New Brunswick:
New Brunswick’s government promises to get its fiscal house in order while maintaining services. Unfortunately, its 2017 budget veers off from the plan of correcting public finances.
Expenditure continues to grow, increasing by 3.5 percent and producing a deficit of $192 million. Meanwhile, government takes in more revenue from a higher HST, and its overall tax burden remains among the highest in North America.
New Brunswick could return to balanced budgets well before 2021, provided that it stopped its government spending growth. With a declining population, spending should not be increasing. The time to be fiscally responsible is now, not in 2021.
Newfoundland and Labrador:
Newfoundland and Labrador’s government contends with several factors in its upcoming budget. These include low oil revenues, high spending obligations, a public finance crisis, and dependence by many residents on government.
But the most important factor will be maintaining confidence from creditors. To finance the deficit and Muskrat Falls, the government will have to borrow billions of dollars per year. For this to happen, lenders need to be assured that Newfoundland has made a plan to address its financial problems, and will stick to it.
The provincial government can address its spending problem by lowering program expenditures and shrinking the public service. Decreasing spending is a necessary step to maintaining creditor confidence.