Government scores a B- on 2011-2012 budget
For more details
NB Budget Report Card
Budget 2011-2012
Letter to Minister of Finance, Blaine Higgs
to introduce the budget report card
We prepared our annual budget report card to score the government on the priorities that we raised in pre-budget meetings on behalf of New Brunswick members. We reviewed five key areas: spending, public sector compensation, taxes, red tape and long term planning.
SPENDING:
One of our greatest concerns this year has been the growing level of government spending as a share of the economy (GDP). In four short years, New Brunswick has gone from having control, to losing control of its finances. It wasn't necessarily the recession that knocked the province off its path, but years of high spending and high taxation. In this year's budget, government held spending increases to 1.2 per cent over last year. While this is a good start, our own research shows that spending will need to be frozen if New Brunswick is to start turning the corner on its debt before the end of the decade.
PUBLIC SECTOR COMPENSATION:
We believe that public sector compensation is an important component of the government spending package. Our Wage Watch study shows that significant disparities exist between public sector employees and their private sector counterparts. In fact, New Brunswick is home to the second-largest wage gap in the country: our provincial public wages exceed comparable private sector wages by 14.1 per cent. We wanted swift action on increasing parity between public and private sector compensation practices and are hopeful that a review will lead to progress in the next budget.
SMALL BUSINESS TAX:
Taxes directly impact a firm's bottom line and ability to make investments in their operations. We welcomed the announcement of a reduction in the small business corporate tax rate. It means that smaller businesses, who regularly competitive disadvantages, are getting recognition for their importance. This will help stimulate entrepreneurship in the province. We will continue to watch for the follow through on the government's commitment to lower this rate to 2.5 per cent over the course of this mandate.
RED TAPE:
Red tape costs small business owners time and money that they would rather invest in their businesses. There is some inclination from government to move forward on red tape reform, although we've yet to learn of any specific reduction initiatives. Other jurisdictions across the country, including Nova Scotia and Newfoundland and Labrador, have introduced processes to 'measure' red tape, set annual targets for reduction, and publicly report on their progress. This is an approach we would welcome in New Brunswick.
LONG TERM PLANNING:
There were not specific targets announced on long term planning. However, the budget did call to cut the deficit in half from its staggering one billion to about $450 million.
Overall, we give this budget a grade of B- in recognition of how difficult it has been to turn the taps off from heavy spending increases over the last four years. Since this is just the first budget from this relatively new government, only time will tell if they can follow through on these commitments. We will of course be watching closely at next year's budget to ensure that this direction of reduced spending is maintained.
For more information please contact our office at 1-888-234-2232.
