After initially warning about a budget full of “difficult decisions” the New Brunswick government has made a dramatic u-turn. On March 17 they delivered the largest deficit budget in the province’s history. This is just the latest example of the dilemma that bourgeois governments all over are finding themselves in: compelled by capitalism to make cuts, but afraid of angering the working class.
For several weeks, Premier Susan Holt and her Liberals had been signalling an austerity budget.
From the capitalists’ perspective, cuts are objectively necessary to make the province attractive for investment, deal with the government’s debt (currently at $13.9 billion), and make room in the budget for more corporate handouts (like the $45 million given to Irving Paper after it laid off 140 of its workers). Various measures were floated to get the provincial deficit under control and shift the cost onto workers and students: $35 million in proposed cuts to education with threats to close some campuses and privatize Mount Allison, abandoning prior commitments to $10-per-day child care, layoffs in the civil service and public sector. Housing Minister David Hickey expressed the government’s attitude saying, “everything’s on the table.”
But news of the proposed cuts unleashed anger across the province—especially among students. Student groups began organizing a rally in Fredericton on budget day. At the same time, in recent weeks, similar attacks on education in Ontario and Nova Scotia have galvanized support for a student strike. In Nova Scotia, a mass movement against austerity began to develop with thousands protesting outside the legislature. In an attempt to appease the movement and save his own skin, Nova Scotia premier Houston had to reverse some of the cuts he had proposed.
On March 17, while the budget was being presented, thousands rallied outside the New Brunswick legislature demanding “No more cuts!” With the threat of a mass movement looming, Holt pivoted.
Rather than confront the workers and youth, Holt is attempting to kick the can down the road with the largest deficit in the province’s history, $1.4 billion in 2026-27. The Liberals now plan to run deficits for the rest of their mandate, adding almost $6 billion to the debt. Instead of deep cuts to education, the budget contains a freeze on education spending. Some austerity remains in the budget, notably a plan to reduce the size of the civil service by 12 per cent. But the sweeping cuts which were originally floated have been shelved—for now.
More austerity inevitable under capitalism
But the government can’t put it off forever. While Holt’s Liberals may justify the deficits by claiming they will stimulate economic growth, the real economic outlook is bleak. The threat of tariffs from the U.S., the crisis in the energy markets, and the general crisis of Canadian capitalism mean that a boom is ruled out. The economy faces an extremely dire situation and the fiscal situation of the government is not going to get any better. Sooner or later, Holt will have to shift back to balancing the budget through cuts to education and other social services.
And this is what the bourgeoisie demands. As Shannon Merrifield, the Chief Executive Officer of the Saint John Region Chamber of Commerce explained, “Delaying tough fiscal decisions will only make them more difficult and more disruptive later.”
Debt servicing costs rose 16 per cent in this budget, largely due to the record $1.3 billion deficit in 2025. Interest payments will continue to rise and are expected to surpass $1 billion by 2028, and that’s with interest rates remaining flat, an optimistic assumption given the situation. Investment under capitalism is only done with the aim of returning profits, this goes for loans to governments too. As creditors become wary about New Brunswick’s ability to repay their debts, they’ll consider the loans more risky and demand higher interest rates as a result. This can lead to an upward spiralling of debt servicing costs.
No wonder then that economist Richard Saillant has called the budget “highly irresponsible”, stating that it will impact the province’s credit rating down the road. Right-wing think tank the Fraser Institute called the budget “disastrous”. And from a capitalist point of view, they have a point.
Unless we are prepared to attack the bourgeoisie’s right to own the means of production, they will continue to hold us hostage. Debt payments will eat up an increasing portion of public revenues, which will only lead to an untenable situation. The government will be forced to offload the cost of this crisis onto workers sooner or later. But with the years of erosion that have already happened to New Brunswick’s education system, infrastructure, and other social services, any measure to restore economic equilibrium is bound to upset the social equilibrium.
The austerity we’ve seen is a taste of things to come. Both federally and provincially, the ruling class is exerting immense pressure for the government to cut. But the backlash we’ve seen against this is inevitable.
Workers won’t accept the attacks the capitalists demand, huge class struggles to defend public services and demand more are on the horizon. Only a determined class struggle can defend the conquests of the past and fight for a new system where we can put an end to the regressive logic of the capitalist system.
