The Higgs government says the economy will rebound in the coming fiscal year as COVID-19 wanes, but it won’t be enough for the province to avoid a large deficit.
Finance Minister Ernie Steeves is projecting the provincial economy will grow by 2.9 per cent this year, after shrinking 3.5 per cent in 2020 because of pandemic restrictions.
But government spending will still outpace revenue, leading to a deficit projection of $244.8 million for 2021-22.
“It’s not the budget I want to deliver but it’s the budget New Brunswick needs,” Steeves told reporters.
“It’s a different world. The pandemic has changed things completely for everybody.”
Increasing vaccination rates and easing of public health and travel restrictions later this year should spur the economy but “there remains a high level of uncertainty in the forecast, and a return to pre-COVID levels of economic activity will take time,” Steeves said in his budget speech.
Increased spending
Overall, spending will be up 3.4 per cent in the coming year while revenue will grow only 1.2 per cent, an imbalance that runs contrary to the Progressive Conservative’s frugal instincts but that Steeves said is necessary after an extraordinary first year of the pandemic.
“This budget takes us further into debt,” Steeves said. “We don’t want debt, but you know what? Now is the time. We have to spend money this year.”
The large deficit projection is based in part on federal funding for a range of COVID-19 programs expiring at the end of the fiscal year on March 31.
Conditional grants from Ottawa jumped from $324 million to $599 million this year, with almost all of the extra money to support the province’s pandemic response. Those grants are budgeted to drop back to $357 million in the coming year.
Steeves said the provinces would push the federal government to continue the funding.
“You just can’t cut it off. It can’t be a hard stop.”
New Brunswick Finance Minister Ernie Steeves reveals details in his government’s 2021-2022 fiscal budget during a news conference on Tuesday, March 16. (Shane Magee/CBC)
Ottawa hasn’t yet said precisely how much it will fund in 2021-22, but if there’s a new influx of money after April 1 it could lower New Brunswick’s deficit figure. A massive influx of federal dollars this year brought a once-ballooning pandemic deficit down to $12.7 million.
Pandemic spending
The budget includes $64 million for specific pandemic spending, including $30 million for the vaccination program now underway.
“New Brunswickers will see a fiscal plan that demonstrates our commitment to providing the necessary supports to address the pressures that the pandemic will continue to place upon the province,” Steeves said.
There’s also significant increases in some non-COVID-19 areas.There’s an increase of about $7 million for mental health across several departments, including $3 million to deal with increased demand for addictions and mental health services.
There’s also $10.8 million in new spending on affordable housing.
The budget forecasts an even larger deficit of $296 million in 2022-23 before it will start to decline the following year to $220 million.
Carbon tax
The government will raise the provincial carbon tax that drivers pay at the pumps by about two cents to 4.21 cents per litre in the coming year. But that announcement was lacking some key information on how revenue will be spent.
Officially, the national climate plan requires a carbon tax rate on gasoline of 6.6 cents this year. The PCs went along with that a year ago but cut the gas excise tax by more than four cents to leave the consumer paying about two cents per litre at the pumps.
This year the national plan requires an 8.8-cent-per-litre tax, so the province would have to reduce the gas excise tax again to keep the net tax stable at the pumps.
But there’s been no decision yet to do that.
There will be about $28 million in leftover revenue if the province keeps the excise tax where it is.
It wasn’t clear Tuesday what other options the government is considering, but Steeves said four choices are on the table and all would see the money returned to New Brunswickers.
“I don’t know if I want to discuss all of them. I have my favourite,” he said. “In one form or another, it will get back to the people.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
