As we embark on a new year, CCC remains actively involved in key areas such as agriculture, energy, education, finance, health and governance. Our intention is to maintain consistent communication with our members regarding developments in these fields and others. As a think tank, our analyses and recommendations are firmly grounded in empirical evidence. We are fortunate to have numerous highly qualified consultants who generously volunteer their expertise to advance the prosperity of New Brunswick.
Although the challenges ahead are significant, it is important to acknowledge the many advantages we possess, notably our talented population and rich natural resources. Effective solutions begin with a thorough identification of existing issues; accordingly, our initial focus is an assessment of the province’s financial position and debt.
DEBT AND FINANCING
For the fiscal year ending March 31, 2026, the operating deficit is projected to be $834.7 million and could go to $1 billion. Total revenue is projected to be $180.5 million lower than budget. This is largely driven by lower corporate and personal income tax revenue as well as lower federal conditional grants. Revenue is estimated at $13,792,310,000 and expenses at $14,341,347,000, resulting in a $834.7 million deficit. The Holt government has increased spending by $2.4 billion over the Higgs government in 2023- 2024.
The Premier anticipates an annual deficit over the next three to four years due to increased spending and potentially declining revenues from tariffs and other sources. The current gross debt is $13,429,568,000, with a Net Debt-to-GDP Ratio of 26.6%. Gross Domestic Product (a combination of the total goods and services) is approximately $36.6 billion, reflecting a growth rate of 2.5%.
In addition to Operating Deficits, Government shows a Capital Budget expenditure of $1,027,886,000; however, in the latest government press release, the capital budget is now estimated at approximately $1.47 billion.
To offset some of the deficit, government has a sinking fund (savings account) of somewhere between $6-$7 billion, which yields earnings of $222,300,000. This amount is shown as a line item in revenue stream and is looked upon favorably when the Province is negotiating bond rates.
Summary of debt
- NB Power’s debt is projected at $5.8 billion for fiscal year 2025–2026. (Province is responsible for NB Power’s debt.)
- Current gross debt: $13.43 billion
- Estimated operating deficits (next four years): $5 billion
- Estimated capital budget (next four years): $6 billion
- Increase in NB Power’s deficit (next four years): $2 billion
- Less sinking fund: ($7 billion)
- Total projected debt by 2028-2029 is estimated at $25 billion
- Net debt-to-GDP ratio, assuming a 1% growth rate of GDP, will double
- Estimated annual interest payments by 2028: $1 billion
Implications of the above:
- Bondholders will adjust credit ratings, resulting in higher interest rates when borrowing
- Federal transfer payments may decrease due to the pressures from western provinces, coupled with huge federal deficits
- Interest on debt estimated at $1 billion will impact the level of services that government can provide to other departments, such as Health, Social Services and Education, which constitute 61% of the budget.
- Financial analysis does not include additional capital funding required to grow the economy or the refurbishing of the Mactaquac Dam.
- Uncertainty of costs related to First Nations compensation and damages
CONCLUSION: The current financial situation over the next four (4) years is unsustainable; decisive action is needed for our future.
Suggestions for Plan of Action:
- Grow the GDP (Gross Domestic Product)
- Create a business plan for the construction of a second CANDU reactor at Lepreau or small modular reactors (SMRs). Stakeholders include private investors, federal government, provincial governments of Nova Scotia, PEI and New Brunswick
- Develop the McCully gas field near Sussex
- Look for other opportunities in the mining industry
- Reduce government expenditures by 10-15%
- Review the qualifications and experience of senior civil servants
- Reorganize NB Power Corporation to make it profitable
- Review marketing strategies to attract new industries to New Brunswick
- Consider reducing Corporate Tax Rate in New Brunswick
- Overhaul the education system by looking at proven experiences
- Create a marketing and communications strategy to attract more tourists to our province
- Overhaul the health care system by eliminating duplications. Complete a 5-year plan
- Others
Daryl K. Branscombe, President
Community of Creative Citizens