Budget retrospective IV and concluding remarks

In this last response, I will cover the points "did the Liberals *really* budget for all of their promises and what was the Grant Thornton report talking about when it said there would be a $300 million shortfall." Following that, I will have some brief comments on the premier's speech in closing the budget debate and my overall thoughts on the budget as a whole considering all of the previous analysis.

Part Four

As I mentioned in a post some months ago, the Liberal promises were priced at $200 million for year one, including some one-time big ticket items like Saint John Harbour, the Marysville Bypass, Task Forces on self-sufficiency, the non-profit sector and post-secondary education, capital construction of a number of new projects, etc.

The $200 million gets spread out over two fiscal years, one presumes, because the government took office half way through the fiscal year.

As I mentioned in the earlier post, based on fiscal transfer figures revised by Ottawa after the 2006 budget, New Brunswick should have been heading for a $320 million surplus in 2006-07 if the books had been properly done. Therefore, even if the Liberals delivered on their full $200 million, there should have been lots of fiscal flexibility left over.

Some things, however, like the HST rebate, were not properly budgeted for by the Tories when they presented their last budget in March 2006. The Liberals mistake was not promising too much, but instead believing in the financial statements made public by the Tories which proved to be flase.

The Grant Thorton report showed that there were major financial challenges however, including the $500+ million final payment for the TransCanada from Woodstock to Grand Falls which the Tories had failed to budget for.

The result - the Liberals could have gone a wholesale promise breaking spree, ran a deficit, raised taxes through the roof, cut programs to death, or some combination of these.

I think they made the best choice of these options, in general, by abandoning and modifying some promises, raising taxes - by-and-large - moderately, and undertaking some program cuts.

Shawn Graham said something that really resonnated with me in his budget speech today:

I am not prepared to hit the pause button on our province's progress while we wait for someone else to determine our fate. So we have to look at what changes we can make here in New Brunswick.

Rather than hiding the challenges, our government is being open and transparent with New Brunswick residents. We are being open about the challenges and we are being open about how we are going to address them.

We have been upfront about the 5 factors that contributed to addressing the fiscal challenge: eliminating the HST rebate on home energy fuel costs, implimenting new revenue measures, directing departments to acheive program administration reductions, constraining overall government spending growth and revenue improvements since the release of the Grant Thorton report this past December.

Choosing these measures was difficult but necessary and I have to say that no government looks forward to raising taxes. But if our province is committed to standing on its own two feet, we must be able to pay for the services that we provide as a province. The tax reductions that had been made previously were not sustainable.

We cannot have amongst the lowest tax base and the lowest tax rates in the country and at the same time expect to provide our citizens with quality public services that are comparable to elsewhere in the country.

It is important to point out that even with the modest increases, New Brunswick still has the lowest personal income tax burden in Atlantic Canada, the small business corporate income tax rate remains the third lowest in Canada and our income threshold matches all other provinces except Alberta and the general corporate income tax today is the fourth lowest. Our government is committed to being competitive and we will remain competitve but most importantly we will become self-sufficient.

That's why we're being upfront with these tax increases and that has not always been the case with previous governments. Governments who raised revenues by not indexing tax thresholds, or through fee increases that went through cabinet behind closed doors. We are not interested in taxation by stealth, we are bringing these changes here to the floor of the legislature for debate. It doesn't get more transparent than that.

I remain very upset by the Small Business tax hikes and I think that other taxes or program cuts should have been found instead, however, I would vote for the motion that passed today which reads "that this House approves, in general, the budgetary policy of the government" (emphasis added) and I certainly prefer balancing the budget in this fashion to the doubling of fees that happened twice under the Tory government without debate or public or legislative input.