Economic and fiscal developments in New Brunswick.

• Author: Maher, Allan E.
• Position: Canada

What is going on in New Brunswick is inextricably linked to developments at the national, and indeed at times, the international level. The government deficit and debt situation is not a new phenomenon. It has been at least a decade in the making, and it took the latest recession to bring attention to a significant "structural" problem that had been imbedded in government finances since the late 1970s. A structural problem exists when the long run spending growth rate is greater than the capacity of the economy.

The government's financial position has been a net penalty to the remainder of society because current and future key social programs are robbed by rapidly rising interest on the debt, and the current and future economic structure is penalized by either current or expected increases in taxes. All Canadians face the same problems together and we must right the financial wrongs of the early and mid 1980s. The decisions of those years drove debt to totally unacceptable levels. Governments across Canada were spending far too much money - money they did not have. It is clear that Canadians cannot continue to live beyond their means indefinitely.

In New Brunswick, we recognized the need for substantive change five years ago. We knew we had to be part of the solution - not part of the problem. We knew we had to do more with less. We knew we had to make administrative savings, downsize government, and at the same time protect key programs. We knew we had to ensure we were getting the most we could from our development efforts and from training programs.

The problem could not be turned around in a year, but we knew unless we started soon, it could never be done, without inflicting great pain; and a key point of the overall strategy was a plan for getting the job done. That budget, and the five since then, have all had the same theme: to make the system work better, protect programs, and solve the financial problem that was developed and compounded over the previous decade.

The basic premise is that if government does its part on these issues, the private sector and the economy will respond and create the needed jobs and incomes. These efforts have paid off so far, but continued progress is required if our fiscal objectives are to be reached. In the March 31st budget, I projected that there will be an ordinary deficit this year of $41.5 million, while significant ordinary surpluses in 1994-95 and 1995-96 will be realized. In fact, for the...