FREDERICTON - The New Brunswick government introduced a modest, balanced budget with no tax changes on Tuesday, but it served notice that a major overhaul is in the works for the province's tax system.
The $7.1 billion budget for 2008-09, introduced by Finance Minister Victor Boudreau, forecasts a $19-million surplus.
There are spending increases for education, health and social services but all government departments have been ordered to cut administrative costs in an effort to shave $15 million from government expenditures.
"We are mindful of the challenges facing our economy, particularly in light of the U.S. slowdown and the high Canadian dollar," Boudreau said in his budget speech in the legislature.
"This is reflected in our revenue forecast."
Revenues are expected to grow by $185.4 million, or 2.7 per cent from 2007-08.
The province's net debt is also expected to grow - to $7.1 billion by 2009. The total represents a roughly $500 million increase over 2007, largely due to soaring capital costs for highway improvements.
It means that every man, woman and child in New Brunswick owes about $9,500 for the net debt.
There are no tax increases and no tax cuts in the new budget.
In Boudreau's first budget last year, New Brunswickers were stunned by an array of across-the-board tax increases for individuals and businesses that abruptly ended years of cautious tax cuts by the previous Conservative administration.
As well, New Brunswickers are still reeling from their latest property tax bills which, in some cases, were as much as 10 per cent higher than the previous year due to rising assessments.
Boudreau said the government will table a paper in April that will outline options to change the tax system.
"The purpose is to better facilitate wealth generation for all New Brunswickers and make the province more attractive to investment and high paying jobs," he said.
It's another wait-and-see approach for the careful Liberal government, which has developed a reputation in its first two years in office for studying almost every aspect of life in the have-not Maritime province.
The Liberals say they want New Brunswick to be self-sufficient by 2026.
Following the release of the paper on tax changes, a committee will consult and then the government will review the recommendations.
Significant tax changes aren't expected before 2009.
The government's penchant for studies is reflected in other areas of the budget, including health and education.
Although the two departments will see major spending increases, many details will have to wait for a new health plan and a post-secondary education report, both due in the spring.
In education, the government is ordering a tuition freeze for the coming year at the province's four universities.
Nevertheless, it means tuitions will be frozen at the second highest level in Canada, after neighbouring Nova Scotia.
The average undergraduate tuition fee for Canadian full-time students in New Brunswick is $5,733. It's $5,878 in Nova Scotia.
"New Brunswick is the province with the lowest percentage of people who have completed at least some post-secondary education in all of Canada," Boudreau said. "That must change."
The government is waiting for the final recommendations from the working group on post-secondary education before making more announcements.
The group of university presidents and college principals was commissioned last year after a report recommended sweeping changes, including merging some satellite university campuses with community colleges to form polytechnic schools.
The government backed away from that idea after facing strong protest.
The government has boosted spending in the Health Department by 5.4 per cent to a total of $2.2 billion - the biggest slice of the budget - but, again, more details on spending will be contained in a health plan to be released in the coming weeks.
Highlights of the New Brunswick budget presented today:
- 2008-09 budget projects modest $19-million surplus in $7.1 billion spending program.
- Net debt expected to reach $7.1 billion by 2009, an increase of about $500 million from 2007. Share of debt for every man, woman and child in New Brunswick is about $9,500.
- No tax increases, no tax cuts. The Liberal government says it will reform provincial tax system, but not until studies and reviews are completed.
- Tuition at four New Brunswick universities frozen for one year, thanks to $12 million infusion of provincial funds. Tuitions are already among highest in Canada.
- All government departments asked to cut where possible to realize total $15 million in savings.
- Health Department spending increases by 5.4 per cent to $2.2 billion - the biggest slice of the total budget. Money will be used to reduce wait times, provide better access. More details to come in health plan later in year.
- Department of Social Development gets additional money to hire 43 new social workers, increase nursing home care, improve daycare and boost social assistance rates.
