Lately we have been hearing a lot of talk about how there is a fiscal crisis in New Brunswick. I had the opportunity to participate in two events where this subject was discussed.
The first event took place on Saturday November 27. It was a People’s Forum on the Economy, called It’s Our Economy Too, organized by several civil society groups. About 125 New Brunswickers from all walks of life were in attendance.
The second conference, called Future NB, was organized by the Business Council of NB, and was co-chaired by David Gagnon and Camille Thériault. It took place on Tuesday November 30 and Wednesday December 1. Approximately 250 people were in attendance, with a strong majority coming from the business community.
Each event painted a starkly different picture of the NB fiscal situation and the future of our province.
For most of us, it is difficult to sift through this information in order to form an opinion. Here are a few facts highlighted by several guest speakers at the People’s Forum on the Economy. I believe they contribute to our examination on whether or not there is a fiscal crisis in New Brunswick.
Fact #1: A good indicator of New Brunswick’s fiscal situation is debt-to-GDP ratio. New Brunswick bodes well when we compare our debt-to-GDP ratio to other provinces. We are in middle of the pack.
Fact #2: Canada is ahead of the curve internationally when it comes to debt-to-GDP ratio. It is at 34%, half the amount of other G7 countries, which averages 69%.
Fact #3: For the past ten years, the provincial and federal governments have been cutting corporate taxes. There is very little evidence that these corporate tax reductions have had the desired impacts in terms of stimulating the economy, especially in terms of productivity-inducing investments. In fact, investment levels in machinery and equipment as a percentage of GDP have been declining in recent years and are now at a lower level than they were in the year 2000.
Fact #4: The NB government is currently experiencing a fiscal imbalance, with deficits. Two factors have caused this situation. The first is the recession which led to increased spending in social programs and stimulus spending. The second is the Liberal 4 year tax reduction plan, which began in 2009. In year 2009-2010, the NB government lost $143 million in revenue as a result.
Fact #5: Government receives the highest economic returns on its investment, not by making tax cuts, but by investing in people. The highest economic returns, measured both in terms of increases to GDP (economic output) and jobs creation, go to investments made in child care services, health care, social services, public infrastructure and education.
One thing is for sure, the decisions that we make today will have long term economic and social implications for the future of our province and the people who live here. There are several roads that lead to economic prosperity. I believe that the criteria that we use to measure economic success must include measuring the following:
If economic success is shared or if it benefits just a select few,
If education and skills development are increased,
If economic development is sustainable,
If we are protecting our environment,
If it is gender inclusive or not discriminatory.
The best decisions are made when several different perspectives are at the decision-making table. I was pleased to hear Premier Alward recognize this in his remarks at the closing of the Future NB Conference. He offered to collaborate with this initiative, if organizers were prepared to broaden the stakeholders involved in the steering committee.
We often hear ourselves being described as taxpayers and consumers. Let’s not forget that we are also citizens of this province and have a stake in the decisions made on our behalf. Like with NB Power, I invite my fellow citizens to become informed on this important issue and make their views known to decision-makers.
Michel Boudreau is the President of the NB Federation of Labour, Labour’s central voice in New Brunswick.