POLITICS

New Brunswick needs to cut spending, boost revenues, auditor general says

01/22/2015 09:57 EST | Updated 03/24/2015 05:59 EDT
FREDERICTON - New Brunswick isn't at the point of bankruptcy but the growing net debt is a concerning trend that requires serious measures to cut expenditures and increase revenues, the province's auditor general said Thursday as she released her annual report.

Kim MacPherson said while the provincial government has acted to control spending, it must do more to address the structural deficit and rise in debt.

"We're not at the point we have seen in other jurisdictions like Detroit or European countries," she told a news conference. "We do have time to take corrective action to get our fiscal house in order and prevent that level of seriousness to happen."

Last year, New Brunswick reported a deficit of $498.7 million, the sixth year in a row the province was in the red.

MacPherson said the net debt has now risen to more than $11.6 billion — a 69 per cent increase since 2006 — and equal to $15,400 for each New Brunswicker.

"This continued increase in net debt represents a very disturbing trend," she told the legislature's public accounts committee. "An even higher demand will exist on future revenue to pay past expenses."

An increase in net debt of $530.7 million has been budgeted for the fiscal year ending in March, suggesting net debt could exceed $12 billion by that time.

MacPherson said correcting the province's structural deficit will require fiscal diligence.

"Expenses or services and programs need to be reduced, revenues need to be generated, or some combination of the two," she said.

The province's Liberal government has promised a balanced budget in six years and last week, it said it needs to find $500 million to $600 million in annual savings in order to meet its financial challenges.

"We're spending more than we're taking in in revenue, so we need to address this," said Finance Minister Roger Melanson. "We want to have New Brunswickers help us out as a province to find solutions."

The government has released a discussion paper and launched a series of public meetings to gather ideas in time for their 2015-16 budget.

But Progressive Conservative Leader Bruce Fitch said that's too long, and the government could be acting on ideas that the previous Tory government gathered.

He said those ideas include merging payrolls.

The auditor general also uncovered problems with the refurbishment of the Point Lepreau nuclear plant, which took three years longer than planned and cost a billion dollars more than expected.

MacPherson concluded that while the costs for the $2.4-billion project were generally reasonable, NB Power, which oversaw the refurbishment, may have lost opportunities to save money by failing to obtain competitive bids where it opted to use sole-source exemptions.

She said NB Power has agreed with 10 recommendations, which include obtaining competitive bids for all significant engineering services, even if not required by legislation to do so.

MacPherson also raised concerns in her report about the deteriorating state of capital assets such as roads, highways, schools and hospitals.

She said there should be at least a 20-year plan for maintaining assets, rather than just a year at a time or the four-year cycle of a government.

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