Ruqayyah Snyder
New Brunswick has long struggled with poverty, with approximately 100,740 (13.8%) of its population living in poverty as of 2006. The province has the dubious distinction of being Canada's poorest, with the lowest median household income in the nation and the highest number of people living on low incomes. New Brunswick's economic woes are multi-faceted, with a variety of factors contributing to its financial troubles. The province has a history of deficit budgets, staggering debt, and an aging population that is shrinking as people move away in search of better opportunities. The tax base is shrinking, and economic growth is muted, with the province struggling to increase its population and attract new investment. The private sector is shedding labour, and the public sector is becoming an increasingly large employer, which is not sustainable in the long term. New Brunswick's high rate of poverty has significant social consequences, with children and youth being particularly vulnerable.
What You'll Learn
High poverty rates among children and youth
New Brunswick has long struggled with poverty, and this is reflected in its high poverty rates among children and youth. In 2007, approximately 26,353 youth under the age of 18 relied on food banks in New Brunswick. The child poverty rate in the province increased from 16.6% in 2020 to 18.7% in 2021, with 26,360 children living in poverty. This rate is unevenly distributed across the province's eight cities, ranging from a high of over 25% in Campbellton, Saint John, and Bathurst, to a low of 11.4% in Dieppe.
The high child poverty rate in New Brunswick is influenced by several factors. One key factor is the province's economic situation, as it has been ranked as having the poorest-performing economy among Canadian provinces, with a low per capita income of $28,000. Additionally, the province has a large rural population, and providing education and health services to these areas is expensive for the government. The COVID-19 pandemic also played a role, as the discontinuation of income support programs and inflation contributed to the rise in child poverty rates.
Government initiatives have had a mixed impact on child poverty in New Brunswick. While the Canada Child Benefit lifted 16,730 children out of poverty, overall, government transfers only reduced the child poverty rate from 40.6% to 18.7%. The risk of child poverty rates returning to pre-pandemic levels remains high, as employment earnings and government support for low-income families fail to keep up with the rising cost of living.
The persistence of high child poverty rates in New Brunswick has significant implications for the well-being and future prospects of its young residents. It underscores the need for effective policies and interventions to address this issue and improve the lives of children and youth in the province.
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Poor economic growth
New Brunswick's poor economic growth can be attributed to several factors, including demographic challenges, a weak tax base, consecutive deficit budgets, and unproductive government spending.
Demographically, New Brunswick has the nation's lowest median household income, and it was the only province that recorded a population decline between 2011 and 2016. The province is experiencing a shrinking tax base, with nearly 5,000 people leaving the labour force in 2017, which hampers economic growth. The aging population and out-migration of younger residents have also contributed to the economic decline.
The province's fiscal situation is further exacerbated by consecutive deficit budgets and a staggering debt, which was projected to hit $13.5 billion at the end of the fiscal year. The government has attempted to stimulate the economy through public works projects and stimulus spending, but the financial recovery has been weak.
The private sector is improving productivity and shedding labour, while the public sector's share of the workforce is steadily increasing. This transition has a "gendered dimension," with 85% of males relying on the private sector for employment compared to 50% of females.
The province's economic growth forecast remains muted, and experts warn that a sharp rise in interest rates or a downgrade in bond ratings could push New Brunswick towards a fiscal crisis.
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High public spending
New Brunswick has a long history of high public spending. From 1965 to 2021, per-person spending increased from $2,346 to $11,835 (in 2021 inflation-adjusted dollars). This substantial increase in spending is largely attributed to Premier Louis Robichaud, whose average annual change in per-person spending was 17.3%, far surpassing other premiers during the same period.
Robichaud's high public spending was directed towards initiatives such as the New Brunswick Equal Opportunity program, which focused on improving education, rural road maintenance, and healthcare services for all residents, regardless of their location within the province. This program aimed to address the disparities between urban and rural areas, ensuring equal access to essential services.
In recent years, New Brunswick has continued to maintain high levels of public spending. Between 2013/14 and 2017/18, nominal spending on public schools increased by 10.4%, even as student enrolment decreased by 2.2%. As a result, the province spent approximately $15,000 per student in 2017/18, the second-highest spending level in Canada and well above the national average. However, despite this investment, New Brunswick students' performance on standardised tests, such as PISA, has lagged compared to other provinces.
The province's high public spending extends beyond education. In 2023, the Higgs government tabled a budget that included tax reductions and a projected surplus of $40 million, marking the sixth consecutive budget surplus. The government has been praised for its disciplined approach to managing public finances, particularly its ability to avoid plunging deeper into debt during the COVID-19 pandemic.
However, New Brunswick still faces economic challenges. In 2019, it became Canada's poorest province, receiving the highest per-capita amount of equalization payments from the federal government. This development underscored the ongoing economic struggles of the province, despite its history of high public investment in various sectors.
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Poor fiscal management
New Brunswick has been dubbed Canada's poorest province, and while the province's finance minister, Ernie Steeves, attributes this to weak economic performance, critics point to poor fiscal management as a key factor.
New Brunswick's poor fiscal management can be attributed to several factors, including:
Inadequate Investment in Public Services
New Brunswick's opposition parties argue that the government has failed to invest adequately in public services, resulting in a lack of support for its citizens. This is particularly evident in the province's healthcare system, which has been described as "crumbling" by Green Leader David Coon. The province also has the lowest welfare rates in the country, according to a report by Maytree, a Toronto-based think tank. These low welfare rates force many recipients into a cycle of debt, relying on payday lenders to make ends meet.
Ineffective Use of Surplus Funds
New Brunswick has consistently demonstrated an inability to utilise surplus funds effectively. For three consecutive years, the province has vastly underestimated revenues, resulting in larger-than-expected surpluses. Instead of investing these excess funds into much-needed public services, the government has prioritised debt reduction and tax cuts. While these measures may provide short-term relief, they fail to address the underlying issues of poverty and inequality in the province.
Mismanagement of Natural Resources
New Brunswick has a history of mismanaging its natural resources, particularly its forests. In 2014, the government allowed forestry companies to increase their wood harvest by 20%, leading to concerns about the sustainability of the province's forests. Additionally, the Irving Group of Companies, a powerful corporate concentration in the province, has been criticised for its opaque forest management practices and excessive influence on government policies.
Inefficient Subsidy Programmes
The government of New Brunswick has a history of attempting to create employment through subsidy programmes, which have often failed to generate long-term economic prosperity. Instead, these programmes have resulted in bad debt and failed initiatives, such as Bricklin, Atcon, and the Marriott call centre in Fredericton. This indicates a lack of strategic planning and effective fiscal management.
Lack of Economic Diversification
New Brunswick's economy has traditionally been reliant on industries such as agriculture, forestry, and shipbuilding. However, these industries have been in decline, and the province has failed to diversify its economic base adequately. This lack of diversification makes the province vulnerable to economic shocks and contributes to its poor fiscal health.
In conclusion, New Brunswick's poor fiscal management can be attributed to a combination of factors, including inadequate investment in public services, ineffective use of surplus funds, mismanagement of natural resources, inefficient subsidy programmes, and a lack of economic diversification. Addressing these issues will be crucial for improving the province's economic outlook and the well-being of its citizens.
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Low tax base
New Brunswick has a population of around 800,000, making it one of Canada's smallest provinces. This small population size limits the tax base of the provincial government, which in turn restricts its ability to generate sufficient revenue. Due to this low tax base, New Brunswick has operated on deficit budgets for several years, leading to increasing debts. The province's spending does not align with its demographic reality, as stated by Richard Vaillant.
The limited tax base in New Brunswick is a significant contributor to the province's overall poor economic state. With a smaller population, there are fewer taxpayers to contribute to government revenue. This results in a lower capacity to invest in public services and infrastructure, which are crucial for economic growth and development.
The consequences of the small tax base are far-reaching. For instance, the great recession of 2008 hit New Brunswick hard, and the province struggled to recover. Between 2011 and 2016, New Brunswick was the only Canadian province to experience a population decline, with many young people migrating elsewhere in search of better opportunities. This shrinking labour force further exacerbated the low tax base issue, creating a cycle of economic stagnation.
The low tax base has also impacted the province's ability to address pressing social issues, such as poverty. In 2018, more than 1 in 5 children in New Brunswick lived below the poverty line, and the province had the lowest household income in the country. The low tax revenue hinders the government's ability to implement effective poverty reduction strategies and provide adequate social services to its residents.
To compensate for the low tax base, the New Brunswick government has had to rely on other sources of revenue, such as natural resource extraction. However, this has proven unsustainable, with industries like mining, forestry, and fishing experiencing significant declines in recent years. The dependence on limited natural resources has hindered long-term economic growth, and the closure of these industries has had a detrimental effect on the province's economy.
In summary, the low tax base in New Brunswick is a critical factor in the province's economic challenges. It restricts government revenue, limits investment in public services and infrastructure, and contributes to a cycle of poverty and stagnation. Addressing this issue is essential for the long-term prosperity and well-being of the province and its residents.
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Frequently asked questions
New Brunswick has the lowest median household income in Canada and is the only province that recorded a population decline between 2011 and 2016. The province has suffered through consecutive deficit budgets and staggering debt, and its tax base is shrinking.
New Brunswick is one of the thirteen provinces and territories of Canada. It is one of the three Maritime provinces and one of the four Atlantic provinces. About half of its population lives in urban areas, predominantly Moncton, Saint John, and Fredericton. The province is about 83% forested, and its northern half is occupied by the Appalachians.
New Brunswick's economy is in a state of decline, with a weak financial recovery hampered by demographic changes and a shrinking tax base. The province has seen a loss of jobs and a decrease in population, particularly among younger residents.
New Brunswick has a high rate of poverty, with approximately 13.8% of its population living below the poverty line. This includes a significant number of single mothers and children, who face challenges such as food insecurity, bullying, and social exclusion. The province also has a large number of residents receiving social assistance, and many rely on food banks to meet their basic needs.
