The New Brunswick government has tabled an $8.9 billion budget for 2016-17 that digs deeper into taxpayers’ pockets while driving the province further into debt.
The budget, tabled by Finance Minister Roger Melanson, raises the HST and corporate taxes while cutting the size of the civil service by more than 1,000 positions and privatizing some services.
Melanson says the government’s objective was to take a balanced approach with measures suggested by the year-long strategic program review.
“These measures are balanced with $296 million in expenditure reductions and $293 million in revenue measures,” Melanson said.
The province is forecast to run a deficit of $347 million this year, while the net debt is expected to hit $13.4 billion by the end of March 2017 – nearly $18,000 for every man, woman and child in the province.
Melanson said the province is expected to achieve a balanced budget by 2020-21.
The government will increase the harmonized sales tax by two percentage points to 15% from 13% effective July 1, generating roughly $300 million in additional revenues each year.
“New Brunswick will now have the same HST rate as Nova Scotia and a rate that is only slightly higher than Quebec’s combined rate of 14.975%,” said Melanson.
To lessen the impact, the government will provide a refundable provincial credit for lower-income individuals and families.
The corporate income tax rate will increase to 14% from 12%.
The tax rate on tobacco products will be increased by 6.52 cents per cigarette over the next two years, with an initial increase of 3.26 cents effective at midnight Tuesday and a second increase of 3.26 cents on Feb. 1, 2017.
“This will eventually bring the tax rate from 19 cents to 25.52 cents, the same as Nova Scotia,” Melanson told the legislature.
The government is also planning a major reorganization of services and the civil service in an effort to eliminate duplication and find efficiencies.
The number of managers in the senior service will be reduced by 30%, or more than 180 positions. Non-core functions within the department of Transportation and Infrastructure will be privatized, impacting nearly 200 casual positions during construction season.
The government operates more than 40 contact centres around the province which will be consolidated into four regional business centres, while non-medical laboratory services will also be consolidated.
The Gagetown ferry will be eliminated, and the visitor information centres in Cape Jourimain and Campobello will be closed due to low usage.
In total, Melanson said 1,300 positions will be eliminated from the civil service over the next five years.
“This is an opportunity as government to look for attrition and to right-size, and to look at how we can have a more efficient public service,” Melanson said.
He said the government will sell some properties while privatizing the operation of the Mactaquac Golf Course and Larry’s Gulch — the government’s fishing lodge.
Melanson said the government has been able to avoid introducing highway tolls or making deep cuts to health and education. However, while 200 teachers are expected to retire this year, 150 teachers will be hired to maintain or improve the student-teacher ratio.