March 28, 2000
FREDERICTON (CNB) -- The New Brunswick government today delivered a balanced budget for 2000-2001 which contains increased funding for health care and education as well as tax reductions for individuals and small businesses. The budget includes an overall reduction in budgetary expenditures of $100.2 million, compared to revised estimates for 1999-2000.
"It is a budget of choices and priorities. It is a budget that places the full financial picture before New Brunswickers," Finance Minister Norman Betts said when he tabled the new government's first budget in the provincial legislature. "It is a budget that makes New Brunswick more competitive and more compassionate."
of Finance Norman Betts and Natural Resources and Energy Minister Jeannot Volpé
(Download 150 dpi image)
The 2000-2001 budget includes as key elements:
-a $33 million reduction in personal income tax, effective July 1, 2000
-the lowest corporate income tax for small business in Canada (rate drops from 6 per cent to 4.5 per cent)
-the highest level of health-care funding in New Brunswick history ($1.5 billion)
-the highest level of education funding in New Brunswick history ($999 million)
-$1,000 increase in financial support for certified disabled persons, to be phased in over four years (worth $5 million when fully implemented)
-a balanced budget with a modest surplus of $21.3 million.
Betts said the budget sets the stage for future surpluses and an overall reduction in the Province's net debt which now stands at $6.86 billion.
Managing Smarter and Changing the Way Government Works
The minister said the challenge for this budget was to redress a serious fiscal structural problem.
The problem has been caused by expenses growing faster than income, increased borrowing, reduced federal transfers and higher debt.
"If left unchecked, New Brunswickers could face annual deficits of close to half a billion dollars within four years," Betts said. "We will not let this happen."
To correct the fiscal problem, the government undertook a Program/Service Review to provide New Brunswickers with a government that is better structured and more focused on clear public priorities. (See Budget Papers) As a result, some of the government's 600 programs are being phased out, some consolidated and others enhanced.
Examples of programs retained or improved are:
-$100 annual Low-income Seniors Benefit
-$ 20 million N.B. Child Tax Benefit and Working Income Supplement
-$34 million silviculture program
-new approach to training and employment
-support to municipalities to improve water quality and treatment facilities
-increased funding for the justice system
-co-ordinated delivery of family and community services.
Examples of programs being reduced or phased out are:
-reduced capital budget in response to massive levels of private capital investment
-reduction in unconditional grant to municipalities in a move toward a system that equalizes fiscal capacity
-reduction in subsidies to business in favour of lower business taxes and a more competitive tax structure
-increases in Crown land royalty rates to ensure a better balance between private woodlot owners and Crown land users
-significant reduction in overlap and duplication of government services through delivery by the private sector
-redesigned tourism strategy that will save money and continue to attract visitors
-elimination of the New Home Construction and Home Renovations HST Credit for contracts entered into after midnight tonight, March 28, 2000.
Betts said the spending choices were difficult but have allowed the government to reduce taxes and increase funding for health care and education.
Renewing Health Care
Funding for health care in 2000-2001 will total $1.5 billion, the highest level in New Brunswick history. Measures will include a $60 million increase for funding for hospital services; a $38.7 million increase for family and community social services; a $13 million increase for ambulance services; a $13 million increase for Medicare; a $5.5 million increase for the Prescription Drug Program, and 10 new medical seats for New Brunswickers at Memorial University.
Betts said further details about expenditures and programs will be outlined during consideration of estimates by the Minister of Health and Wellness and by the Minister of Family and Community Services. (Click here for a 150 dpi graphic.)
He added the Province and the Region Hospital Corporations will implement a new accountability framework to ensure scarce health-care dollars are spent as effectively as possible.
The finance minister also said the federal government has not met the health-care needs of New Brunswickers. "This government will continue its efforts with other provincial and territorial governments and like-minded Canadians to insist on adequate, stable funding for our health-care system," he said.
Betts said New Brunswick will continue to do its part to help New Brunswickers in need. For example, he said, certified disabled persons will receive a supplement providing them with an additional $1,000 to be phased-in over the next four years. This represents a $5 million increase in supplements for disabled New Brunswickers when fully implemented.
Investing in Education
Funding for education totals $999 million, the highest level in New Brunswick history. Measures for the Kindergarten to Grade 12 system will include maintaining $1.9 million for 100 teaching assistants; continuing the $1 million extra top-up fund for school supplies, and implementing the second year of the pay increase for supply teachers.
The 2000-2001 capital budget contains $34 million in capital funding to improve New Brunswick schools, of which $25 million will be dedicated to address health and safety issues. This will be the first installment of a four-year, $100 million "Healthy Schools" program. The government has increased its investment in post-secondary education. Universities will receive a two per cent per year funding increase for each of the next three years.
Betts added that further details about expenditures and programs will be outlined by the Minister of Education during consideration of estimates in the legislature. (Click here for a 150 dpi graphic.)
The finance minister said the government committed to reduce provincial personal income tax rates by 10 per cent during its first mandate. "With our first budget, we are already halfway to meeting that commitment," he said.
Effective July 1, 2000, source deductions for New Brunswick personal income tax will reflect the equivalent of 57 per cent of basic federal tax in the existing system, instead of the current rate of 60 per cent.
"The Province is also adopting a number of recent federal measures to the income tax system," Betts noted. "The combined impact of these measures will save New Brunswick taxpayers $33 million in provincial personal income taxes in 2000-2001. In 2001-2002, taxpayers will save $54 million from these measures."
He also said the Province will move from the "tax on tax" to the "tax on taxable income" method of calculating provincial personal income tax for the 2000 tax year. This will allow the Province to design its own income tax policy more independently of the federal government. (See BudgetPapers)
Building New Job Opportunities
The finance minister said high business taxes hurt jobs, especially in the small business sector.
That is why the government will reduce the small business corporate income tax rate from 6 per cent to 4.5 per cent. (Click here for a 150 dpi graphic.)
"The reduction is effective January 1, 2000, and will put $6 million back into the hands of small business owners and entrepreneurs to invest in, and grow, their firms," he said. "This will give New Brunswick the lowest small business corporate income tax rate in all of Canada."
Other Elements of 2000-2001 Budget
Betts also noted in his budget speech that:
-a budgetary deficit of $16.8 million is projected for 1999-2000 (See Financial Update 1999-2000)
-projections call for an overall surplus (reduction in net debt) in 2000-2001 of $21.3 million; this is based on budgetary expenditures of $4689.9 million and budgetary revenues of $4711.2 million
-the gross capital budget is $151.4 million for maintaining roads, bridges and schools
-the current practice of modest wage increases for public employees will continue
-New Brunswick continues to hold the highest credit rating in Eastern Canada -- important because a higher credit rating means a lower borrowing rate, which results in savings for the Province and for taxpayers
-economic growth of 2.8 per cent (adjusted for inflation) is projected for 2000 (See Economy2000).
The minister also announced that, effective April 1, 2000, the private sale of boats and aircraft will be subject to a provincial levy of 15 per cent.
"While individuals purchasing boats and aircraft from registered dealers have been required to pay the HST since April 1, 1997, those purchasing privately were not required to pay the tax at all," Betts said. "On April 1st, we are correcting this inequity."
In concluding his speech, the minister said the province is at a crossroads and the 2000-2001 budget "starts the real work of balancing our expenditures with our resources."
"We can choose as a province to continue down a well-worn path of deficits and debt, or we can choose a new path that will lead New Brunswick to fiscal, economic and social success," he said.
EDITOR'S NOTE -- Media contacts at Finance are Ann Deveau or Marie-Josée Groulx, communications, Finance, tel.: 506-453-2451; fax: 506-457-4989; e-mail firstname.lastname@example.org. The complete budget speech and several accompanying documents are available on the Internet in two forms:
1. Most of the budget documents can be downloaded in Adobe Acrobat format via the World Wide Web. Adobe Acrobat documents look identical to the printed version and can be easily printed. The Adobe Reader for viewing and printing these files is freely available on the Internet.
The Web address to download the budget in Adobe Acrobat is: http://www.gnb.ca/finance/index.htm
2. The budget documents can be viewed on-line in HTML by setting your Web browser to: http://www.gnb.ca/finance/index.htm or http://www.gnb.ca/cnb/budget2000/budget2000-e.htm.