By Stephen Llewellyn
A appeared on page A1


Are you better off today than you were a year ago? That is a common election campaign theme.

But to find the answer you have to look at all the elements that make up the cost of living, such as pay raises, inflation, gasoline prices, car insurance, personal taxes, business taxes and power rates.

The rise and fall of these expenses have been big news in New Brunswick in recent months and the answer to whether the average New Brunswicker is better off today than a year ago is not easy to determine.

“It is really a tricky exercise,” said University of New Brunswick economics professor David Murrell on Monday.

Part of the problem is that the latest hard data from Statistics Canada on family income does not go past 2004.

“My guess is that New Brunswickers are probably following the Canadian pattern which was in the 1980s and 90s, until the federal budget was balanced, our after-tax income was not improving at all,” said Murrell. “Since that time, the federal taxes have gone down.

“Inflation has been fairly under control and Canadian living standards have risen.”

Murrell is working on a research project showing New Brunswick incomes are slowly converging with the Canadian average.

Last week, NB Power announced it was seeking a 9.6 per cent rate hike. In the latest Liberal government budget, personal income tax, small business and corporate business tax rose to generate $102 million. But vehicle insurance is reportedly down 13 per cent. Inflation is running at just over two per cent and the average wage hike in Canada is slightly above that. Gasoline prices are up and so are property taxes and property assessments. But if your property assessment is up that means homeowner’s net worth is up, which is known as the so-called wealth effect.

“In some ways it is a success and in some ways it is troubling,” said Murrell, about rising property values.

So are we better off now than we were last year?

“It is hard to tell,” said Murrell. “We have had some tax increases.”

The provincial government says that an average family of four with one-income earner will pay an extra $42 a year in provincial taxes. Murrell said the personal tax hike means the average two-income New Brunswick family making between $50,000 and $60,000 is paying about $120 more annually in provincial taxes. The 9.6 per cent power rate hike is worth about $13.50 a month or around $160 a year more for the average family.

“People are getting pay raises,” he said. “Pay raises are beating inflation. We are not going to go into a decrease in our standard of living in the next year or two.”

Even the minimum wage is going up. It rose from $6.70 an hour to $7 an hour Jan. 1. On July 1, it is going up to $7.25 an hour. That is a combined increase of 55 cents or 8.2 per cent. But the longer-term picture is that New Brunswick has to attract more small business, immigrants and large corporations, said Murrell.

“These are two negative factors for incoming businesses,” he said about power-rate hikes and tax increases.

During the McKenna era in the 1990s, the Liberals used the sales pitch of low property taxes, low property values and low wages to attract companies, he said.

“It was true but it is less true over time.”

Now those two factors are up to about 77 per cent of the national average, a change not widely reported, said Murrell. He said the drop in vehicle insurance is a clear benefit for people.

“But that is not really important for businesses.”

There is another benefit of higher energy costs.

“If you are a conservationist it is probably a good thing,” said Murrell. “It will get people to refit.”

But there is also a loser in all these changes.

“For some people on a fixed income, it will be (a drop in living standard),” said Murrell. “But the average New Brunswicker is not on a fixed income.”

Charles Cirtwill, acting president of Atlantic Institute for Market Studies, said people are worse off than they were a year ago but not by much.

“My sense is it is a net loss,” he said. “Maybe it is only a couple of hundred dollars depending on your income.

“I think the answer is no (is the average person better off?). It may be only a marginal no but it is a no.”

Cirtwill said the power-rate hike is the equivalent of not taking the entire family out for a nice dinner or renting a movie every other weekend instead of every weekend.

“These are very real impacts that people are going to feel,” he said.

But Cirtwill also said the power hike doesn’t mean that people will be sitting in the dark. In the battle between falling car insurance premiums and rising power rates is a trade off, he said.

“How does that old story go?” he said. “Give with one hand and take with the other. I think it’s better in my pocket.”

Rising property values do not help people on fixed incomes, said Cirtwill.

“One of the groups that get hurt most by spiraling property values is pensioners,” he said. “Assessments might be going up but you don’t see property tax rates going down.”

Cirtwill said he did not have any data to compare inflation and wage increases. But sometimes people don’t need the statistics to know how they are doing, he said.

“The average Joe coming home with their pay stub at the end of the week, they know whether it is going to hurt,” said Cirtwill. “They know it is not ending up as a net benefit to them.”