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Finance Minister Ernie Steeves discusses the second-quarter fiscal update on Nov. 10, 2022. Image: Zoom video capture

Projected Surplus In N.B. Jumps To $774M

By Brad Perry Nov 10, 2022 | 3:02 PM

New Brunswick is now projecting a surplus of more than $774 million for the current fiscal year.

That is five times higher than the $135 million surplus anticipated just two months ago and 22 times higher than the budgeted surplus of $35.2 million.

Finance Minister Ernie Steeves said strong economic growth and unprecedented population growth have led to massive revenue increases.

“These circumstances are similarly reflected across the country with governments showing significant revenue improvements,” Steeves said in the second-quarter update released Friday.

Revenue for the 2022-23 fiscal year is now projected to be $918 million higher than originally budgeted.

The province said stronger-than-anticipated economic and population growth means more corporate income tax and personal income tax revenue.

A one-time federal top-up under the Canada Health Transfer to clear surgery backlogs is also contributing to the higher revenue.

Total expenses are projected to be $179 million higher than budget due to increased expenses in health, education, transportation and public safety.

Steeves said the positive financial situation puts the province in a better position to tackle ongoing challenges.

“We are still dealing with the effects of COVID-19, inflation is running at a rate not seen in 40 years, labour supply shortages persist, interest rates are on the rise, and talk of a recession is becoming increasingly common,” he said.

“We can move forward with tax cuts and allow residents to keep more of their hard-earned dollars, while also strategically increasing spending in priority areas.

What to do with the surplus

As for what exactly will be done with the massive surplus, Steeves would not release any specifics on Friday.

He did say the money will be divvied between paying down debt, reducing taxes, and new spending.

“There is a plan for it. I can’t reveal it today, but we are moving forward with a number of different plans,” said Steeves.

“Do we need a certain amount of flexibility with our surplus in order to protect us against the upcoming recession? Absolutely. Do we need to help people right now? Absolutely.”

Steeves was also questioned about his government’s budget forecasting given the huge swing between the budgeted surplus and what is now being projected.

He acknowledged the difference is a “big number” but said he continues to have full confidence in his staff.

“Our budget forecasts are better than five of the other reporting entities so far, including the government of Canada,” said Steeves.

“I have full confidence in my staff. They’re outstanding and they’re working hard.”

Reaction from the Liberals and the Greens

While the Higgs government is coy about its plan, the Liberals have some ideas on what the surplus should be used for.

Official Opposition finance critic René Legacy suggested more help for New Brunswickers who are in need.

“The Emergency Food and Fuel Benefit that they put $20 million in, absolutely nothing stops us from doing a second round or a third round to provide some relief around Christmas or even in the dead of winter,” said Legacy.

“With $800 million in surplus, it would be very easy to augment that program.”

That benefit provided a one-time payment of $225 for low-income individuals and $450 for low-income families.

René Legacy, the Official Opposition critic for finance, spoke to reporters about the province’s fiscal update on Nov. 10, 2022. Image: Zoom video capture

Legacy also suggested funnelling more money toward food banks in the province. Since March, the province has contributed $2 million to help food banks meet increased demand.

In addition, the Liberal critic said some of the money should be invested in repairing key infrastructure.

“We have very much still aging infrastructure in this province. It costs twice as much to replace than repair infrastructure,” he said.

Legacy said he understands not everyone could have predicted this level of revenue, but he believes the Higgs government undervalued its initial budget.

“The day that he launched his budget, everybody thought that it was too low and that he did not adequately predict what the growth in revenue was going to be. The variance between the $774 million and the $35 million could have been a lot smaller,” he said.

Meanwhile, Green Party leader David Coon used social media to express his dismay with the fiscal update.

Coon said it is “unfathomable” that while New Brunswickers are struggling, the Higgs government has racked up a $774 million surplus, on top of the $777 million surplus from last year.

“This is over a billion dollars that he could use to serve the common good, by investing in housing, healthcare, seniors care, supplementing heating costs, and fighting the climate crisis. Instead he cuts taxes for the well-off and not a penny for those who are drowning in the skyrocketing costs of living,” he said.

You can view the full report by clicking here.


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