From the Daily Gleaner Tuesday April 29,2014 PROVINCE ON VERGE OF DISASTER-AUTHOR CHRIS MORRIS LEGISLATURE BUREAU A new book says New Brunswick is speeding toward a fiscal cliff and will plummet into economic disaster unless a realistic and determined government takes the wheel and puts the province back on track. Richard Saillant of Moncton, director general of the Canadian Institute for Research on Public Policy and Public Administration, says in his book Over the Cliff? the province is headed for financial ruin thanks to its aging population, bloated bureaucracies and stagnant growth. The book, released Tuesday, presents a dispassionate, analytical look at the factors that are propelling New Brunswick toward the precipice, warning that if nothing changes, the province would have a net debt of about $62 billion by 2035 and an annual deficit of more than $5 billion. The province’s net debt is about $10 billion and its deficit roughly $400 million. “A new Age of Diminished Expectations is upon us,” writes Saillant, a former senior federal bureaucrat and a former administrator at the Université de Moncton. “Barring major surprises that would radically transform our economic fortunes, it will be with us for the next two decades. In this new age, growth will be cut to a small fraction of what it has been over the past generation. Meanwhile, the burden of caring for dependents will escalate. Today, one out of six New Brunswickers is a senior. By 2036, this ratio will be one out of three.” Over the Cliff? will be formally released at a news conference on Tuesday morning in Fredericton. Donald Savoie, Canada research chair in public administration at the Université de Moncton, said on Monday that Over the Cliff? should be required reading for all New Brunswick politicians. “The parties and their advisers should go through this book and prepare their responses – and no platitudes please,” Savoie said in an interview. “The next election campaign in this province will be fought on two issues: economic development and fiscal responsibility. It will be a referendum on those two critically important matters. The parties have to focus on those two issues, drop the platitudes and say something substantial.” Saillant notes in the book that the current Tory government has taken steps to control spending and restore fiscal health, but he says they are not enough. He warns of more credit rating downgrades unless the province can get its house in order. He says that as deficits and the net debt balloon, more and more radical measures will be needed. “Failing this, financial markets will eventually turn off the tap, paralyzing government activities and requiring even deeper cuts and more crippling tax increases to restore fiscal balance.” However, despite the bleak outlook for the province, Saillant says all is not lost – yet. He draws a road map in Over the Cliff? that could allow the province to steer away from the precipice if government is prepared to be honest with New Brunswickers and offer clear solutions. Saillant says tax increases and program cuts will be necessary. He says government will have to be much more determined when it comes to trimming its ranks and streamlining operations. “While major efforts have been made to cut down the size of the public service, New Brunswick still has approximately 25 per cent more provincial public servants than the Canadian average,”the public policy expert writes. “The government also funds a broad array of boards, councils and institutes to deal with various issues. Salaries and other costs for such organizations add up. In brief, we must look at the whole public service apparatus. ” Saillant also writes a prescription for tax increases, suggesting that the government could raise its portion of the HST by two percentage points to its pre-2006 level. He also says further revenues could be gleaned from such things as highway tolls and additional income tax increases. “While it would involve a significant increase in New Brunswick’s tax burden, we believe that this plan is realistic as it stays near historically tested ground,”he writes. “Still, caution is warranted: beyond the next decade, this plan calls for not growing the tax burden above this historically high level, to minimize the risk of adverse economic consequences.” Saillant says the first thing government and opposition parties must do is develop credible, long-term plans for fiscal sustainability in New Brunswick. He said that in developing those plans, they must lay down the facts to New Brunswickers. “The status quo will lead us straight over the cliff,”he writes. Savoie said the book is very timely, coming just five months before the provincial general election in September. He said Over the Cliff? makes it clear that politicians no longer can try to fool the electorate with expensive promises. “This election will be different than previous elections,” Savoie said. “No party can seriously stand up, make commitments and then, if elected to power, say ‘Oh the books are bad.’ We know the books are bad. And if they need evidence, all they have to do is read Over the Cliff?”
Posted on: Tue, 29 Apr 2014 20:28:49 +0000
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