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Nova Scotia NDP tables surplus hoping to curry favour with voters

Finance Minister Maureen MacDonald delivers the first fiscal update for 2012-2013 since the Nova Scotia government released its spring budget, in Halifax on Tuesday, Sept. 25, 2012.


Nova Scotia's NDP government tabled a slim surplus on Thursday of $16.4-million, offering a smattering of small populist measures in what's expected to be its last budget before the next provincial election.

Maureen MacDonald's $9.5-billion fiscal plan for 2013-14, her first as the province's Finance Minister, is propped up by anticipated boosts in provincial and federal revenues as well as $86-million in departmental spending cuts.

Ms. MacDonald said the balanced budget is a landmark achievement for a government that initially promised surpluses in each of the past three years, but was hampered by global economic forces beyond its control.

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"We are back to balance despite three years of modest revenue growth, not through hoping and wishing," Ms. MacDonald said in her budget speech to the legislature. "There have been some bumps along the way, but collectively we have a lot to show for our efforts."

The small surplus would follow a $356.4-million deficit for 2012-13.

Some of the foundation upon which the balanced budget is based comes from federal revenue sources that are projected to grow, driven by a $124.9-million rise in equalization.

Ms. MacDonald is also banking on $233.6-million more in provincial revenue to help shore up the government's finances. She expects $181.6-million of that to come from additional income tax revenue.

The tax on tobacco will go up by two cents per cigarette as of Friday, an increase expected to rake in $18.1-million.

There are also several new voter-friendly funding programs and tax breaks, some of which the government announced in the days leading up to the budget.

About $5.3-million will go to funding insulin pumps and related supplies for youths with Type 1 diabetes, and another $2.1-million will be spent to expand dental coverage for children 13 and under.

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Liberal Opposition Leader Stephen McNeil called the budget a fiscal house of cards engineered to build support in an election campaign.

"There's no question they're heading to the polls," Mr. McNeil said. "This document today is nothing more than for them to be able to try to say they've had a balanced budget."

Other measures previously announced include tax breaks that will exempt 8,000 additional low-income seniors from paying provincial tax, and a small business tax rate reduction to 3 per cent, down by half a percentage point.

The government has also previously announced its intention to reduce the harmonized sales tax by two percentage points over two years beginning in 2014, undoing the increase it introduced in July, 2010.

"Together, we have climbed a steep hill," Ms. MacDonald said. "Together, we will start seeing the hard work pay off."

But Mr. McNeil said it wouldn't take much to steer the province back into the red, adding that he believes the government's forecasts for economic growth are not grounded in reality.

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"The revenue projections are just out of whack," he said.

Progressive Conservative Leader Jaimie Baillie said the government lacks a solid plan to foster employment growth and will have a difficult time keeping the books in the black in future years as a result.

"For me, the important thing is that the province be in balance, there be a plan for jobs, that there be hope for the future," Mr. Baillie said. "Even in the budget assumptions, they don't see any new jobs being created as far out as they go, and as long as that's the case, it's not balanced."

The government is reining in some of its spending, however.

The Economic Development and Tourism Department will see its budget drop to $896.6-million, a decline of $46.1-million. Community Services faces a cut of $41-million, bringing its overall spending down to $130.1-million.

Education is projecting expenditures to ring in at $1.1-billion, a trim of $13-million.

But the Health Department, the government's largest expenditure at $3.9-billion, will see a small increase of $51-million.

Kevin Lacey, the Atlantic director of the Canadian Taxpayers Federation, said the government could have done more to cut spending in order to provide tax relief.

Mr. Lacey said taxes have gone up on a per capita basis by more than $1,000 since 2009, according to his group's calculations.

"That's a lot of money when you consider that the economy hasn't grown in that period of time," he said.

The net debt is pegged to grow by about $100-million, hitting $13.9-billion. That would work out to about $14,600 for every man, woman and child in a province of just fewer than 950,000.

The government's five-year mandate expires in June, 2014.

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