There are only two ways to eliminate a structural budget deficit: increase revenues or reduce expenditures. Each offers legislators a fast option and a slow option. The fast options are raising taxes and cutting services. The slow options are fostering economic growth and increasing public service productivity through rationalization, process improvement and better technology.
New Brunswickers have been hearing a lot about the fast options lately. But it’s the slow options that have the greatest potential to yield value to taxpayers. Unless legislators start implementing these slow options soon, the province’s worsening fiscal situation could trigger deep budget cuts and sudden tax increases in the not-so-distant future.
Government members have spent the past year trying to engage New Brunswickers in a public conversation about the need for more sustainable services. With just three years left in their mandate, and a fiscal crisis brewing in Europe that could drive up interest rates, they must move from cautious consideration to action. They will need to take back the debate from a powerful vested interest group: New Brunswick’s public sector.
Unions such as CUPE have raised the threat of service cuts to fan support for raising taxes and maintaining the status quo. Members of the civil service might gain more security from such a move – but would New Brunswickers?
We believe the question before cabinet is neither “should we raise taxes?” nor “should we cut services?” It is, “can government reduce costs without cutting services?”
We believe the government can, provided it is prepared to challenge the assumptions that underlie the status quo.
The assumption that New Brunswick needs 49,000 civil servants to serve 750,000 people should be at the top of the list. In 1960, the number was closer to 3,000 – and while provincial jurisdiction has changed substantially since then, New Brunswick’s size has not. According to data compiled by Statistics Canada and analyzed by the Atlantic Institute for Market Studies, New Brunswick has the largest civil service per capita among the provinces, with 12.9 employees for every 1,000 citizens. This figure would be higher if nurses and teachers were included. Moreover, the cost has grown faster than inflation.
According to StatsCan, the wages government pays each month for general services nearly doubled between 1989 and 2009; inflation increased by only 55 per cent.
These increases have had a profound impact on provincial spending. If legislators compare expenditures on an apples-to-apples basis with other provinces, they may appreciate the significance of a second question: is New Brunswick short on revenue, or is it inefficient?
By Canadian standards, this province certainly is not rich – but when public services are measured against other provinces using common benchmarks, New Brunswick seems more inefficient than underfunded.
Legislators can see this conclusion in a recent report by the New Brunswick Health Council, which looked at national data. The council found that New Brunswick’s health care system is well supplied with medical facilities, diagnostic machines, and access to doctors and other health-care professionals. These resources simply aren’t being managed in ways that provide efficient and reliable service to the public. The council has estimated that reorganizing the health care system would meet patient needs better, while saving tens of millions of dollars each year.
More efficient models of public service have been field tested in other jurisdictions, from Canadian provinces to countries in Scandinavia and western Europe. Legislators should bring these “best practices” into New Brunswick’s budget debate, offering the public a rational and sustainable alternative to sudden budget cuts or big tax hikes.
New Brunswick has opportunities and assets, as well as fiscal problems; and among its public sector unions, there are voices calling for reforms that will increase productivity. Rather than shying from a discussion New Brunswickers are already engaging in, cabinet must take the lead.
Government should be able to deploy public resources in ways that will serve people better across New Brunswick, while fostering growth and higher productivity. It may take 10 years to reform public services and expand the economy. Legislators need to get started immediately.
We believe that many New Brunswickers will be receptive to new ideas, if those ideas offer credible ways to deliver sustainable services.
“Unsustainable public spending” and “civil service entitlement” are no longer abstract concepts. Today, New Brunswickers can see the reality in news broadcast from Greece, Italy and Spain.
No one here wants to follow those societies into indebtedness, economic stagnation and social chaos.