New Brunswick budget hits up wealthy, seniors for cash

Wealthy New Brunswickers and seniors will pay more while teachers are being cut, and small town courthouses and Service New Brunswick outlets are being closed in the first budget of Brian Gallant's Liberal government.

Finance Minister Roger Melanson's budget projects a deficit of $476.8 million that pushes the total net debt to $12.6 billion by March 31, 2016.

"It is clear that action must be taken, but it must not be reckless action," said Melanson in delivering his budget Tuesday. "It needs to be strategic and thoughtful. It also must be guided by certain principles."

The key principle relied on by Melanson is that those with the greatest ability to pay will contribute more.

"I think this budget is fair," said Melanson.

In keeping with that principle, two new tax brackets are being created for the wealthiest New Brunswickers. Also, the way seniors are assessed for paying for nursing home care is being changed, with their savings no longer exempt from the calculation. The current cap establishing the maximum payment at $113 a day is being removed. (See related story 8 ways your pocketbook is touched by the budget).

Spending cuts hit school districts, courthouses

Government spending is increasing slightly to $8.03 billion, but there are cuts being made to government services.

Melanson announced the province will eliminate 249 teaching positions, noting that enrolment in New Brunswick schools has decreased by 20 per cent since 2000. As many as 200 teachers a year retire across the province and Melanson said the province will try and achieve as many of the teacher cuts as is possible through attrition.

The budget document indicates government funding for school districts is being reduced by $52.8 million, to $983 million. However the Liberal government say the apparent reduction is the result of a change in how school district expenses are accounted for and says the budget has actually increased by $26 million.

No school closures are indicated, but Melanson said the government will support district education councils in their assessment of which of their schools should be closed or consolidated.

Courthouses in St. Stephen, Sussex and Grand Manan are to be closed with their operations merged with the Saint John Law Courts. The court in Grand Falls will also close and merge with the Edmundston court.

Service New Brunswick outlets will close in Saint-Quentin, Saint-Leonard, Port Elgin, Hopewell Cape, Gagetown and McAdam. Service New Brunswick operations in Miramichi will be consolidated, leaving the province with 32 service points, which Melanson says outnumbers the 20 available in Nova Scotia for its larger population.

"We understand that some communities may not be happy with this decision, but New Brunswickers can rest assured that there will remain a number of options in which to access the services they need."

Health funding is set $2.59 billion, which represents an increase of $43 million over last year. Melanson said that increase is almost zero per cent compared to eight per cent growth about 10 years ago.

Opposition critical of budget

Tory MLA and former finance minister, Blaine Higgs, said on Tuesday he was disappointed with the budget and the projected deficit.

"We're moving financially in the wrong direction, we've made a lot of changes and cuts to service and yet our numbers are going up."

Higgs also worries about plans to increase income taxes for those who earn more than $150,000 a year.

"Now we're the highest in Canada," Higgs said.

"When you look at that and you think about people moving into this province or looking at staying in this province and they're at levels in their income that they feel like, 'I would like to stay here but why would I pay this kind of tax in New Brunswick when I can be in any province and pay less.'"

Higgs acknowledges the provincial budget could have been worse, and says he believes federal Liberals might have had some influence.

"I didn't think the federal budget was coming for a while but I would say this is a budget that clearly reflects there's a federal election this year and it didn't want to create any undue angst at this time," Higgs said.

While Higgs was concerned for the wealthiest New Brunswickers, NDP Leader Dominic Cardy said the budget was an attack on the "most vulnerable" in the province, including seniors and students.

Cardy criticized the plan to cut 249 teaching positions.

"How will Brian Gallant ensure that New Brunswick's students are getting the education they deserve, how are the Liberals going to fix the 56 per cent functional illiteracy problem with 249 less educators," Cardy said.

Worst is yet to come

Melanson told reporters that as difficult as his first budget may be for some, his budget next year is likely to be more difficult once the government's strategic program review is completed.

"If we delay these tough decisions, it's going to get even more difficult," he said.

"We are not going to be a government that pushes it away.

"This is the first step to get closer to a balanced budget," he said, indicating his next budget will likely be "even more significant."

While the budget takes steps to increase revenues, there was no move made to increase the harmonized sales tax or impose highway rolls. University of Moncton economics professor Richard Saillant says while the Liberals should have raised their HST, their spending cuts are a positive step.

"They plan on being as rigorous as the previous government and they can only be lauded for that," said Saillant. "And they've already announced very tough measures."

"Reducing teachers is a thing we haven't done here in New Brunswick. We've been growing that. So from that angle I would say they are bold and they need to be congratulated for showing that boldness, in my view."

The provincial public service at its $2.4 billion annual payroll is being targeted for a reduction primarily through retirement and attrition, said Melanson.

Melanson also broached the idea of selling provincial golf courses like the one at Mactaquac or Crown corporations.

"If the right opportunity arises, government might seek to monetize some of these assets sooner, ahead of the strategic program review," he said.

An attempt to sell the Crown power utility, NB Power, ultimately led to the defeat of the Liberal government headed by Shawn Graham in 2010.

Many public participants in the government's strategic program review called on the province to implement highway road tolls and raise the harmonized sales tax as a way to increase revenue. Melanson indicated those ideas could be explored further as the review process unfolds.

"It's not off the table," said Melanson when asked why he didn't increase the HST, which would bring in an estimated $125 million with an increase of one percentage point.

"We want to make sure we have all the facts and understand the full consequences of the decision either way."

Saillant says Gallant should have raised the HST.

"They're missing one-half of the equation and it's the same half of the equation that the Alward government was missing," he said. "And that's why we've been almost doubling our debt over the past 10 years."

"That's why we systematically register deficits north of $400 million, or close to that, year after year," said Saillant. "And that's why we're getting awfully close to being on the red line here."