Decades of Deficits: Revenue Sources and Spending in New Brunswick

New Brunswick is currently experiencing a fiscal crunch. Revenues are below expectations and expenditures are proving difficult to control. Meanwhile the Federal Governmnent has announced a new formula for allocating equalization payments that will tie increases in health care payments to GDP growth, plus those payments will (after 2015) be allocated on a per capita basis. That might effectively reduce payments to NB once inflation, slow population growth, and growing health care costs are factored in. Fortunately, although the provincial debt is approximately $9 billion, interest rates are now low by historical standards and debt servicing has not yet caused a crisis. That is just as well, since slowing economic growth is doing a fine job of reducing government revenue all on its own.

The aim of this post is to present some historical background to NB’s funding sources and examine the role of health care spending as a driver contributing to spending increases over time. More details on how NB spends its revenue, and how that compares with spending in other provinces will be provided in following posts. As we will see (note the last chart below), when we adjust spending by inflation, government spending increases on things other than health care have been kept fairly modest in recent years.

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New Brunswick and Nova Scotia doing poorly in comparison to other provinces – update

Provincial job creation comparisons: Is Quebec the new ‘boom’ province? January 2012 – January 2013 shows Quebec with the largest % gain year-over-year when compared to NB, NS, ON and AB. New Brunswick and Nova Scotia both had significant job losses year-over-year for January. See details here.

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Gagetown temperature data 1925-2012

Recently, I posted on temperature trends at a set of New Brunswick and Nova Scotia air temperature monitoring stations. As I live not too far from Canadian Forces Base Gagetown (New Brunswick, Canada), I decided to add to this topic by downloading and examining the unadjusted mean temperature data from three local surface air temperature stations: Gagetown 2 (Village of Gagetown), Gagetown A, and Gagetown AWOS. The latter two stations are located at CFB Gagetown near the Heliport, while Gagetown 2 is about 20 Km away in the Village of Gagetown. Gagetown AWOS (GAWOS) and then Gagetown A (GA) replaced Gagetown 2 (G2) as monitoring sites several years ago. Data were downloaded from Environment Canada’s Climate Data Online. Data for missing days were estimated from adjacent days, but a few years were omitted where monthly data were missing.

 

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An upward trend can be observed, similar to that seen in the Environment Canada homogenized data set for several New Brunswick surface stations. A linear regression analysis (subject to the cautions regarding autocorrelation in temperature data sets – not likely to be a huge problem here as annual means are being used) shows a significant upward trend with Gagetown 2 data alone (Pr>F = 0.003) or with all data combined (Pr>F = 0.016). The accepted method for analyzing temperature series data collected from different monitoring stations involves subtracting temperature values from the mean of a set time period (e.g. 1951-1980 or 1971-2000). That produces temperature anomalies that can also be plotted against time. I hope to do this at some point. Overall, the data suggest that the Gagetown area is, like other parts of the province, warming in a manner consistent with reported levels of global warming.

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