N.B. Budget Promises Increased Spending And Tax Cuts
FREDERICTON–Finance Minister Ernie Steeves says the province’s new budget is “the product of an approach we have taken over the last three years.”
Steeves introduced the province’s budget on March 22, describing a province that’s maintaining economic momentum as it approaches 800,000 people and comes off a 45-year growth high.
Steeves noted New Brunswick has shown tremendous resilience under what have become volatile global economic conditions. He said estimates have shown real GDP growth for the province has “made up for the losses experienced in 2020.”
The Finance Department predicts real GDP growth of 2.2 percent, continued population growth, and wage increases–all despite inflation running at a 30-year high.
Spending is also projected to grow by 5.5 percent as the Higgs government gets ready to transition its spending plans from addressing Covid-19 to building capacity within government.
Steeves noted the projected surplus of $35.2-million for 2022-2023 and said revenues are projected to grow by 1.2 percent over the same period.
Personal income tax changes announced
Steeves announced Tuesday the basic personal amount for income tax will be increased from $10,817 to $11,720, with the low-income tax reduction thresholds also adjusted from $18,268 to $19,177, beginning in the 2022 tax year. He said the changes are in response to the latest mandated carbon tax increase from Ottawa.
New Brunswick’s carbon tax will increase from $40 per tonne to $50 per tonne April 1, a change Steeves says will represent 2.21 cents per litre in gasoline and 2.68 cents per litre more on diesel fuel.
He said the income tax change will provide an estimated $40-million in personal income tax relief for over 400,000 taxpayers in the province.
A Covid-19 recovery amid growth concerns
Immigration and retention efforts will also see investment, with the government providing $1-million through the Immigrant Settlement Support Funding Program and an additional $200,000 to be used to support international student retention.
Tourism, a sector hard hit by the pandemic and hoping to rebound in 2022, was also addressed in Tuesday’s budget speech.
Steeves said in recognition of those challenges, the government is providing an additional $6.9-million for the Department of Tourism, Heritage and Culture. That, Steeves said, “represents a 26 percent increase in the province’s tourism budget” after nonrecurring Covid-related spending is excluded.
Tuesday’s speech also highlighted what Steeves called “strategic support for capital investments” that are part of an overall effort to boost New Brunswick’s challenges with productivity growth. This year’s budget includes $5-million earmarked for acceleration of capital investments focused on improving productivity and generating long-term growth.
This year’s budget also includes $343-million to increase wages to the public service, an increase Steeves said recognizes the efforts made over the course of the pandemic. He said the investment is “one that we can afford.”
Steeves also answered questions around Covid-19 spending, with roughly $134-million allocated in last year’s budget reduced to only $20-million this year. The money will be set aside for immunization. Steeves said Covid-19 costs will now be realized by each department in government.
“We’re hoping we’re over a big chunk of it anyway,” Steeves told reporters, although he cautioned if there is a resurgence “it will cost us money.”
Changes promised for landlords, tenants
This year will see a long-planned, 50 percent provincial property tax rate reduction for non-owner-occupied residential properties, including apartment buildings and other rental properties. It’s set to be phased in over three years, beginning with the current property taxation year.
Two years ago, the government proposed the same reduction to the provincial property tax rate for non-residential properties but those measures did not proceed due to fiscal uncertainties amid Covid-19.
The government hopes the initiative will support the development of additional units in the province while providing tax relief to landlords, who have raised rents in the fast-paced real estate market.
While Steeves said tenant vacancy rates have continued to fall amid higher rents, he announced a one-year cap on the allowable increase to rent of 3.8 percent (equivalent to CPI growth in 2021). The government is promising the cap will be retroactive to Jan. 1, 2022.
Steeves told reporters the rent cap will be reviewed after one year but added a one-year cap is all government Is committed to at this time.
The government is also promising further amendments to the residential tenancies act–eliminating the ability of landlords to terminate a tenancy without cause. Other promised changes involve allowing a tenant to apply to the Residential Tenancies Tribunal to order landlords to compensate for losses caused by termination without cause. Tuesday’s speech also included a planned amendment to introduce penalties for non-complying landlords.
Steeves also announced Tuesday the government will increase spending on affordable housing by $6.3-million this year.
Health spending highest in 13 years
Tuesday’s budget allocated more than $3.2-billion to the province’s health care system, a 6.4 percent increase over the government’s third-quarter projection and something Steeves called “the largest increase since 2008-2009” in health spending.
Steeves detailed $38-million in spending toward improving access to primary care, surgery, addiction and mental health services, and enhancing supports for seniors under a better-connected system. These are all areas of concern identified in last fall’s plan from government, Stabilizing Health Care: An Urgent Call to Action.
Tuesday’s budget also itemized $3.7-million to enhance and redirect resources toward multi-disciplined, team-based community care to help address less-urgent and non-urgent care needs outside of the Emergency Room. Steeves noted 40 percent of all patient visits are still for less-urgent care.
The budget also includes $4.1-million to support ongoing work in the government’s nursing home plan, with an additional $9.7-million to help provide increased hours of care in nursing homes.
Steeves said the government will also provide gas relief in the form of $5-million targetted toward home support workers who travel from client to client.
In an effort to better recruit and retain workers in the human service sector, Steeves also announced $38.6-million this year to increase wages for human service workers in home support, community residences, special care homes, family support, group homes, and attendants providing care.
Childcare spending lacks timeline
After last fall’s bilateral childcare agreement with the federal government, Steeves said Tuesday that the NB government is set to invest $110-million in the early learning and childcare sector in 2022-2023, with $500-million in investment set to come over the next five years. However, he gave no timeline Tuesday for when a planned childcare investment program would begin.
Steeves says those investments will help lower the cost of childcare for families in the province while respecting investments already made in the early learning system.
Tyler Mclean is a Huddle reporter based in Fredericton. Send him your feedback and story ideas: [email protected].