N.B. Introduces Balanced Budget With Lower Property Taxes
FREDERICTON – New Brunswick rolled out plans to lower property tax rates and fund new initiatives to grow the workforce in a $10.2 billion provincial budget on Tuesday.
The Progressive Conservative minority government tabled its second budget as the opposition Liberals continue calls to trigger an election after cutbacks to hospital emergency room hours.
Finance and Treasury Board Minister Ernie Steeves said the budget creates conditions for growth and addresses the province’s challenges head-on.
“Our 2020-2021 budget is designed to continue on our path to save New Brunswick, not to save the government,” he said told reporters before the budget speech.
The so-called “double tax” on non-owner-occupied properties will be reduced by 50 percent over a four-year period. Beginning in 2021, non-owner occupied residential rates will lower to $0.5617 per $100 of assessment from $1.1233.
Non-residential property taxes will also be lowered. That rate will go down to $1.8560 per $100 of assessment from $2.1860 over four years.
The government says those measures are expected to return $100 million to the New Brunswick economy.
The Fredericton Chamber of Commerce, along with other business organizations, have been calling for a comprehensive tax review and specifically the elimination of the tax on non-owner-occupied properties and non-residential properties.
“We are pleased that the government has heard our call on property tax and intends to begin reducing the double tax this coming fiscal year,” said Fredericton chamber CEO Krista Ross. “This will make business in New Brunswick more competitive and give us a chance to build economic momentum, which in turn will allow the government to further reduce debt and deliver more services.”
People’s Alliance leader Kris Austin says his party will support the budget. He is pleased there are no tax increases and to see funding increases to various government departments.
“In terms of tax reductions, we would have been a little more aggressive with the double tax and the commercial property tax but overall, it certainly is a step in the right direction,” he said.
Economist Richard Saillant said the budget is heading in the right direction and the tax cuts will help the housing market for immigrants.
“One of the ways to do so is make it less costly, that’s what he’s doing to a certain extent,” he told Huddle. “Maybe a next step would be to have a strategy on housing more generally, because the biggest impediment to ramping up, scaling, immigration in this province is housing”
Saillant said the direct impact on rent is hard to determine but it could alleviate pressures on rent increases, and also incentivize developers to build more units.
The budget also includes projections for the province’s carbon tax plan, which will decrease gas prices by 4.63 cents per litre and add a carbon-emitting products tax starting on April 1. The plan will generate $36 million of revenue into a fund for unspecified climate change initiatives. An additional $9 million will go to help the competitiveness of natural gas distribution.
“That’s a whole lot more than we were able to do last year,” Steeves said of the carbon plan. “And there are projects that I’m sure the Green Party and others throughout the province, throughout government will come up with and I’m excited about that.”
The 2020-21 budget is balanced and includes a projected surplus of $92.4 million. Net debt is expected to decrease by $129.3 million. It includes multi-year net debt-reduction targets and net debt-to-GDP targets.
That outlined multi-year spending plan is dependent on an annual increase in revenue from $10.27 billion in 2020-21 to $10.81 billion in 2023-2024. It also relies on consecutive surpluses and projects the net debt-to-GDP ratio to fall to 32 percent by 2023-24.
“Our budget demonstrates that it is possible to live within our means when you embrace solid and responsible financial management, and at the same time address our most pressing issues,” Steeves said.
Increased funds for workforce growth
A key focus in the budget is addressing the province’s shrinking and aging workforce.
The government will direct $900,000 of federal funds to a customized training program for newcomers with language barriers. That comes with an additional $464,000 of federal dollars allocated to improving workplace environments to grow the percentage of women in the construction industry.
The Department of Post-Secondary Education, Training and Labour will also see a budget increase. The province will boost funding allocated for labour market development by more than $2 million and provide a slight increase for adult learning.
The budget also includes plans to help young people transition into the labour market by reducing student debt. Interest rates will be lowered on the provincial portion of student loans to the prime rate (currently 3.45 percent) from the prime rate plus 2.5 percent. The province says that means an individual with a $10,000 loan would save close to $1,300 over 10 years.
New Brunswick has set a target to work with the federal government to increase immigration to 10,000 newcomers per year. The premier announced that goal as part of his 2020 State of the Province Address in January.
Saillant said boosting those numbers and creating a more competitive business environment should be the province’s priorities.
“If you’re improving the overall fiscal context, and at the same time reducing costs strategically in areas where businesses have said that it’s a priority, I think at least at the very least, you’re headed in the right direction,” he said.
ONB expenses lowered
Despite the rollout of new initiatives for Opportunities New Brunswick (ONB), the province’s economic development agency, its expenses are projected to see a slight decrease. Financial assistance spending will remain at $25 million but administration and business development services will be lowered to $13.62 million from $15 million in 2019-2020.
Higgs said in his January speech that the agency will have a new mandate, focusing on attracting business in cybersecurity, digital health and energy innovation.
ONB will also open new offices in India and Europe, to increase exports and attract international investments and talent. The agency will also create a program to help newcomers get quicker recognition of credentials and navigate red tape when starting a business.
Those new initiatives fall under ONB’s administration and business development services budget which is being reduced by more than $1 million. The cost of the foreign offices and new programs, and the specific areas facing reductions, are unclear.
‘No deals made’
The budget tabled by the minority government also includes $5.4 million to increase social assistance rates under the province’s transitional assistance program. Rates for the program will become tied to the consumer price index.
The announcement also comes as New Brunswick braces for the potential impact of the global outbreak of COVID-19, which has yet to spread to the province.
Saillant said the budget reflects a “wait and see attitude” on the coronavirus outbreak.
“Any measures to provide further stimulus to the economy, it should be done in concert if the federal government,” he said.
Steeves said the government had to make tough choices in finding efficiencies but failed to indicate such cuts when questioned by a reporter.
“There are hard choices that way, that you always want to be able to do everything for everybody,” he said. “You want every road to be fixed.”
Other new initiatives include $200,000 for a pilot school food program, free flu shots and increased spending for mental health. Those elements could be key in securing support when MLAs are expected to vote on the proposal next week.
Liberal MLA Gerry Lowe said he would consider backing the PC budget if it included a school or other benefits for his riding. No new schools were announced, but the capital budget in September could include additional infrastructure projects.
Green Party Leader David Coon, who could provide the PCs the support needed to stay in power, has said he may back the budget if he finds it beneficial for the province. He also expressed concerns about holding an election during a potential coronavirus outbreak.
Steeves said there was consultation with other parties but no spending promises were made to keep the government in power.
“There were certainly no deals made or nothing like that,” he said. “We just made the budget as best we could for New Brunswickers.”
With files from Tamara Steele.