Dominic Cardy would scrap the Department of Economic Development and put the money into ‘small business’. Brian Gallant is planning to make New Brunswick the Smart Province. Premier Alward is chipping away.
What we need to know is the strategy each party would put forward to raise the provincial GDP by $4.1 billion in very short order (or a roughly 14-15% rise).
Where did I get $4.1 billion?
The province takes roughly 13% of provincial GDP in taxes, fees and other own source revenue so in order to eliminate a $538 million deficit without raising taxes you will need to generate $4.1 billion worth of incremental GDP (13% of $4.1 billion = $538 million).
Now, you don’t need to raise the $4.1 billion in one year but you need to over a series of years – and remember it must be incremental GDP. Other industries are going to ebb and flow beneath but you need to boost the overall GDP by $4.1 billion if you are to kill the provincial deficit through economic growth.
We need a little straight talk express here. The feds are reducing their relative share of the NB budget every year so don’t expect much from them.
Higgs is right, there must be ways to streamline expenses but that is only on the margins – you will never see a steep decline in public spending in this province.
You could raise taxes too but there is genuine concern among economists about how much room there is to move on that front. A two percentage point increase in HST could possibly raise $200 million/year – maybe less depending on how it impacts on spending – but that sill leaves a huge deficit.
It’s all to vague right now. The provincial government was saying shale gas could be worth $200 million/year when it is a fully mature industry but that might take a decade or more and, quite frankly, does anyone think that industry will be investing here any time soon?
So the parties should be telling us their plan to generate the $4.1 billion GDP boost while holding public spending below the rate of inflation.