Finance

2003-2004 Budget (02/12/10)

NB 1237

Dec. 10, 2002

FREDERICTON (CNB) - The New Brunswick government today delivered its fourth consecutive balanced budget. It contains record investments in health care and education, lower income taxes for people and businesses, and a larger capital budget than last year.

"This budget continues our balanced approach of strong fiscal management and social program investment," Finance Minister Peter Mesheau said when he tabled the 2003-2004 budget in the provincial legislature. "This budget delivers on our commitment to strengthen prosperity for all New Brunswickers."

Finance Minister Peter Mesheau and Minister of Natural Resources and Energy Jeannot Volpé(Large photo) Video: (WMV) Audio:(WMA) - (more audio/video)

Highlights include:

  • fourth consecutive budgetary surplus, projected at $7.5 million in 2003-2004;
  • $1.88 billion investment in health care and seniors, with new investments of $78.4 million;
  • $1.12 billion investment in education, with new investments of $25.9 million;
  • $281.1 million in capital spending, an increase of 10 per cent from last year;
  • $196 million for road and highway construction, an increase of over 17 per cent from last year;
  • an additional $54 million in income tax relief for people and businesses, compared to 2002-2003.

Mesheau said budgetary revenues will be $5.483 billion and budgetary expenditures will be $5.476 billion in 2003-2004.

The economy is expected to strengthen in 2003, with real GDP growth of 2.8 per cent compared to 1.8 per cent in 2002.

However, the financial margin to manoeuvre is limited due to a marked increase in the pension expense. Accordingly, the Fiscal Stabilization Fund will be drawn down by $108.5 million in the new fiscal year.

The minister projects a budgetary surplus of $3.0 million for 2002-2003. Challenges include a shortfall in net income from NB Power and the Workplace Health, Safety and Compensation Commission as well as uncertainty about the pension expense. The Fiscal Stabilization Fund will be drawn down by $104.2 million in the current fiscal year.

The government remains committed to health care as its top priority. Funding is 4.4 per cent higher than last year. Record investments in 2003-2004 will include $843.1 million for hospital services; $388.8 million for long-term care and nursing home services; $327.3 million for Medicare, and $114.5 million for the Prescription Drug Program.

Nursing homes will receive $2 million for WHSCC premium payments and $2 million for resident care needs. Wages for in-home support workers will increase by 25 cents per hour.

Capital spending has more than doubled in health. The budget contains funds for new community health centres, medical equipment, and other capital improvements in health institutions.

For education, spending is up 2.4 per cent over last year and will include $716.9 million in expenditures for Kindergarten to Grade 12. Initially, $2.5 million is being set aside for an early literacy initiative as part of the Quality Learning Agenda.

Early childhood development programs will receive $2.3 million.

The minister said university base funding will rise 10 per cent over three years, starting with $6.1 million, a 3.4 per cent increase over 2002-2003.

An additional $2.1 million will go toward student bursaries for post-secondary education.

On the capital spending side, the budget invests $34 million in education infrastructure, including $25 million under the Healthy Schools program. Community colleges will benefit from capital improvements valued at $2 million.

At $196 million, capital spending is up 17 per cent for transportation, including funds to twin the Trans-Canada Highway and to work on other roads in the province.

Mesheau noted the government continues to spend more on roadwork than it collects in gasoline and motive fuel revenues. To help pay for the cost of our roads and highways, the tax on motive fuel is increasing 1.5 cents at midnight tonight (December 10.) The tax on gasoline will go up 1.5 cents at the same time. Expected revenue of $23.3 million will go into the N.B. Road Improvement Fund to help finance increases in road expenditures of $28.9 million this year.

The minister announced that, at midnight tonight (December 10), the tax on tobacco will increase by 50 cents per package of cigarettes and by an equivalent amount for tobacco sticks and fine cut tobacco. Mesheau said the increase should help curb smoking and yield long-term benefits on the health of New Brunswickers.

As a result of measures taken by the government since taking office, New Brunswickers will benefit from provincial personal income tax savings of $130 million in 2003-2004. Cumulative savings total $360 million over the 2000-2001 to 2003-2004 period.

The government has significantly reduced taxes on business to help create jobs and attract investment. As of Jan. 1, 2003, New Brunswick will have the third lowest general corporate income tax rate in Canada and the lowest small business corporate income tax rate in the country. As a result of measures taken by this government since taking office, the savings total $65 million in 2003-2004.

The finance minister announced two new income tax incentives to help businesses:

  • The R&D tax credit will be increased from 10 per cent to 15 per cent of eligible expenditures incurred on or after January 1, 2003, making it one of the most competitive R&D tax credits in Canada. Fully refundable, the credit is expected to stimulate R&D activity in the province.


  • The government will also bring in a new Small Business Investor tax credit to provide equity capital for small businesses. It will be a 30 per cent non-refundable personal income tax credit of up to $15,000 a year on eligible investments.

In concluding his speech, the minister reiterated that the budget is fiscally conservative and socially progressive.

"It is about meeting today's needs of health care, education, and jobs while investing in tomorrow's needs of strategic infrastructure, innovation and competitive taxation," he said. "We are focusing on the most important priorities of New Brunswickers."

02/12/10

EDITOR'S NOTE - The following five fact sheets (attached below) provide further details of the 2003-2004 budget: Fiscal, Economy, Spending, Capital Budget, Competitive Taxation. The complete budget speech, a highlights booklet, the main estimates and the annual report on the economy will be posted on the Department of Finance Web site at http://www.gnb.ca/0024/index-e.asp.

MEDIA CONTACTS: Ann Deveau (506-444-4498) and Vicky Deschênes (506-453-4138); fax 506-457-4989; e-mail wwwfin@gnb.ca.

Budget 2003-2004
Fact Sheet - Fiscal

2003-2004 (outlook for upcoming fiscal year)

  • budgetary surplus of $7.5 million projected (fourth consecutive surplus)
  • budgetary expenditures of $5.476 billion and budgetary revenues of $5.483 billion
  • drawdown of $108.5 million from the Fiscal Stabilization Fund
  • record $1.88 billion investment in health care, including $78.4 million in new investments
  • record $1.12 billion investment in education, including $25.9 million in new investments
  • additional $54 million in income tax relief for people and businesses, compared to 2002-2003
  • $281.1 million in gross capital spending, of which $196 million is for roads and highways
  • increased pension expenditure requirements due to weak financial markets
  • economy expected to strengthen in 2003 (2.8 per cent real GDP growth projected)

2002-2003 (update on current fiscal year)

  • budgetary surplus of $3.0 million in 2002-2003 (third consecutive surplus)
  • budgetary expenditures of $5.239 billion and budgetary revenues of $5.242 billion
  • drawdown of $104.2 million from the Fiscal Stabilization Fund
  • revenues are down from budget, due mainly to shortfall in net income at NB Power and Workplace Health, Safety and Compensation Commission

Budget 2003-2004
Fact Sheet - Economy

  • The North American economies rebounded in 2002 with the US experiencing real gross domestic product (GDP) growth in the 2.5 per cent range.
  • In 2002, Canada had the strongest GDP growth (3.4 per cent) among the G7 countries.
  • In New Brunswick, economic growth of 1.8 per cent in 2002 was higher than previously anticipated due to a strengthening economy as the year progressed.
  • Increases in New Brunswick farm cash receipts surpassed the national rates.
  • Tourism revenues are expected to reach an all-time high.
  • Lower commodity prices, especially for petroleum and paper products, influenced New Brunswick manufacturing shipments and exports.
  • New Brunswick employment increased at a strong pace reaching a record high of 349,200 in November.
  • With employment growth outpacing labour force growth, the unemployment rate fell to 10.3 per cent in November 2002. The participation rate continued to trend upward to 64.0 per cent.
  • Wages and salaries growth was 3.3 per cent.
  • For 2003, economic growth in North America is expected to be slightly better.
  • Real GDP in New Brunswick is projected to increase by 2.8 per cent.
  • The provincial unemployment rate will show a decrease due to stronger employment growth, which will outpace labour force growth.
  • Consumer inflation is expected to be around two per cent, comparable to the national average.

2003-2004 Budget

Fact Sheet - Spending

Health Care and Seniors

$1.88 billion in health care funding, which is $78.4 million (4.4 per cent higher) than 2002-2003 revised spending:

  • $843.1 million for Hospital Services
  • $388.8 million for nursing home services and long-term care
  • $327.3 million for Medicare
  • $114.5 million for the Prescription Drug Program
  • $2.0 million in assistance to nursing homes for WHSCC premium payments this year under a three-year commitment
  • $2.0 million to enhance resident care in nursing homes
  • $250 annual increase in certified disabled supplement (fourth consecutive increase)
  • continuation of $100 annual benefit for qualifying low-income seniors
  • 25 cent per hour wage increase for in-home support workers, the second portion of a three-year commitment

Education and Children

$1.12 billion in 2003-2004 in education funding, which is $25.9 million (2.4 per cent higher) than in 2002-2003:

  • $716.9 million for Kindergarten to Grade 12, which includes an initial investment of $2.5 million for a new early literacy initiative (under the Quality Learning Agenda)
  • $6.1 million for university base funding (3.4% increase over 2002-2003, as part of a 10 per cent, three-year commitment)
  • $2.3 million for early childhood development programs
  • $2.1 million for student bursaries to enhance access to post-secondary education

Other

  • $5.0 million for the new $25 million, five-year Restigouche-Chaleur Economic Development Fund
  • $5.0 million under the fourth year of the $25 million, five-year Acadian Peninsula Economic Development Fund
  • $2.0 million to support municipalities for transition costs related to provisions of the Official Languages Act
  • $1.0 million for up to 15 RCMP officers to help fight organized crime
  • an additional $0.9 million for NB cultural policy
  • $0.2 million to establish the New Brunswick Advisory Council on Seniors

2003-2004 Capital Budget
Fact Sheet

Capital Spending

$281.1 million in gross capital spending, which is $25.5 million (10 per cent higher) than 2002-2003 revised spending.

Transportation

  • $196.0 million for roads and highways in 2003-2004, including funds to twin the TCH
  • the full amounts of current, existing federal-provincial agreements on roads and highways will be invested over the next five years

Health and Wellness

$24.0 million in gross capital spending, which has more than doubled over 2002-2003 ($12.4 million higher):

  • new Community Health Centres
  • medical equipment
  • capital improvements in health institutions

Education

$34.0 million in gross capital spending

  • $25.0 million under the $100.0 million Healthy Schools program (fourth year)
  • funding to complete the expansion of high-speed Internet broadband for schools and community colleges

Other

  • $10.6 million for "green" infrastructure under the fourth year of the six-year Canada-New Brunswick Infrastructure Program
  • $2.0 million for improvements in the community college network
  • funding to complete the new Miramichi Law Court Facility

2003-2004 Budget

Fact Sheet - Competitive Taxation

Personal Income Taxes

  • As a result of measures taken by this government since taking office, New Brunswickers will benefit from provincial personal income tax savings of $130 million in 2003-2004.
  • Cumulative provincial personal income tax savings of $360 million over the 2000-2001 to 2003-2004 period.
  • 15,000 more low-income New Brunswickers removed from the tax rolls with this budget.
  • In total, more than 40,000 people will not have to pay provincial personal income tax in 2003, compared to the 1999 tax structure.
  • New Brunswick's tax-free income level now second highest in the country.

Corporate Income Taxes

  • As a result of measures taken by this government since taking office, New Brunswick businesses will save $65 million in corporate income taxes in 2003-2004.
  • Cumulative savings to businesses are estimated at $122 million over the four-year period.
  • Effective Jan. 1, 2003, the general corporate income tax rate will be reduced to 13 per cent, making it the third lowest rate in Canada.
  • Effective Jan. 1, 2003, the small business corporate income tax rate will be reduced to three per cent, making it the lowest rate in Canada.
  • The small business income threshold will be increased to $400,000.

Tax Credits

  • New Brunswick's Research and Development (R&D) Tax Credit will be increased from 10 per cent to 15 per cent of eligible expenditures incurred on or after Jan. 1, 2003. The credit will be fully refundable. It will be one of the most competitive R&D tax credits in Canada and is expected to increase R&D activity considerably in the province.


  • A new Small Business Investor Tax Credit will provide a 30 per cent non-refundable personal income tax credit of up to $15,000 per year on eligible investments. It will encourage investments by New Brunswick residents in New Brunswick small businesses, providing an important source of capital. This source of equity financing will help reduce reliance on debt and help finance new projects.


  • New Brunswick's Dividend Tax Credit will be adjusted to ensure it does not overcompensate for the amount of tax collected at the corporate level. For dividends declared and paid on or after January 1, 2003, the rate will be reduced from 7.6 per cent to 3.7 per cent.

Tax Measures

  • The gasoline tax will rise 1.5 cents per litre at midnight on December 10th. The rate will change from 13 to 14.5 cents per litre.
  • The motive fuel tax will also go up 1.5 cents per litre at midnight on December 10th. The rate will change from 15.4 to 16.9 cents per litre.
  • These measures will raise $23.3 million, which will go into the NB Road Improvement Fund. The revenue will help finance $28.9 million in increased spending on road and highway construction, repairs, operations and maintenance.
  • Total road and highway improvement spending in 2003-2004 will still considerably exceed total gasoline and motive fuel revenue collected.
  • The tobacco tax will rise 50 cents per package of cigarettes (and equivalent increases on tobacco sticks and fine cut tobacco) at midnight on December 10th.
  • The tobacco tax increase will help curb smoking, especially among youth, and should have long-term benefits to the health of New Brunswickers.
  • The tobacco tax increase will raise $10.2 million in the next fiscal year.

02/12/10