Deficit, net debt 'not sustainable,' auditor general warns

New Brunswick's pace of accumulating deficits and growth in thenet debt is "not sustainable," Auditor General Kim MacPherson warned Tuesday.

The province incurred a deficit of $260 million for the year ended March 31,and the net debt could reach more than $14 billion by the end of this fiscal year, according to the latest volume of her annual report.

Significant changes are required to improve the financial health of the province.- Kim MacPherson, auditor general

"We cannot continue to place ever-increasing demands on our future revenue streams to pay for past expenses," MacPherson said in a statement.

She is urging the government to set and achieve targets for long-term control and reduction of the net debt.

Otherwise, "it may eventually impact the province'sabilityto meet its existing financial obligations, both in respect of its service commitments to the public and financial commitment to creditors, employees and others."

The warning comes just two weeks after Finance Minister Cathy Rogers announced the province is on track for the lowest deficit in eight years, with a projection of$231.6 million, or $15.5 million less than the original budget projection.

$18K per capita net debt

MacPherson agrees the yearly shortfallis "going in the right direction," but points out it is nonetheless the eighth consecutive annual deficit, with additional deficits forecast through 2020.

Net debt, which measures the difference between the government's liabilities and financial assets, is "one of the most important measures" of the province's financial position, she said.

The net debt has increased by $7 billion in the past 10 years and currently stands at about $18,000 per New Brunswicker.

It's a "very disturbing trend" that could have a negative impact on the province's credit rating, borrowing costs and borrowing capacity,said MacPherson.

New Brunswick's net debt performance compared to other provinces of similar size,such as Nova Scotia, Manitoba and Saskatchewan, also "remains a significant concern,"MacPherson'sreport said.

New Brunswick had the highest increase in net debt and has the highestnet debt per capita in the group.

"Significant changes are required to improve the financial health of the province."