2005-2006 Budget / Building a stronger New Brunswick for all (05/03/30)
March 30, 2005
FREDERICTON (CNB) - A balanced budget that invests record amounts in health and senior care, as well as in education and children, was tabled today at the legislative assembly by Finance Minister Jeannot Volpé.
The 2005-2006 budget also contains further tax relief for New Brunswickers and small businesses.
"New Brunswickers told us during our pre-budget consultations that health, education and jobs are their priorities," Volpé said.
"We will invest a record amount of $2.3 billion in health and senior care, and almost $1.2 billion in education. As we make these key investments, we anticipate a surplus of $98.9 million and a reduction in net debt of $4.0 million."
The fiscal update for 2004-2005 projects a surplus of $112.3 million and a reduction in net debt of $53.1 million.
No tax increases and no new taxes
The 2005-2006 budget contains total expenditures of $6.105 billion, an increase of 3.7 per cent from the revised 2004-2005 level. The new budget contains no tax increases or new taxes.
Provincial income tax credit amounts and tax brackets have been indexed to guard against inflation effective Jan. 1, 2005. Indexation will be extended to include the Low-Income Tax Reduction.
Indexation of personal amounts, brackets and the Low-Income Tax Reduction for 2005 will provide New Brunswick individuals and families additional savings of about $11 million for this taxation year.
As a result of these measures, individuals with incomes of up to $12,713 and families with incomes of up to $20,324 will pay no New Brunswick income tax for 2005. An additional 3,000 New Brunswickers will no longer pay any provincial personal income tax.
"New Brunswickers currently enjoy the lowest provincial personal income taxes east of Ontario," Volpé said. "More than 43,000 additional New Brunswickers will not have to pay any provincial personal income tax for 2005, compared to the 1999 tax system. In 2005-2006 alone, New Brunswickers will realize savings of $137 million as a result of measures we have undertaken."
The 2005-2006 budget contains a three-year initiative that will bring the small business corporate income tax rate to one per cent by 2007 - by far the lowest in Canada.
Effective July 1, 2005, the provincial small business corporate income tax rate will be reduced from 2.5 per cent to 2.0 per cent. Effective the same day, the income threshold eligible for the small business corporate income tax rate will increase from $425,000 to $450,000. This will result in additional annual savings of $4 million for New Brunswick businesses, providing them with more resources to invest and create jobs in the province.
Effective July 1, 2006, the province will further reduce the tax rate to 1.5 per cent and raise the income threshold to $475,000. And effective July 1, 2007, the government will implement the final phase of its commitment by reducing the small business corporate income tax rate to one per cent and raising the income threshold to $500,000.
"This budget confirms our determination to support small business when it comes to staying competitive and creating jobs," Volpé said.
As a result of this tax relief plan, New Brunswick small businesses will save an estimated $12 million more annually once these measures are fully mature, he said.
"We will introduce legislation this session to amend the Assessment Act to help encourage private sector businesses to develop and utilize heritage properties," Volpé said.
This will provide a property tax incentive for owners of designated heritage properties who undertake an approved restoration.
Health and Senior Care a Priority
Total investment in health and senior care will rise to $2.3 billion, an increase of 7.6 per cent over what was spent in 2004-2005. Ordinary account funding for the Department of Health and Wellness will increase $102.8 million over last year's revised expenditures - an increase of 6.1 per cent. The funding includes:
- $20.5 million more for medicare
- $55.5 million more for hospital services;
- $8.2 million more for ambulance services;
- $11.8 million more for the Prescription Drug Program; and
- $4.4 million for new funding for nursing programs (including the 95 new nursing seats at UNB and the Université de Moncton).
The 2005-2006 budget also provides $2 million to promote healthy living for children and youth in the areas of physical activity, nutrition and healthy eating; tobacco cessation; and mental health and resiliency.
"I am very happy about this new initiative because it falls in line with what I have heard during our pre-budget consultations," Volpé said. "People all around the province told us that encouraging healthy lifestyles is an integral part of the health-care system. We firmly believe that investments made in promoting wellness are investments in the long-term health of New Brunswickers, especially in our children."
Families and Seniors
The Department of Family and Community Services budget will receive an additional $19 million this year for a total budget of $737.7 million. The funding includes:
- a six per cent increase in social assistance rates over the next three
years, beginning with a two per cent increase this year - the largest
increase since 1991; - a 9.1 per cent increase for nursing homes;
Quality Education System is Essential
Total education spending will rise to $1.2 billion in this budget, a 3.3 per cent increase over 2004-2005.
Education funding for kindergarten to Grade 12 will increase $23.0 million over last year's revised expenditures, to a total of $752.8 million - the highest level ever. The funding includes:
- 85 more teaching positions (410 teaching positions added to the school system since 2003, on a commitment of 500);
- $2.5 million for the Quality Classroom Resources Fund (second year of a $10-million, four-year commitment);
- $1.1 million for the second year of the pilot laptop research program; and
-$0.7 million for the Quality Technology Infrastructure Enhancement Fund.
Universities will see their funding increased by 4.6 per cent in 2005-2006; three per cent in 2006-2007; and 3.4 per cent in 2007-2008.
As announced in the State of the Province Address, $20 million more will be invested in the University Infrastructure Trust Fund.
The government will also integrate its provincial student financial assistance program with the federal program. This will mean that students will have to manage only one loan instead of two.
Community and Regional Economic Development
The 2005-2006 budget dedicates funding once again for regional and community economic development funds. It includes:
- $5 million for the Miramichi Regional Economic Development Fund;
- $5 million for the Restigouche-Chaleur Regional Economic Development Fund;
- $12 million more over the next three years for the Acadian Peninsula Economic Development Fund (a total of $40 million over eight years); and
- $5 million more for the Total Development Fund.
The budget also includes $18 million for the creation of a new three-year program, the Community Development Initiative. It will consist of three specific components:
- $10-million Community Partnership Fund;
- $6-million Family and Youth Capital Assistance Program; and
- $2-million Community Events Program.
An additional $10 million is being provided for the creation of a three-year, Community Economic Infrastructure Program with an initial $2-million investment in 2005-2006.
The 2005-2006 budget also allocates $1 million to the government's immigration program, a 54 per cent increase over last year. The program will be enhanced to co-ordinate the focus across government on bringing more immigrants to New Brunswick.
"Additional demands for health care and other services, and fewer young people available to fill jobs in the economy, will create challenges for New Brunswick - and other provinces -- over the next several decades," Volpé said. "We believe increasing the levels of immigration of educated and talented people is one method to partly address the problem."
The government also expects to further reduce waste, duplication and overlap in public services in 2005-2006. The goal is to redirect savings to priority areas such as health care and education.
"By managing smarter and maintaining our fiscal responsibility, we continue to live within our means, while investing in the priorities of New Brunswickers," Volpé said.
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 CONTACT: Vicky Deschênes, Finance, 506-453-2451.
Fact Sheet - Economy
Fact Sheet - Fiscal Outlook
2005-2006 (outlook for upcoming fiscal year)
2004-2005 (update on fiscal year ending)
Fact Sheet - Spending
Health and Senior Care
Education and Children
Families and Seniors
Fact Sheet - Competitive Taxation
No tax increases and no new taxes
Personal Income Taxes
Corporate Income Taxes
Qualifying non-profit housing organizations will be able to apply, within a few weeks, to receive a provincial property tax exemption on their low-income residential rental property.
Amendments to the Assessment Act will provide a property tax incentive for owners of qualifying designated heritage properties who undertake an approved restoration to help encourage private sector businesses to develop and utilize heritage properties.