“A First Step, but with a Short Stride”
Nova Scotia’s First Conservative Budget Still a High Wire Act

The first “real” budget of the John Hamm Conservative Government was delivered today by the Minister of Finance Neil LeBlanc. It can be classified as a good first step, but consisting of a short stride, leaving many action steps vague on specifics.

The highlights of the budget are:

A reduction in the “core operating” deficit from $387 million in 1999/00 to $268 million in 2000/01.
A restructuring and re-sizing of the provincial public sector, including health and teachers, which results in a reduction of 1600 full time positions, one third of whom will be eliminated through attrition.
Various “commitments” to get government out of programs and services such as owning and managing hotels, golf courses, some business subsidies, offshore energy ownership, and possibly one or more segments of the liquor business.
A continuation of Minister Leblanc’s openness in financial reporting through the introduction of Tangible Capital Assets accounting to properly reflect the true cost of utilizing these assets, and a promise to introduce “accountability legislation” this year and “surplus management legislation” starting in 2001/02.
Expanding or increasing cost recovery for a number of services such as driver’s testing and handbooks, higher Pharmacare co-pay percentages, higher ambulance users fees, introducing insurance and company licence fees, etc.
Ideally, it would have been nice to see a detailed restructuring plan, or at least mention of when the people of Nova Scotia could expect such details. Without this, it will be difficult for anyone to hold government to a timetable for the ambitious departmental and structural reforms suggested in recent government publication, The Course Ahead.

Mr. LeBlanc is counting on continual strong provincial economic growth to lift “own source” revenues by $76.3 million or 2.6%, while Federal revenues are estimated to decline $65.1 million. Therefore total revenues are expected to increase by only $11.2 million or less than .25 of 1%!

The riskiness of the Province’s financial position can be summarized in the actions taken on the spending side where wide reductions in program spending and subsidies to business are substantially offset by the increase in interest expenses on the ballooning debt and the monies set aside for restructuring. The main items are:


Program reductions/savings(4.4% net)                               $188.0 million

Decrease in Sysco and Nova Scotia Resources deficits          44.9

Elimination of one-time pension/awards costs                         31.5

Net increase in revenues 2000/01                                          11.2

Total Improvements                                                          $275.6 million


Increased Costs

Interest expenses on total debt                                  $85.0 million
Allowance for restructuring costs (net)                        71.9
   Major Increases in costs                                                $156.9

Net Improvement in “Core Operating” Deficit          $118.7 million

The result is a reduction in the “core operating” deficit from $387 million to $268 million, or $118.7 million, or 30.7%. It would have been more fiscally prudent for the Government to have taken a bigger cut out of the deficit this year, at least another 1.7% to reduce the deficit to a maximum of $200 million.

Mr. LeBlanc is projecting a deficit of $91 million for fiscal 2001/02 or a reduction of 66%! This is a challenge the Minister might have been wiser to have lessened by taking bigger expenditure cuts this year.

While the 2000/01Budget is pointed in the right direction and a good first step taken, the people of Nova Scotia will see their total debt exceed $11.0 billion during the coming year and pay almost $1.05 billion in interest expenses!

The risks of our high wire financial act remain extremely dangerous, and any blip in the growth of the Nova Scotia economy, or Canada generally, could result in a bad fall

For more information, please contact Roland Martin or Nancy Faraday-Smith at the AIMS office at (902) 429-1143.