Budget tricks in Nova Scotia
by Fred McMahon
The Moncton Times and Transcript, The Halifax Daily News
Regardless of Nova Scotians’ views on deficit spending, voters in the upcoming election in this province should be outraged about the tricks Russell MacLellan’s government has played with the budgeting process over the 14 months since it was elected.
Surely, the first responsibility of any government is to be honest – or, at least, somewhat honest – with the people who elected it. In the short year and a bit since the MacLellan government was returned with a minority, the government has shown contempt for the people of Nova Scotia in reporting on the province’s fiscal position.
Vancouver Sun columnist Michael Campbell – yes, Nova Scotia’s irresponsible ways have become famous even in Canada’s western-most province, known for its own wackiness – writes: “The budget of MacLellan’s Liberals in Nova Scotia is another vivid example of the corruption that permeates government reporting.”
The budget, Campbell writes, “is a sham that could land the finance minister in jail if he tried to perpetrate such a scheme in the private sector.” Campbell wonders “how decent men and women can show such profound hypocrisy and deceit and live with themselves. It dumbfounds me how they can table a budget like this with a straight face.”
The MacLellan government’s fanciful attitude towards fiscal reality goes back before the 1998 election. In November 1997, Michelin Tire hit job targets that required the provincial government to write off generous loans to the tire giant.
Six months later, this item did not appear in the province’s first post-election budget, allowing MacLellan to claim he had delivered his promise to produce a balanced budget. Miraculously, the Michelin write-off appeared only in the year’s first quarterly report, where the province’s $1.2 million “surplus” became a $82 million deficit largely because of the Michelin write-off.
The province’s public-private-partnerships for school construction seems to have been nothing more than an attempt to get more expenses off the books. They certainly are nothing like public-private partnerships elsewhere on the planet. Some opposition members have gone further and charged the whole process has had more to do with pork than with education.
The government was also derelict in its duties to ensure hospitals and health centres were staying on budget. The government at first ignored its responsibility to cover ballooning debts in the health sector then, when government finally took the debts on board, it choose to be devious.
Rather than admit these deficits tipped the province itself into a deficit situation, the government simply tucked the overspending into the province’s debt, but not in any particular year.
Then came the coup-de-grace for the province’s balanced budget, a $600 million off-book health investment fund. This was no investment fund. It was merely a device to take regular health spending off the books so the province “officially” wouldn’t have a deficit. Even worse, it soon became clear government had no idea how it was going to spend the money.
Two honestly balanced budgets can’t create nearly a billion dollars of new debt. Yet, that’s what MacLellan’s two balanced budgets will add to Nova Scotia’s books. This levitates the dark arts of deficit spending – honed under the governments of Gerald Regan and John Buchanan – to the highest levels of sorcery.
This sort of chicanery is unacceptable. If Nova Scotia must have deficit spending, as Russell MacLellan clearly believes, the premier should have tried to sell that idea honestly during the last election campaign instead of hiding it away.
Not that Nova Scotia needs to run a deficit. Indeed we can’t afford to in the long run. The province is already sitting on a pile of debt left over from the Regan and Buchanan years. Other provinces, notably New Brunswick, have successfully managed their budgets. Nova Scotia can and must do the same.
To be fair to Nova Scotians, political leaders must summon the courage for honest debate and discussion of issues and provincial finances in the upcoming summer election.
Already the signs are bad. The NDP’s Robert Chisholm is the only leader who has consistently talked fiscal responsibility. He also promises no new taxes, a promise he made in the last election along with a pledge to spend gobs of new money. MacLellan didn’t even promise new spending to get to his fiscal donnybrook. He was just incompetent in handling day-to-day spending.
Conservative leader John Hamm’s unseemly waffle over the whether to bring down the government – after he had absolutely, completely, 120-per-cent promised to defeat deficit spending – detracts from his credibility. He will need to be clear and consistent on his plans during the campaign to restore his credibility.
Nova Scotians go into an election forced by a government that baldly reneged on its key campaign promise of fiscal responsibility. But voters have no guarantee the options are better. At least, they can’t be worse.