Analysis and Solution for the Debt Crisis of New Brunswick
Analysis and solution for the debt crisis of New Brunswick
Facts and assumptions:
1. The debt of the Province is approximately $8.3 Billion dollars
2. There are projected deficits for the next several years which will add significantly to the debt.
3. The debt of NBPower is not included (approximately $4.5 Billion dollars) and increasing because of significant difficulties with the refurbishment of the
Point Lepreau Nuclear station.
4. The civil service per capita in the province is one of the largest in Canada.
5. The civil service pension is not fully funded and there lies a significant future liability. Solutions:
1. Cut yearly expense by a significant order of magnitude.
2. Increase taxes – in particular the HST
3. A combination of both 1 and 2.
4. Do nothing and hope for significant new job growth in the private sector in
New Brunswick and that inflation does not occur in the next five years. (Both of these hopes are not supported by any real evidence they will occur and is basically one of denial of the problem and it will go away).
Algorithm of steps to be taken
One must accept the assumption the public is an informed public and communicate issues almost instantaneously. The public does not want raised taxes. Statements by politicians do not carry any weight as the public has a tendency to distrust politicians and their statements. The public has to be informed and consulted of what is to take place before implementing the following steps. After the initial civil service unrest in two to three years the public will regain confidence in the politicians and appreciate what they have done. Because some of the steps below will not find favour with the civil service one should take any comments from them with a very large grain of salt.
The key to selling the public on the issue of restraint before raising taxes has to be sold by example. Some of the examples will be outlined in the step process below.
Pension reform
Step 1
Facts and assumptions:
1. The debt of the Province is approximately $8.3 Billion dollars
2. There are projected deficits for the next several years which will add significantly to the debt.
3. The debt of NBPower is not included (approximately $4.5 Billion dollars) and increasing because of significant difficulties with the refurbishment of the
Point Lepreau Nuclear station.
4. The civil service per capita in the province is one of the largest in Canada.
5. The civil service pension is not fully funded and there lies a significant future liability. Solutions:
1. Cut yearly expense by a significant order of magnitude.
2. Increase taxes – in particular the HST
3. A combination of both 1 and 2.
4. Do nothing and hope for significant new job growth in the private sector in
New Brunswick and that inflation does not occur in the next five years. (Both of these hopes are not supported by any real evidence they will occur and is basically one of denial of the problem and it will go away).
Algorithm of steps to be taken
One must accept the assumption the public is an informed public and communicate issues almost instantaneously. The public does not want raised taxes. Statements by politicians do not carry any weight as the public has a tendency to distrust politicians and their statements. The public has to be informed and consulted of what is to take place before implementing the following steps. After the initial civil service unrest in two to three years the public will regain confidence in the politicians and appreciate what they have done. Because some of the steps below will not find favour with the civil service one should take any comments from them with a very large grain of salt.
The key to selling the public on the issue of restraint before raising taxes has to be sold by example. Some of the examples will be outlined in the step process below.
Pension reform
Step 1