FREDERICTON – New Brunswick is forecasting a deficit of more than $538 million for 2013-14, a $59.6 million increase in the shortfall that was projected in the spring budget.
Finance Minister Blaine Higgs blames lower than expected revenues for the size of the deficit in his second-quarter fiscal update released Thursday. The government is forecasting a $172.9 million drop in revenue compared to what it listed in the budget because of weaker results from Crown utility NB Power and a drop in tax revenue.
The financial update came just hours after auditor general Kim MacPherson released her annual report, calling structural deficits and the growing net debt a disturbing trend.
Kim MacPherson said the province has a net debt of more than $11 billion, which puts a higher demand on future revenue to pay past expenses.
New Brunswick recorded a $507.7 million deficit for 2012-13 — the province’s fifth consecutive annual deficit.
MacPherson said the net debt has increased by more than 63 per cent since 2007, and the pace of debt growth is not sustainable in the long term.
She is calling on the province to set long-term targets for net debt control and its reduction.
Higgs said the province hopes to increase revenue through the development of natural resources, such as shale gas.
In the meantime, he said the province is controlling expenditures, pointing to legislation that passed this week to change the public service pension plan to address its $1-billion deficit.
“We have many more issues in this province that we have to make real decisions on and pension reform has just been one of them,” Higgs said.
Liberal finance critic Roger Melanson said the Progressive Conservative government has squandered the initial years of its mandate when it could have been growing the economy, adding that it has taken too long to develop a plan for innovation and create Invest NB to attract business to the province.
“We understand why we are in this situation because they had no plan to grow the economy and increase the revenues,” he said.
Higgs said he is beginning pre-budget consultations and will deliver both the capital and operating budgets for 2014-15 in early February.