax rate as Nova Scotia and will remain lower than Quebec and Newfoundland and Labrador.
- Removing the maximum daily amount for nursing home care, from the current cap of $113 per day when the average true cost of nursing home care is approximately $233 per day. The province will continue to subsidize the costs of care for those who truly need it while ensuring that those who can afford it contribute a little more towards their care.
- Continuing to exempt the family home from the assessment of a senior’s ability to pay for long-term care, but no longer exempting liquid financial assets such as savings or investments when undertaking financial assessments for nursing home residents. The Department of Social Development will be reviewing and consulting on this policy before it is introduced this fall.
- Closing Service New Brunswick outlets in Saint-Quentin, Saint-Léonard, Port Elgin, Hopewell Cape, Gagetown and McAdam, as well as consolidating operations in Miramichi. The 32 remaining centres will continue to outnumber the 20 centres that Nova Scotia maintains for a larger population.
- Ensuring that teacher staffing better reflects New Brunswick’s demographic reality with the number of K-12 students dropping by more than 20 per cent since 2000, while the number of teachers has gone up. The number of teaching positions will therefore be reduced by about three per cent or 249 positions. With an average of 200 teachers retiring every year, much of this reduction will be achieved through attrition. A special task force will be created to help those affected to transition and those trying to enter the education system plan for their career.
- Increasing the premiums for seniors who use the Medavie Blue Cross Seniors Prescription Drug Program for the first time since 2009 in order to meet its original intention of being a full cost-recovery program. However, this will be done in a progressive way, and drugs for low-income seniors will continue to be subsidized through a separate plan.
- Removing the ambulance fee waiver for those who do not have private insurance coverage, but continuing to waive fees in cases of financial hardship.
- Holding the line at almost zero per cent budget growth in the Department of Health.
- Keeping 2014-15 funding levels for officers of the legislative assembly.
- Adopting a phased approach to eliminating free parking for government employees in urban centres.
- Freezing contributions to universities and community colleges so that they become more focused and efficient in delivering their important services to New Brunswick students.
- Looking at the number of agencies, boards and commissions, the number of people who serve on them, and the compensation for serving.
- Centralizing financial, human resources, information technology and supply chain services under one organization.
- Continuing to implement the Lean Six Sigma process to eliminate waste and improve processes within government. Since October, $6 million has already been saved using Lean Six Sigma.
- Eliminating funding for the Energy Institute, merging Efficiency New Brunswick’s programs with NB Power, and considering the monetization of provincial assets like facilities, buildings and even recreational facilities like the Mactaquac golf course.
Help for families
The economic challenges being faced by the province have also impacted the lives of families. Several measures have been included in the 2015-16 budget to help New Brunswick families, including:
- Increasing the budget for the Department of Education and Early Childhood Development by 3.1 per cent so that strategic investments can be made that will be guided by new, comprehensive plans for both education and literacy.
- Providing tax breaks to allow seniors or their families to renovate their homes to stay independent longer. A New Brunswick Seniors’ Home Renovation Tax Credit will be introduced, effective for the 2015 taxation year. Further details on this new tax credit will be made available in the coming weeks.
- Increasing the number of daycare spaces in the province by September 2018 to make life easier for parents. This will start with the establishment of a daycare-spaces registry that will improve the link between the supply and demand for daycare spaces.
- Improving the status of women by appointing more women to positions of influence and investing over $400,000 to restore an independent forum to undertake research and speak on behalf of women in New Brunswick.
- Making post-secondary education more accessible and affordable by eliminating the parental and spousal contribution to student loans.