New Brunswick finance officials faced questions from MLAs over a series of surpluses in recent years that were significantly higher than originally expected.
Officials appearing before Parliament's Public Accounts Committee on Wednesday blamed the federal government for the discrepancy between initial revenue estimates and the final figures.
Cheryl Hansen, the state's top civil servant and deputy finance minister, also said she was not satisfied with the repeated changes in revenue.
“We will do everything we can and look forward to working with our colleagues in the federal government to improve our forecasts,” Hansen told MLAs.
Executive Council Secretary and Deputy Finance Minister Cheryl Hansen told MLAs she was not pleased with the significant changes in anticipated revenue. (Jacques Poitra/CBC)
The comments and questions came a week after the state released an update for the 2023-24 fiscal year showing it expects a surplus of $247.4 million, six times the original budget.
If this figure is maintained, it will be the fourth year in a row that the company will be in the black, significantly exceeding initial expectations.
The surplus was $400 million more than expected in 2021, $769 million in 2022, and $1.01 billion more than last year.
Opposition MLAs suggested that lower initial projections would result in underspending on social services.
Are you calculating your predictions too conservatively? Green Party MLA Kevin Arsenault asked during a committee meeting.
“The impact of these forecasts is to reduce investment in needed public services. So, this poor forecast will result in more than $2 billion of missed investment. It’s too late to spend the money.”
Green Party MLA Kevin Arsenault speaks to reporters at the New Brunswick provincial legislature. (Michel Corriveau/Radio-Canada)
Liberal MLA Rene Legacy asked why tax revenues were expected to be flat or down in the province's budget, and whether that was a policy decision. Hansen said there was no instruction to be overly cautious about the initial numbers.
Peter Keeley, the department's assistant secretary, said revenue from the HST has exceeded the federal government's original projections for the past three years.
Kealey said those initial projections were fairly consistent with the amount the state would actually receive until the pandemic hit.
“But the generally reasonable relationship went out the window,” Keeley said, noting that the largest difference to date was about $300 million. It is expected to reach about $500 million this year.
“So I'm not making excuses here, I'm just explaining that I trust the initial official estimates from Ottawa,” Kealey said.
He told MLAs that this is forcing the state to rethink its budgeting process.
Finance Minister Ernie Steeves told reporters last week that he had written to federal officials asking if there was a better way to avoid large changes in projected revenue.
Liberal MLA Legacy said he hoped for a better forecast.
“I'm willing to admit that the volatility is insane,” Legacy said.
“Other states are experiencing the same problem, and it's not easy to predict what will happen next.”
Todd Selby, the department's executive director of fiscal, economic and statistical analysis, told Arceneaux that the past few years have been “extraordinary.”
“We're always trying to improve the way we do things,” Selby said. However, we “don't know” whether that will lead to better predictions.
