Dec. 1, 2008
DIEPPE (CNB) - New Brunswick will adopt a balanced approach of strategic investments in infrastructure, economic development, and restraining and reducing government spending as part of next year's budget to stimulate the provincial economy.
Finance Minister Victor Boudreau made the remarks today during a luncheon hosted in Dieppe by the Dieppe Rotary Club and the Dieppe Economic Development Corp. Boudreau spoke of the current economic climate and the great turmoil in the financial markets over the past six months.
"The credit crisis in global financial markets, brought on by the accumulation of sub-prime interest-related mortgage debt in the United States, has led to major stability issues in banks and other financial institutions," Boudreau said. "It's an incredible phenomenon, the likes of which I hope we never see again in our lifetime, or our children's lifetime."
Boudreau described the effect the downturn is having on government revenues - specifically the decline in taxes and royalties from mineral mining and exploration - reduced earnings for provincial pension plans, and the $30-million cost of the spring flooding of the St. John River. This decline in revenues has the potential to put the province into a deficit for 2008-09 and possibly for 2009-10.
In light of the current economic climate, Boudreau described the need for government to restrain government spending where appropriate, while spending on physical infrastructure such as highways, school and hospital renovations or construction, and technological infrastructure such as the government's commitment to ensure that New Brunswick has full high-speed broadband coverage.
"Put simply, government must act now to do what we can, and provide some stimulus to turn this around," Boudreau said. "We will show leadership in a responsible way to help foster growth and consumer confidence in our economy. Waiting until it all falls apart and then trying to pick up the pieces would be misguided, and would be detrimental to New Brunswickers."
Boudreau said that the upcoming capital budget will contain record investments of hundreds of millions of dollars in capital spending. These investments will build upon the record investments of previous year, which have stimulated the economy in many sectors.
Boudreau made it clear that the government's focus on achieving self-sufficiency has not changed due to the economic downturn. In fact, the government will work harder to foster innovation and development, and increase the population.
"As New Brunswick becomes increasingly self-sufficient, we will be in a far stronger position to weather economic storms not only today, but for any others which may surface years down the road," Boudreau said. "We must create a larger, more diversified economy so we can continue to improve our health, education and other services to New Brunswickers today and for generations to come."
Boudreau said that the province is committed to balanced budgets, despite the likelihood of a deficit in the coming year. He believes that the underlying strength of the provincial economy will allow the province to return quickly to strong economic growth and operating surpluses.
"What is important now to face this crisis and overcome it is that we provide the necessary leadership to ensure the fundamentals are in place for an economic recovery and a return to surpluses in the future," Boudreau said.
With fiscal restraint on the part of government, targeted infrastructure spending and a restructuring of the provincial tax system with lower personal and corporate taxes, Boudreau is confident that New Brunswick will be stronger, with greater potential for growth than ever.
"Rest assured that with all these measures outlined to you, we are confident that New Brunswick will be able to navigate the choppy waters we find ourselves in right now," Boudreau said. "Together, we will come out on the other side, in calmer waters, stronger and better than before."
MEDIA CONTACT: Marc Belliveau, communications, Finance, 506-453-2451.