January 13, 2014

 

Hon Blaine Higgs

Minister of Finance

Chancery Place

675 King Street

Fredericton, NB

E3B 1E9

 

Dear Minister Higgs,

 

Thank you for reaching out to our organization and inviting us to your budget consultation sessions held in Saint John and Bathurst in December.

 

Unfortunately, due to scheduling conflicts our organization was unable to attend your sessions. However, we did want to take the opportunity to let you know what we will be looking for in this year’s provincial budget.

 

In 2012-13, our organization endorsed the budget plan in which your government said they would balance the budget by reducing spending. We believe, Minister, that your strategy then was right.

 

However, in the last budget, you broke your promise not to raise taxes and introduced some of the largest tax increases in the past 30 years. You said at the time that these tax increases were needed to curb the growing deficit.

 

Yet, the deficit problem that the tax increases were supposed to solve is now getting worse – much worse – as a result of the struggling economy. Tax increases have stunted economic growth. An RBC report underscored this same point. These tax increases are slowing down the economy thereby making it even harder for you to balance the budget in the near future. 

 

Already New Brunswick has one of the highest unemployment rates in all of Canada, one of the largest deficits for the size of the province and worker’s wages are barely keeping up with inflation. We are never going to grow the economy and increase our provincial revenues unless New Brunswick is tax competitive with the rest of Canada.

 

That said, you have also made some very positive moves in the last year to help put New Brunswick in a better financial position.

 

Our group strongly supports your push to put government workers on the shared risk pension program. While we would have supported much more dramatic reforms, we do believe that taking action to curb the growing pension problems is not only the right thing to do given the financial state of the province, but it also promotes fairness for the taxpayers who fund government pensions.

 

We also believe that your government supporting and helping to grow an indigenous energy sector in New Brunswick will pay big dividends in the future. Both the Canada East pipeline and the natural gas sector are important industries for the future of the province. For too long, thousands of New Brunswickers traveled west to Alberta to extract the very products that are under their feet right at home.  Your actions to develop this industry will change that trend.

 

Further, we support moves by your government to limit the seemingly never-ending growth of the public sector and to control government spending.

 

No one knows better than you that we have a lot more work to do to accomplish both a balanced budget and a strong provincial economy.

 

In this year’s budget, we will be looking for the following:

 

1. No tax increases

 

Prior to your government’s tax increases, New Brunswick was one of the lower tax jurisdictions in Canada. Now, after the tax changes, New Brunswick is one of the higher tax jurisdictions.

 

This means that New Brunswick is becoming less and less attractive (financially speaking) to raise a family in.

 

A person earning $60,000 in Saint John pays $1,700 more in income taxes than the same person making the same wage in Edmonton, Alberta. That does not even take into account that in Alberta you don’t pay any provincial sales taxes.

 

In order to take advantage of burgeoning opportunities, New Brunswick has to be in a position to compete and allow workers to keep as much of their hard earned pay as possible.

 

You have said leading up to this year’s budget that you will not increase taxes this year.  We hope to see you stick to that commitment.

 

2. End of corporate handouts

 

If offering money to companies to attract business were a successful strategy, then after years of federal and provincial governments offering various incentives, New Brunswick would be a very rich place. Instead millions have been sent to companies who have ultimately gone belly up or simply failed to deliver on promised development targets.

 

Given the province’s tenuous financial situation can we really afford, now, to continue to hand out taxpayers’ money to companies?

 

We believe it is time for a change. We believe the government should end its experiment with Invest New Brunswick and scrap the Department of Business New Brunswick.

 

Getting rid of these development agencies is not a new idea. Donald Savoie from the University of Moncton supports such a move given the province’s financial situation.

 

We believe the businesses will want to locate here only if they are able to make a profit. Of course, the government does not control the world economy but one of the things it has direct control over is how much it taxes New Brunswickers.

 

If the government is serious about economic development, rather than employing hundreds of public officials to administer it and giving away taxpayers’ money, we believe it is better to cut those programs and the red tape and instead focus the building blocks of a strong economy, like education, health care and low taxes.

 

3. Privatize NB Liquor

 

You have stated in previous speeches that you believe that the public needs to change their expectations about what to expect from their government.

 

So the question then is, does government need to do all the things that it currently does?

 

There is an obvious public interest in the government being involved in health care, education and infrastructure.

 

Given the financial situation of the province, it is time to question whether it makes sense for our government to sell alcohol.

 

To get a glimpse of what the liquor industry in New Brunswick might look like without a government monopoly, one need only look west.

 

After retail liquor sales in Alberta were fully privatized (wholesaling is still run by government), the total number of stores increased. In 1993 (prior to privatization), there were 304 total outlets, today there are 1,726 outlets. The proliferation of stores also increased the total number of people employed in the industry. In 1993, just 1,300 people were in the industry. There are now over 4,000 full and part-time jobs.

 

Also the number of products available increased. Prior to privatization, the government-owned liquor stores offered consumers just 3,325 different products.  Now consumers can get just about anything they want – the total number of products on store shelves is 16,495.

 

All in all, the change was good for consumers and also good for government coffers.

 

In Alberta, the amount of revenue collected by government from the liquor industry went from about $400 million prior to privatization to around $750 million.

 

Privatization means government gets the benefit of no longer having to manage a liquor business and consumers get more choice – a win for government and for taxpayers.

 

4. Don Drummond Style Commission

 

We believe that the issues that face New Brunswick are serious and it is time to have a far ranging look at what government does well and how to do it even better. We also believe that no one has all the answers.

 

In 2011, Ontario set up the Drummond Commission to look for areas that the government could change to ensure the province could get back to balance. New Brunswick should follow suit.

 

Such a commission would lead a public discussion on the state and growth of the government in the province and make recommendations for change.

 

These are just some of the things we will be looking for in this year’s budget. We again would like to thank you for involving our organization in your consultations. We will continue push for lower taxes, less spending and more accountable government.

 

Sincerely,

 

 

Kevin Lacey

Atlantic Director

Canadian Taxpayers Federation

 

877-909-5757

[email protected]