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Deficits doom N.B. regime

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HALIFAX -- By 2018, if shale gas is found and the proposed TransCanada pipeline is built, New Brunswick's economy will be booming and the government will table a balanced budget, the province's first in more than a decade.

This prediction of better times ahead was the only good news to emerge from the stand-pat, pre-election budget Premier David Alward's Progressive Conservative administration tabled this week in Fredericton.

There were no increases in taxes or fees, but only because those were hiked in last year's budget. Spending on operations and programs has been brought under control, but a sluggish economy and lower-than-expected revenues offset the belt-tightening on the expenditure side.

And while next year's deficit is projected to be lower, just shy of $400 million, it will bring the net debt to more than $12 billion by 2015. That's a staggering figure for a small province with a population that dropped by almost 1,000 last year, to about 756,000.

New Brunswick's per-capita debt is already $14,623, the second-highest in the country, auditor general Kim MacPherson reckoned in her latest annual report. Neighbouring Nova Scotia leads the debt race to the bottom, by a slim $100 a head.

Finance Minister Blaine Higgs announced little new spending in Tuesday's budget. There will be modest increases in welfare rates, better prescription drug coverage and $35 million for new infrastructure projects, but little else that might woo voters.

"This is not a typical election budget," he admitted. "We are staying the course."

It was the Alward government's fourth deficit budget since coming to power in 2010, and it breaks a campaign promise to deliver a balanced budget during its mandate. That promise seemed as impossible then as it has proven to be elusive now.

But Higgs predicts the province is on track to post a $119-million surplus in the 2017-18 fiscal year. Alward and his finance minister are banking on an economic boost from petroleum-related development to pull the province out of deficit.

In his annual state of the province address last week, Alward promised access to more timber on Crown land to revitalize the forest industry, which has long been the backbone of the province's economy. But the premier also envisioned a bright future in which New Brunswick is transformed into "a critical player in the global energy market."

Exporting Alberta crude to the world and developing the province's natural gas reserves, he said, could translate into billions of dollars in new investment and thousands of construction jobs.

But a lot of puzzle pieces have to fall into place first. The promoters of the 4,500-kilometre Energy East Pipeline project, which would bring western Canadian oil to Saint John, have yet to file for regulatory approval. And the search for natural gas in New Brunswick has met with violent protests that are likely to escalate if development proceeds.

Alward ousted Liberal premier Shawn Graham in the last election, the first time a New Brunswick government was denied a second term since Confederation. The Liberals, with a new leader and a commanding lead in the polls, appear certain to return the favour in the fixed-date election set for Sept. 22.

Premier-in-waiting Brian Gallant is an energetic young lawyer -- he'll turn 32 this year -- and in little more than a year as leader he has put the Liberals back on top.

The party was the choice of almost half of New Brunswickers in the most recent poll conducted by Halifax-based Corporate Research Associates. Alward's Tories have been relegated to a second-place tie with the New Democrats, with 25 per cent support.

Gallant points to the string of deficit budgets as proof the Tories have "lost all credibility when it comes to fiscal management." The Liberals talk of rebranding New Brunswick as "the smart province" and investing in skills training and information technology startups; while the costs and details of their plans remain vague, voters seem determined to give them another chance.

New Brunswick's energy dreams might yet come true. But if the polling numbers hold for another seven months, the premier and finance minister who take the credit for bringing order to the province's finances in 2018 won't be Progressive Conservatives.

They'll be Liberals.

 

Dean Jobb, a professor of journalism at the University of King's College in Halifax, is the Winnipeg Free Press East Coast correspondent.

Republished from the Winnipeg Free Press print edition February 7, 2014 A11

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