The Moncton Times and Transcript, The Halifax Daily News
NS’s economic crossroads
by Fred McMahon
Nova Scotia’s economic future is at a crossroads. If the province continues its present course, desperate times lie ahead. Yet, no party seems willing to aggressively address the very real threat to our prosperity.
The Nova Scotian government forks over almost $750 million a year in net debt servicing. This is $750 million we can’t spend on health care, education, roads, or tax breaks. It cripples government’s ability to provide Nova Scotians the things we need from government.
The threat to Nova Scotia’s future is the government’s current course of rapid debt creation. A poll released a few days ago shows almost twice as many Nova Scotians, 58 per cent, would prefer to spend money for health care rather than balance the budget, 33 per cent.
But the only way we can afford health care is through a balanced budget. Imagine what could be done today if the province hadn’t spent so foolishly in the past. In one year, our debt servicing costs exceed by a huge margin the much toted health investment fund’s $600 million for three years.
Things are about to get worse. Russell MacLellan’s two “balanced” budgets added $860 million of new debt to the province’s books. The third, for 2000-2001, projects about $240 million of additional debt, for a total of $1.1 billion of new debt.
This doesn’t count the $600 million health investment fund, for a new total of $1.7 billion in additional debt. That assumes government’s on-book debt estimates are correct. Yeah, and you can throw snowballs around on the sun.
But there’s more. These numbers don’t include off-book debt such as the debt of provincial corporations, for which the province is responsible. For example, in June 1998, the government estimated the debt of Nova Scotia Resources Ltd. at about $500 million. Now the minister responsible for crown-corporations refuses to release a new report on NSRL’s apparently ballooning debt.
“I received [the report] on Monday of [last] week, and I’m in an election,” Ken MacAskill told reporters. “My first priority is being re-elected. I will work on the report when I get a chance to meet with some senior staff in Halifax.”
At least MacAskill admits getting re-elected is more important than providing the information we need to make an intelligent choice. Of course, providing that information could interfere with MacAskill’s, and the Liberal’s, prime directive – “being re-elected.”
Other questions abound. How much more money does the government plan to pump into Sysco? How badly will the province be hit by lease costs for the P-3 schools, which were just another way to get debt-making off the books? What is the financial state of the provincial health boards? How many more surprises have the governing Liberals locked in closet?
So without making a stretch, and assuming Liberal bookkeeping is honest, the province’s debt is set to grow by at least $2 billion. That’s about $150 million in new debt servicing costs.
The provincial government claims it must borrow now to fund health care. Image how desperately tough it’ll be in two or three years time, when Premier MacLellan claims he’ll stop borrowing. By then, the provincial government will have $150 million less to spend each year because of bloated debt servicing charges.
We could see the health care system ripped apart as the province groans under massive debt servicing costs. Or we could face huge job-killing tax hikes. We could continue to borrow, but that only puts off the day of reckoning. Yet, none of the party leaders has fully addressed the dire threat our burst of debt creation poses.
The way to save the health care is not to throw more money at it today, but to get the debt under control so we’ll be able to spend on health care in the future instead of slipping money into an envelope and posting it to the province’s bankers.
Only 18 per cent of Nova Scotians now believe health care is poor. We must reform the system while it still functions rather than see health care decimated by debt servicing costs in a couple years.