With one of the weakest performing economies in the country and little in the way of natural resources, Nova Scotia’s NDP government is promising a balanced budget, succeeding where other provinces and the federal government have failed.
Premier Darrell Dexter’s critics are curious about how this will be achieved when the budget comes down on Thursday, questioning whether a looming election is part of the government’s balancing equation.
A recent editorial cartoon in the Halifax Chronicle Herald showed the Premier sitting on top of an obese bunny, with a big deficit sign on its belly, yanking desperately on its ears to pull it through a tiny hat.
“This really looks like a bit of sleight of hand and magic …,” Liberal finance critic Diana Whalen told reporters after Finance Minister Maureen MacDonald’s prebudget speech to the Halifax Chamber of Commerce last week.
Ms. MacDonald, who used the words, “balance,” “balancing” or “balanced” 23 times in 20 minutes, received a lukewarm response from the luncheon crowd.
Balancing the books is a controversial topic here and had been in doubt after the December fiscal update showed the 2012-2013 deficit figure, which was forecast in last year’s budget, had increased by $66-million to $277-million. Weak personal income-tax revenues were blamed, in part, for the higher number.
After much prevaricating, however, Mr. Dexter announced last month that his government would deliver a balanced budget, making Nova Scotia the only province in Atlantic Canada and one of four provinces in the country to achieve this.
The government has not wavered from this promise since – and has gone even farther.
In her speech, Ms. MacDonald promised to wipe out the deficit while still “protecting the services Nova Scotians value most – health, education and community services.”
The Liberals don’t believe it. Their suspicions have been raised by the Auditor-General’s recent revelations that the NDP underestimated its deficit figure in last spring’s budget by $27-million. The government has sloughed it off, saying the gap did not affect the budget’s overall estimates.
“It’s very unlikely that this is going to be done [balancing the budget] without harm to essential services,” said Ms. Whalen. “We’ll be on the lookout to see where the cuts are coming.”
Canadian Taxpayers Federation’s Kevin Lacey is skeptical about how the government will achieve balance, especially given that most provinces, including Nova Scotia, have missed their revenue targets. But for now, he is taking Mr. Dexter at his word that he can balance the budget – despite all of the negative economic numbers.
“Our hope is this is a sincere effort to balance the budget and it’s not politics in the lead-up to the election,” he said.
Two members of an independent panel, struck by Mr. Dexter just after he won his 2009 majority to look at the province’s finances, believe balance can be achieved now because of decisions the government made early in its mandate.
“Dexter made some pretty difficult choices early on,” said Donald Savoie, a public administration expert from New Brunswick and the chair of the expert panel. He points to the two-per-cent increase to the HST that the Premier announced just after he was elected and had made a commitment not to increase.
Mr. Savioe said that has helped with revenue. In terms of spending, he notes that the government has cut universities by 10 per cent over four years.
“I think on the revenue side he made some pretty tough decisions that I think are bearing out,” said Mr. Savoie. “And on the spending side, contrary to popular perception, I think he has made some pretty courageous decisions.” He compares this to the New Brunswick budget brought down last week that showed a $479-million deficit – and has only, for example, frozen university spending this year.
Economist Elizabeth Beale, the president of the Atlantic Provinces Economic Council, also sat on the committee. She believes the government can come in on target by continuing to restrain government spending. “They haven’t done too badly on that front,” she said. But she adds, “It will be interesting to see if they can hold to that facing an election.”
Editor's Note: Nova Scotia's budget will be presented on Thursday. A previous version of this online article incorrectly said it was Tuesday.