N.B. Liberals cancel Tory tax rebate

New Brunswick's Liberal government killed a Tory plan Wednesday to eliminate the provincial portion of the HST on power and home-heating fuel bills, and blamed the former government for leaving the province's finances in a downward spiral.

The decisionlaunched a war of words between the two parties more venomous than in the recent provincial election campaign.

"The HST rebate was flawed public policy," Premier Shawn Graham said Wednesday. "It was put in place by the Tories to win votes but the public policy did not entice New Brunswickers to conserve on energy."

Graham said a program will be announced early in the new year to improve the energy efficiency of older homes, and low-income families who make less than $25,000 a year will qualify for a one-time energy assistance of $100.

But Progressive Conservative Leader Bernard Lord said Graham has broken a promise.

During a news conference in Fredericton, Lord played a video clip from a televised interview with Graham during the recent campaign in which the Liberal leader said he would honour the HST rebate.

Former Conservative finance minister Jeannot Volpe was more blunt in his assessment of the new Liberal premier.

"I feel that he has lied to the people of New Brunswick and I would hope that everyone around the province would realize that they can't trust those people. They've got no integrity," Volpe said.

The decision to axe the rebate came as the government released an independent review of the province's books by the accounting firm Grant Thornton.

Finance Minister Victor Boudreau said unless significant changes are made, the trend is for large deficits over the next three years, starting with a $17.6-million deficit for the current fiscal year.

He said the projections are for potential deficits of $300 million to $416 million in 2007-08, and as much as $573 million to $773 million by fiscal 2009-10.

"The former minister, Jeannot Volpe, knew this information. He knew it before the election, he knew it during the campaign, but for whatever reason he chose not to disclose this information to New Brunswickers," said Boudreau.

'Future projections are only that': Lord

Lord dismissed the idea that the Tories left the province in a deficit position.

"When we left office we were still heading for a surplus now we're heading for a deficit," he said. "They have broken their promise, they have put us back in a deficit, and they have raised taxes all in the same day."

Lord said the Grant Thornton projections are based on assumptions, and the real picture of the province's finances is the report of the auditor general.

"In 2003 when we were re-elected, the projection for 2005-2006 from the Department of Finance was at the time a deficit of over $500 million, and we ended up with a surplus of over $243 million, which means you can make decisions and choices to change these things," said Lord.

"Future projections are only that, future projections."

Volpe warned the government will likely have to raise taxes in an effort to boost revenues.

Energy Minister Jack Keir is already saying power rates will have to increase.

"Electricity rates in New Brunswick are being subsidized by the taxpayers, and that's not right," Keir said Wednesday.

"Folks that currently heat their homes with gas or oil or wood are paying their full share, and electricity homeowners are not."

Boudreau said everything in the Grant Thornton report will be considered as he prepares his first budget to be released in the new year.