N.B. surplus on track to hit $774.4 million this year

Finance Minister Ernie Steeves's fiscal update on Thursday shows the projected surplus for this fiscal year has grown to $774.4 million. (Jacques Poitras/CBC - image credit)
Finance Minister Ernie Steeves's fiscal update on Thursday shows the projected surplus for this fiscal year has grown to $774.4 million. (Jacques Poitras/CBC - image credit)

The Higgs government is projecting another breathtakingly massive budget surplus this year.

The province's second-quarter fiscal update now forecasts a surplus of $774.4 million — a sum 22 times higher than the $35.2 million Finance Minister Ernie Steeves predicted in the provincial budget in March.

That reflects government revenues now on track to be $918.1 million more than budgeted.

The flood of revenue includes $388.3 million in increased corporate income tax revenue and $317 million in higher personal income tax revenue — both a reflection of a strong economy and provincial population growth.

"More people working means more income taxes and more people are spending, too," Steeves said at a news conference.

Those figures account for $70 million worth of personal income tax cuts Steeves announced last month, though they won't be fully reflected until next year.

Assuming the forecast holds true, this year's surplus would be just a hair below last year's record surplus of $777.3 million. That surplus fuelled calls for the government to spend more on health care, housing and other needs.

This year's surplus would shave another $661.7 million off the provincial debt and reduce what the province spends on interest payments servicing the debt by another $25 million.

Vague plans for using the money

But the Progressive Conservative government has already hinted it plans to spend more money this year to help New Brunswickers struggling with the higher cost of living because of inflation.

Steeves wouldn't say how it might spend or if there's an upper limit on how much of the surplus he'd use for programs.

"There is a plan for it," he said. "I can't reveal it today, but we are moving forward with a number of different plans.

"Do we need a certain amount of flexibility with our surplus to protect us against the upcoming recession? Absolutely. Do we need to help people right now? Absolutely. There's a lot of great ideas out there … and we're going to act on them and you'll some of them very soon."

The update says spending is up $179 million more than budgeted, including $81.1 million more in spending on health care.

The expense figures reflect some recent spending announcements, but not the $100 million over three years the province plans to spend building hundreds of new social housing units.

Further spending increases would eat into the projected surplus.

Liberal opposition finance critic René Legacy wouldn't say how much of the surplus he'd spend if he had the power to do so.

Liberal questions government's slow pace

But he said the Higgs government isn't adapting fast enough on the spending side to rapid population increases and the needs in health, education and housing that come with it.

"It really lacks the ability and does not have the imagination to manage growth. We are still seeing a government that is dealing as if they were in 2012, trying to manage deficits, shrink government, control programs, and it's a little bit tone deaf to the realities of what we need."

He also said the recent income tax cuts that skew toward high-income earners represent poor fiscal planning.

"If our economy shrinks in the next couple of years, they're not going to bring this tax back. That's lost revenue."

Green MLA Kevin Arseneau said he'd use the entire surplus in areas such as housing, health, education and climate change.

"There's so many places we could put it," he said.