Tag Archives: New Brunswick debt

Debt does not become us


Is New Brunswick officially a black hole?

In cosmology, the phenomenon generally refers to a gravity well that’s so dense, so impenetrable that not even photons escape its event horizon.

Here’s what Canada’s national debt clock says about our particular partner in Confederation: $12.8 billion in arrears to domestic and international creditors, which translates into more than $17,000 for every man, woman and child in New Brunswick. (Add that to your mortgages John and Jane Doe if, that is, you’re lucky enough to have them).

The right-leaning Fraser Institute likes to portray this province as one of Canada’s weaker sisters. I, in turn, like to portray the Fraser Institute as a bunch of fatuous blowhards. But, alas, not this time. This time, they appear to be right on the money, which they keep in their big, fat billfolds.

Still, consider their latest analysis: “The growth in government debt over the past eight years reversed a positive trend from the mid-1990s to late-2000s when Canada’s federal and provincial governments made considerable progress in reducing their debt burdens. After a period of debt reduction, combined federal and provincial debt reached a low of $833.8 billion in 2007/08.

“However, the economic recession in 2008/09, combined with the significant increases in government spending that took place in 2009/10, meant that every government fell into deficit in either 2008/09 or 2009/10. This started Canada’s governments down their current path of persistent deficits and growing debt. The trend has largely persisted since then and will likely continue in 2015/16 through the upcoming round of federal and provincial budgets.

“Total debt in 2015/16 is estimated to be just shy of $1.3 trillion. This growth in combined federal and provincial debt has not been limited to just a few jurisdictions. The federal and every provincial government increased their debt levels between 2007/08 and 2015/16.”

In New Brunswick, for example, the provincial government now pays $685 million a year to service its long-term debt. That’s money that does not go to improve and expand health care, public education, city streets, and cultural venues. It’s a giant’s share of a shrinking pie that does not feed the poor, educate the illiterate, invest in private-sector innovation, bolster entrepreneurial diversity, or keep our universities and colleges vibrant, relevant places where our children might purchase a real sense of hope in this region.

In fact, we’ve all been circling the drain for some time in this province. So have Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. We’ve all been living on borrowed time and money. It’s merely a cold comfort to be reminded that so has the rest of the country.

“Canadian governments (including local governments) collectively spent an estimated $60.8 billion on interest payments in 2014/15,” the Fraser Institute’s analysis concludes. “That works out to 8.1 per cent of their total revenue that year. To put the amount spent on interest payments in perspective, it is more than what is spent on pension benefits through the Canada and Quebec Pension Plans ($50.9 billion), and approximately equal to Canada’s total public spending on primary and secondary education ($62.2 billion, as of 2012/13, the last year for which we have finalized data).”

Ouch, indeed!

Of course, New Brunswick has a way out of this black hole, this gravity well. Embrace, for once, the idea of community. Reject the partisan bickering that keeps good notions on the lonely blueprints of policy wonks.

Recognize that New Brunswick must prepare for a new event horizon, where imagination escapes pessimism at the speed of optimism every time.

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Brian Gallant’s big break?


With his approval rating dropping into the political dumpster, the premier of New Brunswick needed a convincing win, one year into his mandate. He got it with BMM Testlabs’ announcement that, with the province’s help, the company will create 1,000 good jobs in Moncton, though not all at once.

Now, can Brian Gallant maintain the momentum the province evidently needs?

In a commentary the premier penned for this newspaper organization last month, he declared how pleased he was to have participated in the “biggest job announcement ever sponsored by government in New Brunswick’s history.”

The fact to which he referred was that the province had put real skin into the game – ultimately in the form of taxpayers’ dollars – not only to keep a satellite office of an international company in the environs around Moncton, but to help expand it: 200 well-paid positions each year over the next five.

To be clear, BMM Testlabs is an Aussie operation that makes its bones by making sure that gaming companies don’t run afoul of their particular jurisdictions’ rules and regulations. It maintains outposts in its home country, the U.S., South Africa, and, of course, Canada, among many others.

In other words, as a player in a government-regulated industry it needs and gets all the public-sector support it can handle. In fact, that is its global, strategic imperative. But, really, in this marketplace, whose isn’t?

Private companies and corporations troll the world for “business-friendly” jurisdictions – those that provide tax incentives, skills-development initiatives and various “move-in/move-up” allowances.

In fact, former Liberal Premier Frank McKenna made an unapologetic career out of the tactic in the late 1980s and through much of the 1990s – even going so far as to set up an international 1-800 line that connected directly to him. I actually dialed the number once in 1990 just to see if it worked. It did.

The conversation went a little like this:

Me: “Uh. . .Hullo, Mr. Premier. I was just phoning to determine whether this thing of yours was, well, real.”

McKenna: “It is. What can I help you with?”

Me: “Uuumm…do you have pop in a bottle?”

McKenna: “Why, in fact, in Sussex, I do.

Me: “Then you better let him out as mum wants him home for dinner.”

Click, and the dead-phone hum ensued.

I assume that when BMM and Opportunities New Brunswick got together, a childish prank like this was declared verboten. After all, says Mr. Gallant in his column, “Good government policy opens the door for job creation.”

Somehow, that goes to this: “We are supporting responsible resource development projects. We are excited about the thousands of jobs that could be created from major projects, such as the Energy East Pipeline, the LNG terminal in Saint John and the Sisson Mine. All of these projects have moved closer to reality under this government and we will continue to work to make them happen. If these projects go forward, nearly 10,000 jobs will be created at their peak.”

Before we, of course, descend to the infantile humor that such a claim requires (something about unicorns farting rainbows), let us just pause, for a moment, and consider the implications of Mr. Gallant’s broader claims.

BMM’s announcement is great news. But its determination to create jobs is not, necessarily, deterministic. Anything can happen (and often does) with domestic and offshore companies.

The idea is to keep every possibility in play, and never allow one big jobs announcement triumph over the long-term objective of building economic vigor and diversity – or, in truth, goose one particular premier’s poll numbers.

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The crowns of our careers


When I was 33, I was schlepping phone books, on temporary assignment in the back end of Halifax’s Fairview neighbourhood.

When Brian Gallant was 33, he was ending the first year of his inaugural term as premier of New Brunswick.

Who, I wonder, had the better deal?

In my case, all I had to do was forget the fact that the publisher of the magazine that had employed my wife and me as editors and production managers had gone bankrupt, concentrate on the then and now, and pick up enough loose change to fill the gas tank and deliver the yellow pages to gulags of apartment complexes.

In Mr. Gallant’s circumstances, all he had to do was reconcile a provincial budget that ran hundreds-of-millions of dollars into the red with the fulsome expectation of a jurisdiction, hosting 750,000 people, which would clamor, loudly, for its regular, reliable entitlements – including, perhaps, why it was no longer getting free phone books every April 1.

This is one of the reasons why, when I have been asked by various political parties over the years to run as a candidate on their tickets, I have politely, but firmly, stated: “I would rather be road kill on the Trans-Canada, stuck in the grill of a RAM ProMaster van, than live to answer questions from people like me, over and over again.”

This is, of course, why Brian Gallant is a better citizen of this province than I. So are David Alward, Shawn Graham, Bernard Lord, Camille Theriault, and even Frank McKenna, who doesn’t even live here anymore.

Each of them chose to run for, and succeed to, public office, knowing the costs to their personal lives and well being, knowing how fully ridiculed and hated they would become. Each of them, in their own ways, made peace with that inevitability.

This is not to say that those who aren’t inclined to throw their hats into the political ring should let those who are off the hook. This is, after all, our remnant of democracy.

So, to Mr. Gallant, on the anniversary of his first year as premier of New Brunswick, I say: Good start.

You’ve managed to get just about every constituency angry: Seniors, public servants, educators, health-care professionals, and ambulance drivers.

In fact, that’s what a first-term premier is supposed to do – level the playing field, shake out the winter carpets, prepare for political springtime. People don’t pay attention to the condition of their own lives until they are well peeved.

The corollary to this is, of course, to generate one, truly magnificent idea around which to rally a disaffected and disengaged public – not three, not two, just one good, durable notion that will catalyze a productive, prosperous society.

You might begin this way:

Talk more, in the next year, about giving back to New Brunswick not the trinkets and baubles the federal government sometimes allows, but the power and capital local communities require to collaborate and thrive together.

Build a true consensus across county and municipal lines for common social and economic needs in our hospitals, clinics and schools.

Ensure that every kid in this province learns to read, write and speak both English and French to an international standard. Deliberately remodel New Brunswick as a center of excellence in math, science and literature.

Finally, lay the foundation for civil discourse in this province; make facts rule the public conversation.

You, Mr. Gallant, are only 33. Your whole life is ahead of you. And, from my perspective, at age 55, you have the better deal.

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Life’s certainty: debt and disappointment


For more proof that the federal government lives in a black box, coated with bubble wrap and buried in the deepest antechamber of Parliament Hill, look no farther than the hosannas it raises over the Finance Department’s latest projection that the country has posted a razor-thin surplus of less than $2 billion.

Apparently, this announcement is designed to cheer a worried populace, convince the nation that the Harper plan for “careful economic stewardship” is working and that, thanks to cunning and perspicacious policy at the centre, the regions may expect bread, honey and wine in the years ahead, if only they would get with the political program.

How, one wonders, does this logic track in Alberta, where provincial finances have been decimated in recent months thanks to a federally supported campaign to link that province’s economic prospects to fossil fuel prices it does not, and never has, controlled? How, indeed, does that constitute “careful stewardship”?

How, furthermore, does the argument persuade the people of Newfoundland and Labrador, Manitoba and Ontario that their astonishing fiscal woes can be ameliorated by the actions (or, more precisely, inactions) of a federal partner in Confederation that has been absent without leave for, lo, these many, nine years?

How, indeed, do we reconcile such claims with the very real possibility that New Brunswick will find itself unable to cap its impressive operating deficit (now in the hundreds-of-millions-of-dollars), let alone pay down its long term debt (now above $12 billion)?

If we lay these burdens at the feet of the federal government, we have good reason.

That so-called national “surplus” has been bought and paid for by the provinces and territories that have been forced to endure broad caps to public spending on traditional, nation-building priorities, including: health care, public education, university research and development, arts and culture, and workforce skills development and placement.

To be sure, this does not, and should not, let New Brunswickers off the hook for their own prettily arranged economic malaise.

Over the years, we have been more than willing to demand of our provincial governments everything we’ve always believed we had a right to expect: low taxes, high-quality public services, good jobs, seasonal employment combined with fully funded, no-questions-asked employment insurance.

Still, lurking beneath the surface has been a federal administration that has evinced very little interest in the conditions of the places where people actually live and work and raise families – and even less interest in building long-term economic capacity where it matters most.

In contrast, an enlightened national government would spend time getting to know the provinces with which it is obliged to partner. It would reach out to extend the enormous capital and human resources at its disposal to build a true and durable national consensus on social and economic priorities.

It would not shut down debate in Parliament, relegate important committee work to busy work, demean the democratic process by burying every important issue into an omnibus bill, and demonize every principled, conscientious objector of its priorities and plans as effective enemies of the state.

It would not refuse to extend humanitarian relief to those who are, heartbreakingly, unable, through no fault of their own, find succor and solace elsewhere in the world.

We, in Canada, do not live in a black box, coated with bubble wrap and buried under Parliament Hill.

We, in New Brunswick, and in every other province and territory of this once-noble country, live in the light with our hearts nobly bleeding, our hands generously outstretched.

So should our federal government.

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Is it in Gallant we trust. . .or just the “Life of Brian”? 


It is not entirely clear to me what Premier Brian Gallant was thinking as he composed his first State of the Province address and chose, last week, to launch with a quote from the 13th-century Catholic friar, Francis of Assisi (a.k.a., Giovanni di Pietro di Bernardone).

But if grabbing attention by conflating the secular woes of the current age in New Brunswick with those of pre-Renaissance Italy was his endgame, the Grit honcho may have been on to something – even if that something amounted to enduring irrelevance amongst the body politic.

“Start by doing what’s necessary, then do what’s possible, and suddenly you are doing the impossible,” he began, parroting the buono parola of the late, great saint and animal lover (take care, Mr. Premier; moose fences could, again, become an election issue, fours years hence).

For those who subscribe to the power of magical thinking, it was a truly awesome  overture. For the rest of us who don’t, it was a truly brilliant distraction.

After all, in the other words of the original Franciscan monk, “It is not fitting, when one is in God’s service, to have a gloomy face or a chilling look,” because, presumably, “If God can work through me, he can work through anyone.”

Of course, if He does, then he has never looked better.

Standing before an elbows-to-elbows crowd of maybe 1,000 gawkers (read: citizens), the young premier was GQ-ready in composure and presentation. Reportedly, he even memorized his speech, so as to appear. . .well, authentic.

“Decisions are going to be made to put our finances in order,” he said. “We have tough choices before us. . .It can be made by 13 people in a cabinet room, or they can be made with 750,000 people working together.”

What’s more, he said, “We have to have the resolve to tackle these challenges once and for all, I can tell you that our government has the political will and has the resolve to take these challenges on.”

Yes, he said, “We need to get people out of our hospitals.”

Yes, he affirmed, “The (provincial government) program review is purely pragmatic.” (In other words, civil servants: no hard feelings).

And yes he declared, “We have to get away from the status quo. . .When we have our finances in order, we can focus on the kind of things we need to do to help make our province the best place to raise a family. If we want to achieve these. . .things, the status quo is not an option. . .To move forward, away from the status quo, we need to make some tough decisions.”

As for his reliance on St. Frank (no, not you McKenna), he said, “That quote (by F. Assisi) sums up what New Brunswick has to do, in my opinion. . .Do what’s necessary. Then do what’s possible. Then, suddenly, we are doing and accomplishing things we never thought possible. . .I think New Brunswickers are ready for tough choices.”

Does he now?

Faith, folks, is a many-splendored marvel.

It can move people to extraordinary feats and exemplary behaviour.

Or, it can persuade erstwhile able-minded individuals to abandon their reason to the big-rock candy mountain of redemption through sacrifice.

Even St. Francis might agree: the devil is in the details.

It’s not enough that the premier delivers homilies. That’s what election campaigns are for.

And the time has passed for a 750,000-member consultation team. If anything, we New Brunswickers have proven over the past 18 years that we really don’t play well together in our various sandboxes of privilege and entitlement.

The time now is for a true, bullet-by-bullet strategy to rescue the province from its dangerous fiscal morass, taking careful consideration of the long-term investments that actually contribute to sustained and durable prosperity (early and public-school education comes to mind).

We don’t need a preacher, delivering sermons as a trendy, Sunday-morning vicar might. We need a secular democrat possessed of a clear-eyed vision for the next 25 years of public administration.

In the end, he will not be remembered for his magical oratory. He might even be reviled by many who once believed in him.

As for the rest of us, let us judge him by the actions he took to rebuild this economy – not by his saintly words.

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The good news for New Brunswick: Here, in this place 


“Finances bleak, but province not bankrupt” – headline news in the Moncton Times & Transcript, Friday, January 23, 2015

Dear New Brunswick,

Here’s what you do when you’re about to go under: Put on your Sunday best, paint a smile on your face, take a walk through all your favorite haunts, count your blessings, and, above all, keep your mouth shut.

You would not believe how ennobling simple measures can be when you are about to lose everything.

After all, what is “everything”?

Is it a house, a car, a snowmobile?

Is it a wife, a husband, a son, a daughter?

Oh well, easy come, easy go.

We can’t have it all.

Gone – that’s the poetry of our times.


In fact, when you think about it (and you’ll have plenty of time for that), “Gone” is a pretty fantastic place to live.

No more obligations, expectations or dreams. No more plans, plots or potting beds. No more of. . .well, anything, really.

Just silence, sleep, and the slow inexorable crawl to the circus tent, where all are destined to find their final resting places – just some sooner than others.

Still, dear New Brunswick, don’t forget to slap on that lipstick, don that boater, adjust the suspenders on the oak barrel you’re wearing. The world is watching you. You want to be presentable when you finally succumb.

Don’t you?

Fear not at all, noble province. Those who were smart enough to leave in time to make their bones in far-off places – where big, rock candy mountains still transform black gold into fountains of toonies – will return to bless your own inert skeleton.

Speaking of them, what of Jules and Jim 15 years from now.

In January 2031, Jules is running a hand through his thinning, grey hair, glancing occasionally at the clock on the wall of the departure lounge. “Looks like we’re running out of time,” he mumbles. “What else is new?”

The storms of late December had minced the schedules of the one airline that still bothers to call on New Brunswick. Normally, any delay en route to the oil and gas fields of northern Alberta mean long lineups for itinerant Maritimers arriving late to Fort Mac’s weekly job lottery.

But, today, Jules doesn’t mind so much. His traveling companion is late. Might as well sit tight, he tells himself. A pipe-fitter by trade, 25 years of going down the road and back has taught him how to wait. He’s good at it; waiting and thinking.

He’s old enough to remember a different New Brunswick, when his native home was not just a regional staging ground in the brisk business of exporting human capital. That was before the Wall Street money lenders had called the loans, effectively throwing the province into receivership.

Really, he thinks, what other choice did they have?

In 2024, the provincial government had failed to make the minimum payment on its long-term debt of $42 billion. Sporting an operating budget deficit, in that fiscal year, of $7 billion, it had needed a miracle to cover its financial obligations. And there hadn’t been one of those in this benighted corner of Canada for some time.

Still, Jules recollects the word “miracle” being used when he was a boy and Greater Moncton, for one, was an authentic economic nexus of the Maritimes.

He checks the clock on the wall again.

“Where is that whelp?” he mutters to no one in particular. “The boy is 45 minutes late, and the plane is here, finally.”

As his 16-year-old nephew Jim’s bonded master, Jules is almost looking forward to showing his young apprentice the ropes in Alberta.

Jim, apparently, has made other arrangements.

Dear New Brunswick, here’s what you do when you’re about to go under: Put on your Sunday best, paint a smile on your face, take a walk through all your favorite haunts, count your blessings, and, above all, shout from whichever rooftop you still own.

Shout loudly and shout boldly.

“I am still here.”

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Focussing the lenses of two economic telescopes into one


As the country’s leading economic prognosticator suggests the “the trickle-down effect from plunging oil prices will boost New Brunswick’s economy in the short term,” the province’s Auditor-General Kim MacPherson issues “a stark reminder that” the government, here, “has not listened to much of (her) fiscal advice.”

Both quotes emerged in stories the Telegraph-Journal researched late last week and published on its increasingly crowded front-page acreage (a testament, perhaps, to the surging intrepidity of its economic reportage).

In the first instance, the Conference Board of Canada holds out hope (faint as it may be) that New Brunswick will grow its GDP by as much as 1.8 per cent this year – the beneficial result of a low Canadian dollar, driven down by falling oil and gas prices and the Bank of Canada’s attending interest-rate adjustment of its benchmark rate, from one to 0.75 per cent.

This lending level is almost unheard of in recent times, and its effect will be (at least, for now) to make New Brunswick’s predominantly export-oriented goods and services appear mighty attractive to the U.S. marketplace, where a newly booming and hungry economy will almost certainly want to backstop its inevitable price inflation with comparatively cheap, high-quality wares from its friendly neighbours to the north. (Remember: consumer spending is the Holy Grail of global capitalism).

In the second instance, says A-G MacPherson, the New Brunswick government is spending too much. In fact, the habit has become an addiction. According to the official statement from her office on her her most recent report, “the financial position of the province tabled today (January 22, 2015) in the legislative assembly, the auditor general. . .expressed concerns about the continued increase in net debt of the province. In 2014, New Brunswick reported a deficit of $498.7 million, its sixth annual deficit in a row. To assist in financing these deficits, the province has incurred additional debt. New Brunswick’s net debt has now risen to more than $11.6 billion or $15,400 per New Brunswicker.”

The summary continues: “The report shows a troubling $4.7 billion (69 per cent) increase in net debt since 2006. An increase in net debt of $530.7 million has been budgeted for the fiscal year ending March 31, 2015 suggesting net debt could exceed $12 billion by that time.”

Said Ms. MacPherson: “The new Fiscal Transparency and Accountability Act includes targets to decrease net debt. To achieve these goals, the government will need to demonstrate more fiscal diligence.”

Finally, “In the report, the auditor general also addressed the challenges of the deteriorating state of capital assets such as roads, highways, schools and hospitals.

‘Solving the problem of aging infrastructure is more than a matter of new spending,’ said MacPherson. ‘It is about having a long-term infrastructure plan that will ensure the sustainability and safety of all essential infrastructure, while respecting the fiscal challenges faced by the province.’

“The auditor general stressed that while the government has acted to restrain the growth of expenses, it needs to do more to address New Brunswick’s structural deficit and continued growth of net debt.”

So, here, then, we face the conundrum of New Brunswick’s faltering economy: On the one hand, we can expect short-term growth thanks to forces beyond our control; on the other, we face long-term demise thanks to forces beyond our control.

‘Twas ever thus in these parts.

The question is: Must it forever be?

The answer is not easy, but it is explicable.

The private sector (occasional big-business gerrymandering, notwithstanding) makes money when it believes that the public sector conducts itself fairly, equitably and transparently; when the latter’s regulatory frameworks are straightforward and commonsensical, when its costs do not exceed its value, when its employees do not, in the course of their duties, betray a career-long affection for “nine-to-fiveing” in their boots of clay.

Governments in New Brunswick, meanwhile, would do themselves enormous favors by proposing triumphs of the imagination: Sensible tax structures that emphasize consumption over income; bold policies that encourage immigration from around the world, and not just from northern regions of this province (tantamount to moving deck chairs on a sinking ocean-liner); and investments in early childhood education paid for with, say, tolls on overbuilt, public highways.

This is all within our grasp. And if we do, in our collective wisdom, grasp, the changes in the province might, for a change, prove permanent.

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Pulling New Brunswick back from the brink



Conspicuous by its almost complete absence from the agonizing ruminations over New Brunswick’s perilous fiscal situation has been any suggestion of a real solution. 

No one in government, it seems, has wanted to poke the 800-pound gorilla that is the electorate for fear of getting squashed en route to the ballot box.

That is, of course, a politician’s prerogative: to hand-ring with the best of them, pledge to swallow the bitter pills and persevere for the sake of all our children, only to turn around and waste millions of dollars on doomed schemes in the name of economic development, if not calculated self-aggrandizement.  

Economists and academics are at somewhat greater liberty to tell it like it is without concern for public reprisals.

Indeed, Donald Savoie, the Canada Research Chair in public administration and governance at the Universite de Moncton has made the province’s $12-billion debt, $500-million deficit and public-spending crisis key features of his public commentary, almost delighting (if that is the word) in jabbing voters for their refusal (or unwillingness) to reconcile their expectations of government programs with the reality of their province’s circumstances.   

Now, his colleague, Richard Saillant, the Director General of the Canadian Institute for Research on Public Policy and Public Administration at UdeM, has produced a tight book of 150 pages, or so, provocatively entitled, Over the Cliff? Acting Now to Avoid New Brunswick’s Bankruptcy.

Dr. Savoie is right when he enthuses in the preface that the author, who is also a former federal public servant, “has done New Brunswickers a great service.” In fact, what his dissertation contains is precisely that which has been missing since the discussion began: a solution, or, at least a credible stab at one with enough detail to both warrant and fuel serious debate. 

Be warned, however; Mr. Saillant’s fixes are far from easy, and he pulls no punches in describing them or the conditions that make them necessary.

“For several decades, New Brunswick’s economy has surfed on a rising tide of labour force growth, fueled by the baby boom generation and the steady, largely successful march of women towards equal participation in the workforce,” he writes. “The tide is now receding, dragging down the economy with it. A new Age of Diminished Expectations is upon us.”

Most sobering, perhaps, is his message about public priorities. While he congratulates the Alward government’s success, since 2010, in holding program spending growth to less than one per cent, he insists that the austerity can’t last “while maintaining today’s levels of public services, particularly in the health care sector.”

Indeed, “if the government does not raise taxes further and if it maintains the same public spending patterns as it did on average over the past quarter century,” by 2035-36 New Brunswick can expect to run an annual deficit of $5.5 billion on a long-term debt of $62.3 billion and a whopping debt-to-GDP ratio of 172 per cent. Not that things would likely get that far: “Credit-rating agencies would most likely pull the plug long before this happens.”

As for the solution, Mr. Saillant’s cold-eyed approach involves cutting down “baseline program spending growth every year by at least one-third of the previous year’s deficit from 2014-15 to 2029-30. Starting in 2030-31, this proportion is reduced to one-sixth.”

At the same time, he writes, “The government increases taxes and other revenues above their baseline growth by at least one-third of the previous year’s deficit from 2014-15 to 2029-30.” Again, “starting in 2030-31, this proportion is reduced to one-sixth.”

In the end, this strategy would effectively stabilize the province’s accounts. The annual deficit would fluctuate between $100-500 million. The net debt would peak in 2035-36 at about $17 billion.” 

It’s not, perhaps, the most favorable scenario (we weren’t smart enough, early enough in our collective unravelling to now expect a better result), but it’s the best we can do given our current demographic and economic challenges. And, realistically, even this approach is fraught with all the usual political perils.

But, as Mr. Saillant correctly observes, we voters “need to stop rewarding politicians who make lofty promises without explaining where the money will come from.”


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And now for something completely different: good news for New Brunswick. . .sort of



New Brunswick may be drowning in debt. In fact, practitioners of the wooly science of fiscal forensics may have already pronounced this province dead on arrival. But don’t we just do a bang-up job reporting our woes to the rest of the world?

The C.D. Howe Institute says we deserve a little praise for a change. Specifically, Colin Busby of The C.D. Howe Institute tells the Saint John Telegraph-Journal that, according to his annual study on government spending overruns in Canada (also known as “The Pinocchio Report”), this province does “reasonably well” predicting its financial condition. We are, in a phrase, “middle of the road”, which is better than road kill, I suppose.

What’s more, we’re brutally honest with ourselves and the rest of the country about the hobo clothes we’re forced to wear. “New Brunswick is one of the jurisdictions where you can clearly find comparable numbers,” Mr. Busby says. “You simply find what the budget promises were and then find the numbers in the public accounts and compare them. That’s a positive story for New Brunswick.”

Still, he adds, “When it comes to spending overruns and the ability to hit budget targets, either overshooting or undershooting (New Brunswick) is not in the range of Ontario and the federal government who have done a significantly better job in terms of holding to what they promised in their spring budgets.”

Here’s how the numbers shake out: Over the past 10 years, cumulative overruns, expressed as fractions of 2013/14 budgeted spending, were highest in Saskatchewan (36 per cent), Alberta (26 per cent) and Manitoba (22 per cent), lowest in Canada, overall (one per cent), Ontario (five per cent) and Nova Scotia (seven per cent).

New Brunswick overspent by $1.2 billion over the past decade, which is bad. On the other hand, averaged out over the period, we came in less than 15 per cent off our annual targeted goals, which is good. Sort of.

For a finance minister, there is, I’m guessing, a certain comfort in knowing, with any degree of accuracy, just how badly off your jurisdiction is in the scheme of things. It’s a little like being sentenced to an indeterminate jail term. At least you know you have a cot; let’s just hope your bunk buddies in the bond market aren’t complete psychos.

But, in the larger context, how instructive or useful are these sort of statistical parlour games?

That New Brunswick manages to “present well” is vastly less important than its moribund economy, the structural instability of which makes accurate budget forecasting a near impossibility (a fact which suggests that the province’s reasonably fair reporting record is more a function of good luck than good prognostication).

Meanwhile, the Conference Board of Canada forecasts continued stormy economic weather for the province. “Prospects for New Brunswick’s economy will remain dim for at least one more year,” it said in its revised winter outlook earlier this month. “Cuts in the potash industry, and the closing of the Maple Leaf Food plant in Moncton, will limit economic growth to 0.8 per cent in 2014.”

How will this affect the next round of budget promises?

An even more intriguing question is whether a fully functioning shale gas industry, which should make us all filthy rich, will also make our elected officials filthy liars, though through no fault of their own.

The C.D. Howe Report notes the paradox common to provinces rich in natural resources: Their budgets are even farther from target than are those of patently poor provinces, such as New Brunswick. Economic instability, it seems, cuts both ways.

“Jurisdictions that are more dependent on natural resources showed sizable positive revenue biases: Saskatchewan, Newfoundland and labrador and Alberta all had biases of eight to 10 per cent,” the Institute noted. The natural-resource dependent jurisdictions that more affected by commodity-price swings also had low accuracy scores.”

So, then, the more money a jurisdiction has sloshing around in oil and gas wells, the less veracious are its budget forecasts.

What a delicious irony.

Still, if I had to choose, I’d rather the province I call home be recognized for the power of its industry, than the accuracy of its numbers-crunchers.

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Burning down New Brunswick’s fiscal house

New Brunswick is surely on the horns of a dilemma

New Brunswick is surely on the horns of a dilemma


We’ve knelt around this bonfire before, watching the flames grow higher, hungrier. The kindling is the first to go, then the wild alder branches, and finally the great stumps of driftwood, charred black, vanish in the inferno.

Inevitably, we reach the point of knowing that time is short and we’re running out of fuel. Still, we can’t seem to move. Our feet and hands are stuck in the sand, to be followed, any day now, by our heads.

“Net debt is one of the most important measures of the financial position of the province,” New Brunswick Auditor general Kim MacPherson reminded us, with the patience of a camp counsellor, last week in her annual report. Although she’s led this sing-a-long for months, we still can’t remember the words.

“For the year ended 31 March 2013, net debt increased by $931.8 million to $11.1 billion. Net debt has increased $4.3 billion since 2007. The 2013-2014 Main Estimates budgets for an increase in net debt of $594.4 million for the year ended 31 March 2014. Based on 2013-2014 Main Estimates, net debt of the province could be in excess of $11.6 billion for the year ended 31 March 2014.”

We interrupt her just long enough to toss another log from our dwindling stash onto the fire. Excuse us, Ms. MacPherson, you were saying. . .

“This continued increase in net debt represents a very disturbing trend. An even higher demand will exist on future revenue to pay past expenses. Such continued negative trends impacted the Standard & Poor’s decision to downgrade the province’s bond rating from AA- to A+ in 2012. This rating change will ultimately result in more

expensive borrowing costs. As well, New Brunswick’s increased borrowing may constrain future borrowing capacity and affect future provincial operations and delivery of services. The A+ rating remained unchanged in 2013.”

That does sound serious, Ms. MacPherson. Do go on. . .

“Another way to assess the significance of the size of the province’s net debt is to compare it to the net debt of provinces with similar populations as New Brunswick in absolute amount, per capita and as a percentage of GDP.  Comparable provinces include Nova Scotia, Manitoba and Saskatchewan. . .Over the last five years, within this comparable group, New Brunswick has had one of the highest increases in net debt (45 per cent) The rate of Net Debt growth has also increased in the past year (growing by nine per cent).”

You don’t have to be Finance Minister Blaine Higgs to realize that all is not well in the purple violet province, where the annual deficit now looms large at $538.2 million. But, it helps. He may be the only citizen of New Brunswick who isn’t stoking the all-consuming fiscal fire.

“While it is true that our expense reductions have prevented a much larger deficit, we cannot turn a blind eye to the revenue challenge that our province now faces,” he said following Ms. MacPherson’s report to the Legislative Assembly. “No one is immune to the fiscal situation we are facing in this province and we are asking our stakeholders to be prepared to discuss how we can get back to balanced budgets.”

Translation: Hey stakeholders, be prepared for more cuts.

In Higgsian terms, is New Brunswick’s infrastructure “bigger than it needs to be”? Is he correct when he says “we need to work on that”?

Is the solution, effectively, to downsize our infrastructure and with it our appetites and expectations?

Says Mr. Higgs: “When you look at he situation we have in the province with declining enrollment in our schools and the number of schools we have. . .if you look at the number of hospitals we have for a province our size. . .you look at the roads we maintain for a province our size. . .we have to look at serious changes in how we do business and how we can deliver services on a continuous basis in a more effective way. . .How do we give the best education unless we have the critical mass there to do that and do that reasonably?”

Of course, right-sizing the province would be the antithesis of “politics-as-usual”.

Then again, this is the one highly combustible commodity that we, in New Brunswick, should be happy to see finally go up in smoke.

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