A recent report from the Atlantic Institute for Market Studies, a regional think-tank, suggests that Atlantic Canada has not, in recent memory, gone into “austerity” mode. This report is important because citizens are often led to believe the government has been trimming and cutting, when nothing of the sort has actually been happening.
Discussion of “austerity” is more than semantics: it is one more indicator that regional governments have steadily expanded their program spending, funded by new revenue streams – and often new taxes. Citizens should ask if that enlarging of the administrative state has made the programs and services of government better. We believe in many cases it has not.
Across the region, spending has climbed and government has expanded for three-plus decades. That means much of the talk of hard decisions and living within means is just that: talk. And it helps explain why the net debt for New Brunswick has skyrocketed so much: because program spending, even adjusted for inflation and measured on a per capita basis, has almost doubled since 1980. Politicians at various points in those 35-plus years tried to convince the population that tough calls were being made – but evidence shows cuts are rare.
Political gain is more important to many governments than prudent management of the public purse. That calculation goes two ways: First, citizens are promised fiscal discipline with no damage to quality of government services. That approach often ends in no great change to either spending habits or quality of service. Second, a challenging party may say that the population has unjustly suffered spending cuts, and what’s needed is a restoration of government generosity. Quality of service rarely jumps at the rate of spending under such circumstances. The net result is a province further behind.
A better approach is needed in New Brunswick. The provincial government talks of sparking growth. The reality has been persistent, poorly targeted stimulus spending more focused on job subsidies and political dividends than on productivity gains or greater trade opportunities.
We believe New Brunswick needs real spending discipline to prevent debt and uncontrolled public wages from swamping the ship. More public sector largesse and artificial stimulus won’t turn the provincial economy around.