Finance

2004-2005 Budget (04/03/30)

NB 380

March 30, 2004

FREDERICTON (CNB) - The New Brunswick government today delivered a balanced budget for 2004-2005 with no new taxes and no tax increases. The budget contains record investments for the priorities of health and senior care, education and children, as well as investments to create jobs and prosperity.

"The measures we have taken to address the imbalance between projected expenditures and revenues will ensure that we continue to live within our means and focus on priorities," Finance Minister Jeannot Volpé said when he tabled the 2004-2005 budget in the provincial legislature. "The budget provides more money in the classroom and at the bedside, and less for administration."

Finance Minister Jeannot Volpé and deputy minister John Mallory. (Large photo.) Video:(WMV) Audio : (WMA) - (more audio/video)

Budgetary revenues in the 2004-2005 Budget will be $5.729 billion and budgetary expenditures will be $5.727 billion, for a projected reduction in net debt of $2.4 million.

Highlights include:

"The government met its commitment to balance the budget over the 2000-2001 to 2003-2004 cycle, with an estimated cumulative surplus of $161.8 million," the minister said. "We will now focus on our commitment to do so over the coming four-year cycle."

The minister anticipates a deficit for fiscal policy purposes of $21.3 million for 2003-2004. Had corrective action not been taken during the year, he said, the deficit would have been far higher. A key factor was a reduction in equalization of $112.7 million from budget.

In 2004-2005, the government remains committed to health care as its top priority. Funding is 5.2 per cent higher than last year. Record investments in 2004-2005 will include $905.9 million for hospital services; $396.6 million for community health services; $376.4 million for Medicare, and $132.0 million for the Prescription Drug Program.

Other measures include $4.0 million for ambulance service enhancements, $2.5 million for a new cancer strategy, and $500,000 for a wellness strategy to reduce obesity in youth. The provincial contribution toward wages paid to in-home support workers will increase by $1.2 million.

For education and children, spending is 2.4 per cent higher than 2003-2004 revised spending. It will include $736.4 million in expenditures for Kindergarten to Grade 12.

During 2004-2005, 200 teaching positions will be added to the school system to focus on early literacy and children with special needs. A $10 million Quality Classroom Resource Fund will be created to fund school supplies and resources for students and teachers, starting with $2.5 million in this budget. A $1.8 million Quality Technology Infrastructure Enhancement Fund will ensure technical support for information technology in schools.

University base funding will rise by two per cent over last year, and $5 million will be invested in the University Infrastructure Program.

Volpe said the budget also contains a record $5.7 million in initiatives that will directly benefit child care facilities. This includes $4 million to improve the salaries and working conditions of child care workers and $1.3 million for their training. In addition, the budget has $1.7 million extra, for a total of $8 million, for day care assistance.

The minister said economic growth of 2.8 per cent is expected in 2004, compared to 2.0 per cent in 2003.

The budget invests in jobs and prosperity, by reducing the small business corporate income tax rate from 3 per cent to 2.5 per cent on July 1, 2004 - the lowest rate in the nation. The income threshold will increase from $400,000 to $425,000 on the same date.

Funding for regional and community economic development will be $15 million, and there is also $4.5 million for total development. A total of $10.9 million is set aside for the extension of broadband access to most areas, which will help strengthen rural communities.

"Efficiencies have been found across government to ensure adequate funding for our priorities," the minister said. "In non-priority areas, we have decided to eliminate or reduce funding for some government programs, and we said no to a series of new spending demands."

He added that overlap and duplication will be reduced, some government offices will be consolidated and others will be closed. These decisions will result in about 750 fewer public service positions. The actual number of job losses will be less, due to the elimination of 130 currently vacant positions, a targeted early retirement program, a redeployment program and a severance package.

"In order to achieve the long-term wage stability we require to keep expenditures under control, we are asking public service unions to accept little or no increase in wages this year, with modest increases in subsequent years as our financial situation improves," Volpé said.

The government's preference, he said, is to respect current collective agreements and negotiate future settlements.

Volpé noted that municipalities will receive predictability and stability in unconditional grant funding. The total funding pool will be maintained at the current level of $60.4 million for 2005, 2006 and 2007.

While no tax increases were brought forward, some fees, fines and penalties will be increased in the coming year. These measures will add $22.9 million to revenues.

During pre-budget consultations, New Brunswickers urged that their social programs be preserved, despite the fiscal challenge. They said they believed efficiencies could be found across government to fund health care, education and other priorities.

The minister said he received more than 2,000 pre-budget submissions, and he thanked people for making their voices heard. He pledged to continue to find ways to save money and make the public service more efficient.

For example, he said, the government will study whether to consolidate services common to each department, such as information technology, human resources, and finance and administration. Government departments, the school system and the hospital system will be examined. Government will also do an extensive review of provincial parks to determine whether to own or divest its assets.

"Addressing the fiscal challenge today is in the best interests of New Brunswick for tomorrow," he said. "By continuing to live within our means, it will ensure that we can invest in the prosperity and priorities of New Brunswickers now and into the future."

04/03/30

EDITOR'S NOTE: Four fact sheets on the budget are attached. The complete budget speech, a highlights booklet, the main estimates and the annual report on the economy are available on the Department of Finance website at http://www.gnb.ca/0024/index-e.asp. MEDIA CONTACTS: Department of Finance, Ann Deveau (506-444-4498) and Vicky Deschênes (506-453-4138); fax 506-457-4989; e-mail wwwfin@gnb.ca.

Budget 2004-2005

Fact Sheet - Fiscal

2004-2005 (outlook for upcoming fiscal year)

2003-2004 (update on fiscal year ending)

Fact Sheet - Economy

Fact Sheet - Spending

Health and Seniors Care

$2.06 billion in health care funding in 2004-2005, which is 5.2 per cent higher than 2003-2004 revised spending:

Education and Children

$1.15 billion in 2004-2005 in education funding, which is 2.4 per cent higher than in 2003-2004:

Other

Fact Sheet - Competitive Taxation

Corporate Income Taxes

Personal Income Taxes

Other

04/03/30