N.B. government heading for $800M deficit, civil service cuts: official

The New Brunswick government is in line for a massive $800-million deficit in 2009-10 and is planning a series of program cuts and significant reductions in the civil service, a government official confirmed Tuesday night.

When Finance Minister Victor Boudreau tables his budget March 17, the official said, it will include a large deficit, more than one-third of which will be blamed on losses incurred by provincial pension plans on the stock markets.

'That [deficit] would be the headline on the day of the budget, but today the headline is an $800-million deficit. It is a tactic of spin doctors and it is a way to manage the media.' — Bruce Fitch, Conservative finance critic

Boudreau's New Brunswick budget will include a roadmap to extricate the province from deficits in four years, the government source said.

Along with the large deficit, Premier Shawn Graham's Liberal government will announce a number of program cuts and the possibility of hundreds of civil service reductions.

Disclosing any portion of a budget was once considered taboo, an offence that could lead to the resignation of a finance minister.

Tom Bateman, a political scientist at St. Thomas University in Fredericton, said the long-standing practice of budget secrecy is fading as politicians try to better manage the news, especially when it is bad news.

So government officials releasing budget items, particularly a deficit figure, is becoming more common, according to Bateman.

"It prepares people for what is coming and it will blunt the force of the news when it is announced formally next week," he said.

"The other idea is, if it is bad news, they release really bad news and low-ball the actual numbers on the budget day. They put the $800 million [deficit] out now and then they could say they did some digging and recalculating and now it is $600 million and then it is not as bad news."

The political scientist said more transparency surrounding the budget is good, although he said the politicians do have the ability to try to shape the news agenda to better serve their interests.

"Nonetheless there is a selective release of information and that will be to the benefit of who select and hold that information. There is a lot of political positioning," he said.

Conservative MLA Bruce Fitch, the Opposition's finance critic, said Wednesday morning that the Liberals are trying an old political trick of trying to distance bad news from their budget.

"That [deficit] would be the headline on the day of the budget, but today the headline is an $800-million deficit. It is a tactic of spin doctors and it is a way to manage the media," Fitch said.

Fitch said such a massive deficit should have been disclosed in a more transparent manner.

Journalists should be careful with leaks: CBC producer

Ira Basen, a CBC producer and an expert on political spin, said journalists have to be very careful about accepting leaks from government officials.

"By and large, I think it is not something that journalists should be doing. It turns us into passive conduits of other people's spin," Basen said on Wednesday.

Basen said the first time he saw a government disclose its fiscal position ahead of its budget was in January when a Prime Minister's Office official leaked to reporters that the federal Conservatives were forecasting a $34-billion deficit.

It is in the interests of politicians and media strategists to get out bad news early, such as staggering deficits, so on budget day the media will be focused on new spending initiatives or tax cuts instead, he said.

Traditionally, when journalists reported a leak, it could take 24 hours before reaction to the news would be available. Basen said the ability of news websites to update stories throughout the day does allow the public quicker access to additional viewpoints.

"I suppose that does make a difference. It still makes me uncomfortable [with accepting leaks] because we are playing their game and we shouldn't be playing their game. We should be playing our own," Basen said.

"From the public's point of view, this [budget deficit] isn't something the public needs to know five days in advance of the budget."

Deficit will be Graham government's legacy: Fitch

The Tory finance critic said the Liberals are saddling New Brunswick taxpayers with a mammoth deficit that is going to take years to recover from.

"Every government, every premier wants to have a legacy," Fitch said.

"Shawn Graham will have no problem in finding his legacy. His government is the one that set the biggest deficit in the shortest period of time in New Brunswick. They can blame the pensions, they can blame the timing [of the recession]. It happened on his watch, it is his legacy."

The projected 2009-10 deficit is more than double the $285-million shortfall that the province is planning for fiscal 2008-09, which itself contrasts with the small budget surplus for 2008-09 that the province had forecast a year ago.

The province announced in December a two-year capital spending plan worth more than $1.2 billion, which Boudreau said was intended to rev up the sputtering economy.

Union members won't roll over to cuts

Tom Mann, executive director of the New Brunswick Union, which represents civil servants, has been involved in the province's labour movement through other economic downturns. He said governments always seem to make the "predictable" choice and cut the public service.

With the budget less than a week away Mann told CBC News on Wednesday many of his members are growing increasingly "antsy" because of all of the leaks and whispers in the capital over slashing the bureaucracy.

"We certainly won't be rolling over [if deep cuts come]," he said.

"We will have to wait and see … whether the impact is as large as is being rumoured on the streets across the province."

Mann said there are ways to reduce costs, such as stopping the "double-dipping" of former civil servants who retire, collect their pensions and come back and consult for the province, sometimes in multiple departments.

The union leader said there are likely redundant programs in the government, but he warns against simply cutting the civil service blindly.

"Undoubtedly, there is money that can be saved within the civil service but certainly not to the extent that I would use the words 'bloated' or 'excessive,'" Mann said.

The Conservative finance critic said he wants to know whether the job losses will be met through attrition, or if there will be cuts to front-line services.

"It is going to be critical to find out exactly where these cuts will occur, if they are in front-line services, in social departments," Fitch said. "This would be a travesty because as tough economic times continue people will need more of those services."

Other provinces facing large deficits

Elsewhere, Ontario has already announced it is destined for an $18-billion deficit over the next two years as it combats the effects of the global economic downturn.

Ontario Finance Minister Dwight Duncan unveiled the figure recently in a speech, three weeks ahead of presenting Ontario's $100-billion budget.

Even oil-rich Alberta is predicting a $1.4-billion deficit in 2008-09 and a further deficit for the following fiscal year.

New Brunswick's pension plan isn't the only one looking at staggering losses.

Quebec's pension fund manager, the Caisse de dépôt et placement du Québec, has been placed on credit watch by the Standard & Poor's bond rating agency after announcing at the end of February a $39.8-billion loss for 2008, one-quarter of its total assets.