New Brunswick is cutting its civil service and selling off Crown assets in an effort to fix its finances as it struggles to overcome a net debt expected to near $11 billion in the next year.
The cash-strapped provincial government delivered a budget Tuesday that focuses on getting its own fiscal house in order, looking within for spending cuts instead of implementing rounds of tax hikes.
“We think New Brunswickers are paying enough tax,” Finance Minister Blaine Higgs said.
“We think we can deliver more value for the tax dollar and that is exactly what this budget is all about.”
The $8.2-billion spending plan forecasts a $182.9 million deficit for the 2012-13 fiscal year, down from the anticipated $448.8 million shortfall when the current fiscal year ends Saturday.
But the budget projects the net debt to hit $10.8 billion by the end of March 2013 — or about $14,380 for every man, woman and child in the province.
“The grim fiscal situation our government inherited has resulted in a process of difficult decisions being made to start our province on the path to fiscal sustainability,” Higgs said.
One measure calls for a reduction in the province’s civil service. On Monday, a provincial government source told The Canadian Press that 4,500 jobs would be cut over the next three years through attrition.
But Finance Department officials said Tuesday after the budget was delivered that up to two-thirds of those positions could be replaced because they are considered essential.
Higgs said the move will save about $86 million annually by 2014-15, the same year the government has promised to balance the books.
Danny Legere, the New Brunswick president of the Canadian Union of Public Employees, said the public sector cuts will hurt.
“We’re down to the bare bones and any cuts will impact the services to New Brunswickers,” Legere said as hundreds of his union’s members marched in front of the legislature.
Liberal finance critic Donald Arseneault echoed Legere’s concern.
“A civil servant is not just somebody stuck in an office in Fredericton,” Arseneault said. “There are social workers, nurses, and teachers. It has a tremendous impact on New Brunswickers.”
He accused the government of not doing enough to create jobs and grow the economy.
But some groups hailed the Progressive Conservative government’s decision to avoid tax increases, saying growth in public spending needs to be curbed before costs are shifted to the public and businesses.
“Too many governments turn to taxpayers, rather than within, to solve problems they have created,” said Leanne Hachey, vice-president of the Canadian Federation of Independent Business’s Atlantic wing.
Kevin Lacey, the Atlantic director of the Canadian Taxpayers Federation, agreed.
“New Brunswick has simply overspent in the last six years and something needed to be done to address spending,” Lacey said.
“What he has announced is an attack on spending in government.”
The government will sell about $10 million worth of Crown assets this year, consider selling the government airplane and review policies for government vehicles.
It is also cancelling a $600,000 subsidy for the province’s harness racing industry as of March 31, 2013.
Health spending is expected to total nearly $2.6 billion, taking up the largest slice of the annual budget. But the 1.6% funding increase falls short of Premier David Alward’s 2010 election campaign promise to boost health spending by three per cent annually.
There are a few minor tax changes. The tax on buying a home doubles to 0.5% as of June 1, a move expected to generate $7 million a year.
Starting April 1, the tax that financial institutions such as banks pay on their capital assets will be increased to four per cent from three per cent, providing an estimated $5 million annually.
Higgs said the government will also bring in a new royalty regime for the province’s natural resources sector.
Municipalities learned last fall that Tuesday’s budget would contain a two per cent cut in the funding they receive from the province through an unconditional grant.
Bathurst Mayor Stephen Brunet said that leaves his council with little choice but to increase property taxes.
“There’s going to be an increase somewhere, it’s got to be,” Brunet said.
“Sadly it’s going to be in property taxes, which is the only thing that we live on in the municipal world.”