Province Of New Brunswick 18-K Annual report (foreign governments)

2011-2012 Third Quarter Report

Published by:

Department of Finance

Government of New Brunswick

P.O. Box 6000

Fredericton, New Brunswick

E3B 5H1 Canada

Internet: www.gnb.ca/finance

February 2012

Translation:

Translation Bureau, Supply and Services

ISBN 978-1-55396-347-9

Think Recycling!

2011 Economic Update

2011 Statistical Summary (to date)

Growth Rates

	2010 to 2011		Reference
	NB	Canada	Period
Population and Labour Force
Total Population	0.3	1.0	July
Employment	-1.2	1.6	Jan-Dec
Unemployment Rate (%)	9.5	7.4	Jan-Dec
Indicators
Foreign Exports	19.5	12.4	Jan-Nov
Retail Trade	4.8	3.5	Jan-Oct
Average Weekly Earnings	3.7	2.7	Jan- Oct
Housing Starts	-16.2	-0.8	Jan-Sept
Manufacturing Sales	16.4	7.8	Jan-Nov
Consumer Price Index	3.5	2.9	Jan-Dec

per cent change unless otherwise indicated

Source: Statistics Canada

• The Department of Finance’s current estimate for real GDP growth in 2011 is 1.2 per cent and is consistent with latest survey of private sector forecasters. The pace of growth was slower than what was expected at budget, largely as a result of a weak labour market in New Brunswick and weaker-than-expected growth in the U.S. and Europe.

• New Brunswick’s population has grown for the fourth consecutive year in 2011, adding almost 10,000 residents since 2007-08.

• New Brunswick’s job market was weak in 2011 with employment falling by 4,000 as gains in part-time employment were not enough to offset full-time losses. On a positive note, employment was up slightly in the final quarter of the year.

• Despite the loss of jobs, average weekly earnings growth in the province has outpaced Canadian growth.

• New Brunswick remained a growth leader in exports and manufacturing sales in 2011, largely as a result of rising world energy prices.

• Retail sales have shown healthy growth, up 4.8 per cent, compared to the national increase of 3.5 per cent.

• Consumer inflation in the province has averaged 3.5 per cent, in advance of the national growth rate of 2.9 per cent. Excluding food and energy, CPI growth was a more limited 1.5 per cent in New Brunswick in 2011.

2011-2012 Fiscal Update

Based on third quarter information, a revised deficit of $471.1 million is projected for 2011-2012. This is an increase of $22.3 million compared to the budget estimate of $448.8 million and a $74.6 million decrease from the second quarter report.

Net debt is projected to increase $620.2 million year-over-year, a decrease of $10 million from budget and an $80.1 million decrease from the second quarter report.

Revenues are projected to be $36.5 million lower than budget. The major variances include:

• Personal Income Tax is projected to decrease $53 million because of an anticipated negative adjustment related to the 2010 taxation year and a weakened economy.

• Return on Investment is down $21.9 million. The Lotteries and Gaming Corporation revenue is down $11.5 million due to factors consistent with the second quarter report: lower than anticipated profits and higher than anticipated revenue sharing payments to First Nations. In addition, the New Brunswick Liquor Corporation revenue is down $9.3 million because of lower than anticipated sales.

• Corporate Income Tax is projected to decrease $18 million because of lower federal projections of national corporate taxable income.

• Sale of Goods and Services is down $7.5 million mainly due to lower own source revenue for consolidated entities, which is offset by lower expenses.

• Special Operating Agency funding is down $5.8 million mainly due to various funding agreements within the Regional Development Corporation which is offset by reduced expenditures.

• Harmonized Sales Tax is up $40.8 million due to positive adjustments related to prior years.

• Metallic Minerals Tax is up $9 million attributable to higher than anticipated world zinc prices.

• Licences and Permits are up $7.6 million mainly due to an increase in the volume of motor vehicle registrations.

• Financial Corporation Capital Tax is up $6 million as a result of increased capital for major banks.

2011-2012 Fiscal Update

Total expenses are projected to be $14.2 million lower than budget. This is mainly due to the following:

• $15.7 million decrease in the Department of Transportation mainly due to the recognition of rehabilitation payments under public-private partnerships as investments in tangible capital assets.

• $12.7 million decrease in the Department of Post-Secondary Education, Training and Labour mainly due to decreases in employment development programs (partially offset by lower revenue).

• $12 million decrease in Service of the Public Debt due to lower than forecasted interest rates.

• $7.9 million decrease in the Regional Development Corporation mainly due to projected under-expenditures in the Community Initiatives program.

• $8.6 million decrease in the Regional Development Corporation Special Operating Agency, which is offset by lower revenue.

• $6.5 million decrease in Business New Brunswick due to a projected under-expenditure in the Strategic Assistance Program.

• $6.1 million increase in Agriculture, Aquaculture and Fisheries mainly due to anticipated increases in existing federal-provincial agriculture business risk management programs.

• $7.9 million increase in the Department of Health mainly due to higher than anticipated expenditures within the Prescription Drug Program.

• $25 million increase in General Government, mainly due to increased employee benefit and pension plan expenses as a result of lower than budgeted investment returns.

• $2.9 million increase in the Department of Social Development mostly due to additional expenditures in the Income Security Program.

COMPARATIVE STATEMENT OF SURPLUS OR DEFICIT

Thousands

$

	Year Ending March 31
	2012 Estimate		2012 2nd Quarter		2012 3rd Quarter		Variance from  Estimate
Revenue
Ordinary Account		7,232,630		7,202,425		7,202,835		(29,795)
Capital Account		215		648		693		478
Special Purpose Account		60,678		61,236		62,434		1,756
Special Operating Agency Account (net)		83,548		75,679		77,758		(5,790)
Sinking Fund Earnings		228,600		228,000		225,000		(3,600)
Amortization of Deferred Capital Contributions		36,408		37,074		36,859		451
Total Revenue		7,642,079		7,605,062		7,605,579		(36,500)
Expense
Ordinary Account		7,538,713		7,594,764		7,522,389		(16,324)
Capital Account		70,510		74,185		75,842		5,332
Special Purpose Account		67,728		68,466		67,159		(569)
Special Operating Agency Account (net)		85,965		77,258		77,231		(8,734)
Amortization of Tangible Capital Assets		327,985		336,132		334,095		6,110
Total Expense		8,090,901		8,150,805		8,076,716		(14,185)
Surplus (Deficit)		(448,822)		(545,743)		(471,137)		(22,315)

COMPARATIVE STATEMENT OF ORDINARY ACCOUNT REVENUE BY SOURCE

Thousands

$

	Year Ending March 31
	2012 Estimate		2012 2nd Quarter		2012 3rd Quarter		Variance from Estimate
Taxes
Personal Income Tax		1,279,000		1,229,000		1,226,000		(53,000)
Corporate Income Tax		243,600		254,000		225,600		(18,000)
Metallic Minerals Tax		39,000		50,000		48,000		9,000
Provincial Real Property Tax		448,000		448,000		448,000		0
Harmonized Sales Tax		1,083,800		1,087,200		1,124,600		40,800
Gasoline and Motive Fuels Tax		247,300		247,300		247,300		0
Tobacco Tax		145,300		145,300		150,000		4,700
Pari-Mutuel Tax		640		630		600		(40)
Insurance Premium Tax		43,154		43,354		43,336		182
Real Property Transfer Tax		6,400		6,400		6,400		0
Financial Corporation Capital Tax		14,000		20,000		20,000		6,000
Sub-total: Taxes		3,550,194		3,531,184		3,539,836		(10,358)
Return on Investment		423,870		405,166		402,013		(21,857)
Licences and Permits		122,167		129,573		129,765		7,598
Sale of Goods and Services		289,630		287,064		282,160		(7,470)
Royalties		85,920		85,520		87,655		1,735
Fines and Penalties		8,956		8,214		8,234		(722)
Miscellaneous		29,447		29,558		30,744		1,297
TOTAL: OWN SOURCE REVENUE		4,510,184		4,476,279		4,480,407		(29,777)
Unconditional Grants Canada
Fiscal Equalization Payments		1,632,600		1,632,600		1,632,600		0
Canada Health Transfer		605,700		605,700		605,700		0
Canada Social Transfer		251,400		252,700		252,700		1,300
Wait Times Reduction Transfer		5,459		5,480		5,480		21
Other		1,938		1,938		1,938		0
Sub-total: Unconditional Grants Canada		2,497,097		2,498,418		2,498,418		1,321
Conditional Grants Canada		225,349		227,728		224,010		(1,339)
TOTAL: GRANTS FROM CANADA		2,722,446		2,726,146		2,722,428		(18)
TOTAL: GROSS ORDINARY REVENUE		7,232,630		7,202,425		7,202,835		(29,795)

COMPARATIVE STATEMENT OF ORDINARY ACCOUNT EXPENSE

Thousands

$

	Year Ending March 31
DEPARTMENT	2012  Estimate	2012 2nd Quarter	2012 3rd Quarter	Variance from Estimate
				$	%
Agriculture, Aquaculture and Fisheries	40,372	46,686	46,436	6,064	15.0	%	!
Business New Brunswick	28,341	28,641	21,841	(6,500)	-22.9	%	ü
Education and Early Childhood Development	1,060,976	1,060,976	1,060,476	(500)	0.0	%	ü
Energy	2,910	2,890	2,860	(50)	-1.7	%	ü
Energy Efficiency and Conservation Agency
of New Brunswick	17,040	17,040	18,880	1,840	10.8	%	!
Environment	16,563	16,788	16,438	(125)	-0.8	%	ü
Executive Council Office	5,623	5,613	5,563	(60)	-1.1	%	ü
Finance	20,522	19,822	19,672	(850)	-4.1	%	ü
General Government	647,853	703,844	672,882	25,029	3.9	%	!
Health	2,534,448	2,542,982	2,542,371	7,923	0.3	%	!
Intergovernmental Affairs	3,066	3,056	2,966	(100)	-3.3	%	ü
Invest NB	3,000	3,000	2,975	(25)	-0.8	%	ü
Justice and Consumer Affairs	43,470	44,595	44,160	690	1.6	%	!
Legislative Assembly	20,513	22,520	21,151	638	3.1	%	!
Local Government	119,808	119,667	119,019	(789)	-0.7	%	ü
Maritime Provinces Higher Education
Commission	274,101	274,101	274,101	0	0.0	%
Natural Resources	111,401	111,401	110,899	(502)	-0.5	%	ü
Office of the Attorney General	17,538	17,283	17,113	(425)	-2.4	%	ü
Office of Human Resources	3,092	2,842	2,817	(275)	-8.9	%	ü
Office of the Premier	1,590	1,590	1,565	(25)	-1.6	%	ü
Post-Secondary Education,
Training and Labour	304,033	304,325	291,346	(12,687)	-4.2	%	ü
Public Safety	135,862	135,862	133,162	(2,700)	-2.0	%	ü
Regional Development Corporation	74,244	74,244	66,394	(7,850)	-10.6	%	ü
Service of the Public Debt	679,993	671,000	668,000	(11,993)	-1.8	%	ü
Social Development	1,009,941	1,019,533	1,012,793	2,852	0.3	%	!
Supply and Services	125,226	125,226	124,726	(500)	-0.4	%	ü
Tourism and Parks	28,959	29,444	29,304	345	1.2	%	!
Transportation	189,136	170,701	173,437	(15,699)	-8.3	%	ü
Wellness, Culture and Sport	19,092	19,092	19,042	(50)	-0.3	%	ü
TOTAL	7,538,713	7,594,764	7,522,389	(16,324)	-0.2	%

üProjected under-expenditure

!Projected over-expenditure

The 2012 Estimates were restated to include departmental transfers and reorganization.

COMPARATIVE STATEMENT OF CHANGE IN NET DEBT

Thousands

$

	Year Ending March 31
	2012 Estimate		2012 2nd Quarter		2012 3rd Quarter		Variance from Estimate
Surplus (Deficit)		(448,822)		(545,743)		(471,137)		(22,315)
Acquisition of Tangible Capital Assets		(522,406)		(503,837)		(496,878)		25,528
Amortization of Tangible Capital Assets		327,985		336,132		334,095		6,110
Revenue Received to Acquire Tangible Capital Assets		49,395		50,214		50,538		1,143
Amortization of Deferred Capital Contributions		(36,408)		(37,074)		(36,859)		(451)
(Increase) Decrease in Net Debt		(630,256)		(700,308)		(620,241)		10,015