Finance Minister Ernie Steeves delivered his fourth budget Tuesday, calling it “the product of an approach we have taken over the last three years” with a focus on what he described as maintaining economic momentum in a province approaching 800,000 in total population coming off a 45-year growth high.
Steeves noted New Brunswick has shown a tremendous amount of resilience under what have become volatile global and economic and fiscal conditions, saying estimates have shown real GDP growth for the province has “made up for the losses experienced in 2020.”
The Finance Department predicts real GDP growth of 2.2% and continued population growth and wage increases – all despite inflation running at a 30-year high.
Spending is also projected to grow, by 5.5% as Steeves noted the Higgs government gets ready to transition its spending plans from addressing COVID-19 to building capacity within government.
Steeves noted the projected surplus of $35.2 million for 2022-23 with revenues also projected to grow by 1.2% over the same period.
Personal income tax changes announced
Steeves announced Tuesday the basic personal amount for income tax will be increased from $10,817 to $11,720 with low-income tax reduction thresholds also adjusting from $18,268 to $19,177 beginning with the 2022 tax year, changes he stated are in response to the latest mandated carbon tax increase from Ottawa.
New Brunswick’s carbon tax will increase from $40 per tonne to $50 per tonne on April 1, a change Steeves says will represent 2.21 cents per litre in gasoline and 2.68 cents per litre more on diesel fuel.
The speech outlined the income tax change will provide an estimated $40 million in personal income tax relief for over 400,000 taxpayers in the province.
A COVID-19 recovery amid growth concerns
Immigration and retention efforts will also see investment, with Steeves adding the government will provide with one-million dollars through the Immigrant Settlement Support Funding Program with an additional $200,000 to be used to support international student retention.
Tourism was also addressed in Tuesday’s budget speech, a sector hard hit by the pandemic and hoping to rebound in 2022.
Steeve said in recognition of the challenges, the government is providing an additional $6.9 million for the Department of Tourism, Heritage and Culture, spending Steeves said “represents a 26% increase in the province’s tourism budget” after non-recurring COVID-related spending is excluded.
Tuesday’s speech also highlighted what Steeves called “strategic support for capital investments,” part of an overall effort to boost New Brunswick’s challenges with productivity growth. This year’s budget includes $5 million earmarked for the acceleration of capital investments focused on improving productivity and generating long term growth.
This year’s budget also includes $343 million to increase wages to the public service, an increase Steeves said recognizes the efforts made over the course of the pandemic, calling the investment “one that we can afford.”
Steeves also answered questions around COVID-19 spending, with roughly $134 million allocated to spending in last year’s budget reduced to only $20 million set aside for immunization, saying COVID-19 costs will now be realized by each department in government.
“We’re hoping we’re over a big chunk of it anyway,” Steeves told reporters, though cautioning if there is a resurgence of COVID, “it will cost us money.”
Changes promised for landlords, tenants
This year will see a long-planned 50% provincial property tax rate reduction for non-owner-occupied residential properties, including apartment buildings and other rental properties, set to be phased in over three years, which Steeves confirmed will begin with the current property taxation year.
Two years ago, the government proposed the same reduction to the provincial property tax rate for non-residential properties, measures which did not proceed due to fiscal uncertainties amid COVID-19.
The government hopes the initiative will support the development of additional units in the province while providing tax relief to landlords, who have raised rents in the fast-paced real estate market.
While Steeves declared tenant vacancy rates have continued to fall amid higher rents, he announced a one-year rent cap on the allowable increase to rent of 3.8% (equivalent to CPI growth in 2021). The government is promising the cap will be retroactive to Jan. 1, 2022.
In speaking to reporters on the budget prior to delivering the speech in the legislature, Steeves said the rent cap will be reviewed after one year, but added at this point, a one-year cap is all government is committed to at this time.
Government is also promising further amendments to the Residential Tenancies Act by eliminating the ability of landlords to terminate a tenancy without cause. Other promised changes involve allowing a tenant to apply to the Residential Tenancies Tribunal to order landlords to compensate for losses caused by termination without cause. Tuesday’s speech also included a planned amendment to introduce penalties for landlords for non-compliance.
Steeves also announced Tuesday that government will also increase spending on affordable housing by $6.3 million this year.
Health spending highest in 13 years
Tuesday’s budget allocated more than $3.2 billion to the province’s health care system, a 6.4% increase over the government’s third-quarter projection and what Steeves called “the largest increase since 2008-2009” in health spending.
Steeves detailed $38 million in spending allocated toward improving access to primary care, surgery, addiction and mental health services, and enhancing supports for seniors under a better-connected system – all areas of concern identified in last fall’s plan from government, Stabilizing Health Care: An Urgent Call to Action.
Tuesday’s budget also itemized $3.7 million to enhance and redirect resources toward multi-disciplined, team-based community care to help address less urgent and non-urgent care needs outside of emergency rooms, where Steeves noted 40% of all patient visits are still for less urgent care.
This budget also includes $4.1 million pledged to support work ongoing in the government’s nursing home plan, with an additional $9.7 million going to help provide increased hours of care in nursing homes.
Steeves said the government will also provide gas relief in the form of $5 million targetted toward home support workers who travel from client to client while gas prices continue to hover around $1.75 per litre for regular self-serve gasoline.
In an effort to better recruit and retain workers in the human service sector, Steeves also announced $38.6 million this year to increase wages of human service workers in home support, community residences, special care homes, family support, group homes and attendants providing care.
Childcare spending lacks timeline
Following the bilateral childcare agreement with the federal government announced last fall, Steeves said Tuesday that the New Brunswick government is set to invest $110 million in the early learning and childcare sector in 2022-23, with $500 million in investment set to come over the next five years, though there was no timeline given in Tuesday’s speech for when planned childcare investment program would specifically begin.
Steeves says those investments will help lower the cost of childcare for families in the province while respecting investments already made in the early learning system.
