2001-2002 Budget (01/03/27)
March 27, 2001
FREDERICTON (CNB) - The New Brunswick government today delivered its second consecutive balanced budget, which fulfils its commitments to New Brunswickers with record investments in health care and education as well as lower taxes for New Brunswick workers, families and businesses.
"Today's budget demonstrates clearly our balanced approach to fiscal choices and public priorities," Finance Minister Norman Betts said when he tabled the 2001-2002 budget in the provincial legislature. "By cutting taxes we help increase economic growth and foster job creation. By focusing our spending priorities on what matters most - children, seniors and workers - we are able to make record investments in health care and education. And by managing smarter we are able to balance our budget today and plan for tomorrow."
The 2001-2002 budget includes as its key elements:
- a record $1.683 billion investment in health care;
- a record $1.039 billion investment in education;
- personal income tax reductions totalling a further $34 million;
- corporate income tax reductions totalling a further $14.3 million;
- a second consecutive budget surplus, which is $34.8 million in 2001-2002;
- a two-year projected reduction in net debt of $67.9 million, and
- a new fiscal stabilization fund of $100 million to ensure New Brunswick has the fiscal capacity to invest in the future.
Striking the right balance
"With our first budget, this government struck a balance between key public priorities and the means with which to fund them," the minister said. "It is a balance we must continue to strike."
The minister noted in his budget speech (See Fact Sheet - Fiscal):
- budgetary surplus (reduction in net debt) of $33.1 million is projected for 2000-2001; the surplus is larger than originally forecast and stems from provincial expenditures being slightly lower than budgeted and also from an increase in revenues just recently confirmed by the federal government;
- budgetary surplus (reduction in net debt) of $34.8 million is projected for 2001-2002; therefore, the projected two-year reduction in net debt is $67.9 million; the net debt is estimated to be $6,739.8 million; the government is committed to ongoing debt reduction;
- to be prudent, a $100 million fiscal stabilization fund will be set up; it will be used for one-time expenditures only, in future years, when the fiscal situation requires it;
- the unconditional grant amount for 2001-2002 fiscal year will be $67 million;
- the government will spend $30 million, over the next three years, under the Total Development Fund, to help revitalize resource-based industries in agriculture, fisheries and aquaculture, forestry, mining and tourism;
- $25.3 million will be invested under the Strategic Assistance Program;
- $250 annual increase in financial support will be given to certified disabled persons; this is the second of four annual increases, totalling $1,000;
- the government will continue to provide the $100 annual Low-income Seniors' Benefit to about 32,000 senior citizens;
- new funding will be provided under the Canada/New Brunswick Framework Agreement on Agricultural Risk Management;
- real GDP growth of 2.1 per cent (adjusted for inflation) is projected for 2001 (See Fact Sheet - Economy);
- as previously announced, the gross capital budget for 2001-2002 is $197.2 million; investments will reflect clear public priorities of clean water, healthy schools, safer buildings and better roads.
Building new job opportunities
The minister said in his speech that building new job opportunities is at the core of this government's economic growth agenda. He added: "Lowering taxes for people and business is at the heart of our priority to build those new job opportunities."
He announced 14 specific tax reductions and changes. (See Fact Sheet - Personal Income Taxes)
Personal income tax changes
"Effective for the 2001 taxation year, all taxpayers with income less than $10,000 and families earning income less than $16,000 will no longer pay provincial income tax," Betts said. "With this single measure, this government is removing over 15,000 taxpayers from the provincial tax rolls.
"This will be accomplished through a low-income tax reduction that will also benefit single tax filers with net income less than $15,200 and families with income less than $20,400."
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The finance minister said the second phase of reductions to provincial personal income will be retroactive to Jan. 1, 2001. This will put about $34 million more back into the hands of New Brunswickers in fiscal 2001-2002.Tax filers at all income levels will see benefits from the changes, Betts noted. Combined, provincial personal income tax savings of last year's budget and this budget are estimated at $88 million in fiscal 2001-2002.
"This represents a tax reduction of over eight per cent, well on our way to meeting our 10 per cent reduction commitment by the end of our mandate," the minister said.
The budget contains numerous other changes such as the enhancement of a number of credits as well as the indexation of personal non-refundable credit amounts and tax brackets to virtually eliminate 'bracket creep'.
For example, effective for the 2001 taxation year, New Brunswick will substantially increase the disability tax credit, the caregiver and infirm dependent tax credit, and the education credits by matching the enhanced federal amounts.
Corporate income tax changes
The government also introduced three corporate income tax measures:-a reduction in the small business corporate income tax rate from 4.5 per cent to 4 per cent, which is the lowest small business rate in the country (estimated savings of $2.3 million for small business owners in 2001-2002);
- small business threshold increased from $200,000 to $300,000 of active business income (estimated savings of $3 million for small business owners in 2001-2002);
- a reduction in the general corporate income tax rate from 17 per cent to 16 per cent (estimated savings of $9 million to New Brunswick businesses in 2001-2002).
Betts said lower corporate taxes will improve overall competitiveness, build new job opportunities and make the province more attractive to outside investment. (See Fact Sheet - Corporate Income Taxes)
Sustaining our health care system
The government remains committed to ensuring stable and sustainable health care funding well into the future. Funding for health care in 2001-2002 will be a record-high $1.683 billion. Investments in health care will be increased in 2001-2002 by a further $82 million, an increase of 5.1 per cent over revised spending estimates for 2000-2001, and an overall increase of 11.1 per cent since the 1999-2000 fiscal year.
Measures will include a $27.1 million increase in funding for hospital services; an increase of $21.8 million for long-term care; a further $11.4 million in the Prescription Drug Program, and a $3.5 million increase for ambulance services. (See Fact Sheet - Health Care)
Additional details about expenditures and programs will be outlined during estimates presented by the Minister of Health and Wellness.
As had been announced previously, capital investments for health include $6.9 million in capital improvements and renovations to hospitals and $2.5 million for capital equipment in hospitals.
The finance minister said money alone will not solve all of our health care problems. "We must ensure that we are balancing today's health care needs with tomorrow's health care needs and ensure we have the funds available to pay for both," he said. "This means that we must manage the rate of growth in health care spending by working together and planning for the future."
Investing in education and children
The government is committed to investing more in education and in children.
It is the most important investment we can make in our future, Betts said. Funding
for education totals $1.039 billion, the highest level in New Brunswick history.
The total includes expenditures for Kindergarten to Grade 12, grants to universities,
funding for community colleges, as well as capital investments in educational
Measures include $1.1 million to reduce the maximum Grade 3 class size from 32 to 30; 50 additional teaching assistants; $7 million over three years to provide high-speed Internet bandwidth to all schools; $3.1 million as the second year of the three-year increase in university funding, and $300,000 for e-learning Spanish courses for high school students. (See Fact Sheet - Education and Children)
Further details about expenditures and programs will be outlined by the Minister of Education during consideration of estimates in the legislature.
Betts said the Province will spend $7.3 million this year under the N.B. Early Childhood Development Agenda. It will be the first step in a five-year, federal-provincial effort to promote healthy pregnancy, birth and infancy; improve parenting and family supports; strengthen early childhood development, learning and care, and strengthen community supports.
In addition, the government will invest $1 million to hire 20 new social workers for child protection.
In concluding his speech, the minister reiterated that the government had adopted a balanced approach in order to achieve balanced results.
"We have carefully weighed the need for improved competitiveness in the economy with renewed compassion for those in need," he said. " We have balanced our plans for today with our commitments to our children for tomorrow."The result is a province where greater opportunity becomes more of a reality for New Brunswickers and their families every day."
EDITOR'S NOTE - Media contacts at Finance are Ann Deveau or Marie-Josée Groulx, communications, telephone 506-453-2451; fax 506-457-4989; e-mail email@example.com
The complete budget speech, a highlights booklet, the main estimates and the annual report on the economy will be available from the Department of Finance web site at http://www.gnb.ca/fin. The 2001-2002 capital budget, which was released in December 2000, is already posted on this site.
The following attached fact sheets describe various elements of the 2001-2002 budget:
Fact Sheet - Fiscal
Fact Sheet - Economy
Fact Sheet - Personal Income Taxes
Fact Sheet - Corporate Income Taxes
Fact Sheet - Health Care
Fact Sheet - Education and Children
Fact Sheet - Fiscal
Major Budget Items
- A record $1.683 billion investment in health care
- A record $1.039 billion investment in education
- Personal income tax reductions totalling a further $34 million
- Corporate income tax reductions totalling a further $14.3 million
- Second consecutive surplus budget of $34.8 million
- Two-year projected reduction in net debt of $67.9 million
- New fiscal stabilization fund of $100 million to ensure New Brunswick has the fiscal capacity to invest in the future
2000-2001 Fiscal Year
- Economic growth in 2000 stronger than forecast, provincial expenditures managed well, New Brunswickers to benefit from larger surplus than originally forecast.
- As a result of this growth, anticipating higher revenues than were budgeted. Increase in revenues recently confirmed by the federal government. Provincial expenditures estimated to be slightly lower than 2000-2001 Budget.
- Projecting surplus of $33.1 million for the 2000-2001 fiscal year. Increase of $11.8 million over the 2000-2001 budget estimate of $21.3 million.
- Supplementary estimates to include the establishment of a $100 million fiscal stabilization fund. Fund will be used for one-time expenditures only, in future years when the fiscal situation requires it. If fiscal situation permits, will add to fund in future years so can continue to have capacity to manage financial affairs prudently.
2001-2002 Fiscal Year
- For 2001-2002 fiscal year, projecting budgetary revenues of $5.027 billion and budgetary expenditures of $4.992 billion.
Some expenditures include:
- $25.3 million in the Strategic Assistance Program
- $10 million this year in new three-year $30 million Total Development Fund
- $7.3 million this year for early childhood development
- $1 million to hire 20 additional social workers for child protection
- $250 annual increase in financial support for certified disabled persons; this is the second of four annual increases, totalling $1000
- $2 million over four years to modernize and consolidate New Brunswick Acts
- 2001-2002 fiscal year, total unconditional grant funding $67 million
- 2001-2002 fiscal year, projecting surplus of $34.8 million.
- In government's first two years, projected $67.9 million will be paid on provincial net debt to bring it to $6.739 billion.
Capital budget (issued in December 2000)
- $197.2 million for 2001-2002, an increase of 30 per cent over the previous year.
- Highlights of the capital investments for 2001-2002 include:
- gross capital budget of $116.7 million for the Department of Transportation
- $34 million for schools
- $9.5 million under the Canada-New Brunswick Infrastructure Program
- $8.7 million, starting with $1.8 million in 2001-2002, to build a new courthouse in Miramichi
- $5 million over two years, starting with $500,000 this year, for Provincial Archives building
- Investment choices reflect clear public priorities of clean water, healthy schools, safer buildings and better roads. They protect people's health and safety where they live, where they learn, where they work and do business, and where they travel.
Fact Sheet - Economy
- In 2000, private forecasters estimate real growth in New Brunswick to be between 2.9 per cent and 5.5 per cent. Last budget projection for increase in real GDP of 2.8 per cent. Now estimating real growth in New Brunswick at 3.5 per cent in 2000.
- Important gains in several key economic indicators.
- At 10 per cent, unemployment rate hit its lowest level since 1976.
- Record 334,400 New Brunswickers employed in 2000. Growth in job market strongest in full-time jobs - 85 per cent of employment gains.
- Increases in New Brunswick manufacturing shipments, exports, housing starts, and restaurant receipts surpassed national rates.
- Manufacturing shipments and exports, influenced by higher commodity prices, each increased over 20 per cent.
- NB Housing starts reach their highest level since 1994.
- Private forecasters estimating New Brunswick growth rate for 2001 between 1.1 and 2.8 per cent. Department of Finance forecasts real GDP growth in 2001 to be 2.1 per cent.
Fact Sheet - Personal Income Taxes
- Second phase of reductions to provincial personal income tax retroactive to January 1, 2001. Will put about $34 million more back into the hands of New Brunswickers in fiscal 2001-2002.
- Combined, provincial personal income tax savings of last year's budget and
this budget are estimated at $88 million in fiscal 2001-2002.
-Eliminating provincial income tax for those with incomes below $10,000, targets assistance to low-income families. Making other changes including the enhancement of a number of credits as well as the indexation of personal credit amounts and tax brackets.
Low-income Tax Reduction
- Effective for the 2001 taxation year, all taxpayers with income less than $10,000 and families earning income less than $16,000 will no longer pay provincial income tax.
- Removing over 15,000 taxpayers from the provincial tax rolls. Low-income tax reduction will also benefit single tax filers with net income less than $15,200 and families with incomes less than $20,400.
Increased Personal Non-refundable Credits
Effective for 2001 taxation year, non-refundable amounts for calculation of the provincial credits being increased to equal federal amounts. These include the basic personal credit, spousal credit, equivalent to spouse credit, and other personal credits. Source deductions will reflect reductions effective July 1 retroactively to January 1, 2001.
Enhanced Disability and Education Tax Credits
- Effective for 2001 taxation year, disability tax credit amount to increase from $4,293 to $6,000. Caregiver and infirm dependent tax credit amounts to increase from $2,386 to $3,500. Education tax credit amounts to double. Full-time education amount to increase from $200 to $400/month. Part-time education amount to increase from $60 to $120/month.
New Brunswick will index personal non-refundable credit amounts and tax brackets to the federally indexed amounts.
Replacement of High Income Surtax with New Bracket
- Effective for 2001 taxation year, New Brunswick high-income surtax will be replaced with new tax bracket at $100,000 with rate of 17.84 per cent rate. Provincial tax credit for charitable donations in excess of $200 to increase from 16.52 per cent to 17.84 per cent effective for the 2001 taxation year.
Capital Gains Change and Support for Education
- Inclusion rate for capital gains reduced to 50 per cent for provincial income tax purposes, and provincial support for education increased through more generous income tax exemptions for scholarships, fellowships, and bursaries.
Low-income Seniors Benefit
- $100 Low-income Seniors Benefit, New Brunswick Child Tax Benefit and the Working Income Supplement to continue.
Fact Sheet - Corporate Income Taxes
- Small business corporate income tax rate reduced to 4 per cent - the lowest small business rate in the country - effective January 1, 2001. Further savings of an estimated $2.3 million to the small business sector in New Brunswick in fiscal 2001-2002.
- Effective January 1, 2001, small business threshold increased from $200,000 to $300,000 of active business income. Further savings of an estimated $3 million for the 2001-2002 fiscal year.
- Combined with last year's rate reduction to 4.5 per cent, total tax savings as a result of 2001-2002 budget for small business community estimated to be $11.3 million for the 2001-2002 fiscal year.
- General corporate income tax rate reduced one point from 17 per cent to 16 per cent, resulting in savings to New Brunswick businesses of an estimated $9 million per year. First reduction in the general rate in New Brunswick in 20 years.
- Enhancements will be made to the Film Tax Credit and the program will be extended.
- New Mineral Exploration Tax Credit valued at $1 million per year.
Fact Sheet - Health Care
- Record-high budget in health care of $1.683 billion for 2001-2002
- Investments in health care will be increased in 2001-2002 by a further $82 million, 5.1 per cent over revised spending estimates for 2000-2001, and overall increase of 11.1 per cent since 1999-2000 fiscal year. 2001-2002 health care budget represents 22.4 per cent increase above 1999-2000 budget.
- Investments in health care represent the single-largest new budget allocation of 2001-2002 budget.
- Key new investments in health care in 2001-2002 budget compared to revised estimates for 2000-2001 include:
- a $27.1 million increase in funding for Hospital Services;
- an increase of $21.8 million for long-term care;
- a further $11.4 million in the Prescription Drug Program; and
- a $3.5 million increase for Ambulance Services.
- Committed funds to a multi-year nurse recruitment and retention strategy and to completion of the expansion of MRI services.
- New Brunswick pharmacists to benefit from increase in dispensing fee, first since 1997.
- Capital investments for health include $6.9 million in capital improvements and renovations to hospitals and $2.5 million for capital equipment in hospitals.
Fact Sheet - Education and Children
Investing in Education
- 2001-2002 Budget takes commitment to education to record levels. Expenditures for Kindergarten to Grade 12, grants to universities, funding for community colleges, as well as capital investments in educational facilities will total $1.039 billion.
- Investments include:
- invest a further $1.1 million to reduce the maximum Grade 3 class size from 32 to 30;
- hire another 50 teaching assistants;
- invest $7 million over three years to provide access to high-speed Internet bandwidth in all schools;
- invest $3.1 million as the second year of the three year increase in university funding;
- invest $300,000 in e-learning Spanish courses for high school students.
- Capital investments in education as highlighted in the capital budget.
- $34 million for schools, including $25 million for the ongoing Healthy Schools program;
- $2 million for repairs and renovations to community colleges
Investing in Children
- New Brunswick Early Childhood Development Agenda to be released.
- $7.3 million will be invested this year as part of this five-year federal-provincial effort. The goals of this national approach are to:
- promote healthy pregnancy, birth and infancy
- improve parenting and family supports
- strengthen early childhood development, learning and care
- strengthen community supports
- Day care operators to receive greater funding to improve the quality of service and staff training.
- Number of speech pathologists will be increased.
- Waiting lists for early intervention services to be reduced.
- New prenatal benefit program to be created.
- Invest additional $1 million to hire 20 new social workers for child protection.