N.S. budget gets poor grade Think-tank criticizes spending, taxes

By SUSAN BRADLEY / Staff Reporter

A conservative think-tank has given Nova Scotia a mediocre grade for its past year’s budget.

In a report released Monday, the Atlantic Institute for Marketing Studies stamped the province’s budget report card with C/C+ because of poor financial planning.

“Although the province ended 2003-2004 in reasonably good fiscal health, its grade is reduced by a high-spending, tax-raising 2004-2005 budget that is hardly conducive to promoting a healthy environment for economic growth,” said the report’s author David Murrell, an economist at the University of New Brunswick.

The overall grade for the four Atlantic provinces was a C, below the national average of C+.

Those provincial governments are expected to begin tabling their 2005-2006 budgets within the next month or so.

Slowed economic growth, declining populations and increasing health-care costs threatens the region’s ability to attract business capital and skill labour, Mr. Murrell said.

He acknowledged that Nova Scotia’s minority Conservative government played a role in spending increases contained in last year’s budget.
“I don’t follow politics but I agree that minority governments probably have a tendency to increase spending.”

The report doesn’t address the recent federal-provincial agreement on offshore royalties that is expected to add $830-million to Nova Scotia coffers.

Mr. Murrell lauded the province’s promise to use the windfall to reduce its debt.

“But that will have to be policed. The temptation is there to spend it, like getting a tax refund and spending it on a vacation instead of paying off credit card debt.”

He cautioned Nova Scotia to resist following the path of Newfoundland, which did increase program spending – earning it a budget grade of C-, the lowest in the region.

The report gave Prince Edward Island a C-/C grade for its chronic overspending and for having three times as many public administration employees as the national average. That works out to be 22 government workers per 1,000 residents.

New Brunswick was the star of the Atlantic provinces with a C+, reflecting the state of its finances in 2003-2004, and the accuracy of that budget’s predictions. The institute’s report, however, was still critical of program spending that increased faster than the province’s revenues.