On debt in New Brunswick

I see the provincial government trotted out that statistic about New Brunswick having the third lowest net debt per capita in the country when it released the government financial statements on Friday.

This issue of debt is a bit of recurring theme here because I have a slightly different take on things but first, let’s use Statistics Canada data for a little comparison.

New Brunswick has the highest debt charges per capita of any province in Canada. Scroll down to page 52 in this report to view. (By the way, this is an interesting comparative view of government spending in Canada)

Also, I believe that NB Power’s $3 billion in debt is not included in the data. That would increase NB’s net debt by over 40%. Now, of course not all of NB Power’s $3 billion in debt is ‘stranded’ but a big chunk is and the NB taxpayer is on the hook for all of it.

But even if you agree with the assertion that we have low net debt relatively speaking, to me that translates into more wiggle room for investing in economic development.

Consider this analogy. If the roof on your house was collapsing and you had what the bank considered a good debt load and you had a credit line would you say “I am not fixing that roof because I like having a low debt load” or would you take on the debt to fix your house?

Or another. Would you not take student loans and forgo university just to stay out of debt?

The truth is that New Brunswick should be investing a lot more into economic development and I wouldn’t worry an iota if the net debt increased or if we ran some short term deficits. This deficit fighting bogeyman is left over from the 1980s when governments ran deficits year after year with no spending control. If you are spending on the right things, a small deficit or increase in net debt is fine IMO.

Again, they just announced a onetime increase of $368 million to the net debt to pay for a highway. Why would it be so unconscionable to announce a one time increase in debt to build an Energy Park in Sussex or a Bay of Fundy cold water energy system to attract a data centre cluster to Saint John or a large scale wind turbine manufacturing and refurbishment facility in Belledune or an auto plant in Bathurst?

Because that, my friends, is outside our neatly constructed box and going there might entail some risk and might open someone up for scrutiny in the op/ed pages of the newspapers.

Like most things in this province, I think we need to look at debt through a slightly different lens. If you are piling on government spending because you have no discipline on expense control – that is one thing. But if you are increasing government spending in strategic investments that will pay dividends down the road, that is another.