New Brunswick’s provincial finances and economy are in a precarious position, which means that government decision-makers will have to make thoughtful, deliberate and frequently difficult decisions in the coming years in order to continue to deliver the services that New Brunswickers expect and deserve. The capital budget delivered at the end of 2018 makes it clear that this government is willing to make difficult choices and this approach will be required for the operating budget as well.
It is normal for governments, businesses and individuals to carry some debt. Credit can be useful when managed properly, but when accumulating more and more debt becomes the norm, it is hard to pull out of that cycle. New Brunswick is beyond the point of paying one credit card with another – our credit rating is teetering; increased interest rates are looming and growth is marginal. If New Brunswickdoesn’t decide to tackle its debt addiction, someone else will be making decisions for us in the not-too- distant future.
Getting the deficit under control is a positive sign, but in reality this is just a baseline starting point to getting our finances in order. The net debt is approaching $15 billion, in addition to NB Power’s debt, or the billions more required to be invested in the Mactaquac Dam in the next few years. Interest rates have been essentially as low as they can go for several years, so we have to anticipate a rise at any time. And as economists like Richard Saillant have warned time and again, New Brunswick’s stagnant and aging population are going to push healthcare costs upward, with fewer people in the workforce to pay for it. As federal Immigration Minister Ahmed Hussen recently stated on a trip to New Brunswick, by 2036, Canada will only have two workers for every retiree, and that is a very uncomfortable and unsustainable number.
In other words, the relationship between the Province’s finances, its ability to deliver services and economic development are symbiotic and inextricably linked. It’s one of the reasons our organization’s vision is Stronger Community Through Business Prosperity – a concept that we believe is equally applicable provincially. This relationship also means that tax policy is the best economic tool we have available. When viewed in this context, every dollar spent by your government is relevant to the business community. The less the Province can spend today, the more breathing room it has to improve business conditions both now and into the future (and to reduce debt and provide services).
The Province must carefully balance its current short-term revenue needs with its long-term growth needs – viewing decisions (at least in part) through a business lens. Government can’t run exactly like a business – there are different priorities, responsibilities and pressures. However, there are lessons the government can learn and apply from the business world that would be beneficial to all New Brunswickers. Not all policy decisions can be made based on business principles, but the implementation of policy through governmental departments and civil servants should be delivered in a business-like manner.
New Brunswick not only needs to be open for business – it has to let the world know. Our high taxes, unwillingness to develop natural resources and labour challenges have led to a serious decline in private-sector capital investment, as stated in the province’s current economic growth plan. This is a major drag on our economy and that plan was authored before WorkSafeNB rates skyrocketed, CPP and minimum wage were increased, a new statutory holiday was introduced, or of course, before the pending carbon tax is implemented.
The lack of private sector capital investment is a signal from companies that there are better places to do business. People, capital and many business operations are all highly mobile today. Our province is already struggling with that very issue as we feel the pull to other parts of the country that otherwise have a better economy and more opportunities for people and businesses. The province’s debt and approximately $700 million in annual interest payments means the government has one hand tied behind it’s back when it’s trying to implement policies to grow the economy.
As we have advocated extensively, New Brunswick leaders must understand the difference between spending and investing and be willing to act on that knowledge. This kind of restraint is required not only to provide the services that New Brunswickers need and deserve, but also to be able to create the competitive business environment that business needs to thrive. Without consistent and sustainable economic growth, any other positive decisions made by your government will be for naught. The current government has signaled their intentions to do exactly that – so on March 19, when Finance Minister Steeves delivers the pain expected we all should keep in mind the larger purpose for these decisions and remain focused on New Brunswick’s future prosperity.
Krista Ross is CEO of the Fredericton Chamber of Commerce, a nationally accredited organization with nearly 1,000 members, is an active business organization engaged in policy development and advocacy that affects the competitiveness of our members and the Canadian business environment. The Chamber’s vision is ‘Stronger Community Through Business Prosperity’.