Over the coming weeks and months we are going to hear quite a lot about the fiscal mess the previous government left us in. Some of it will be true; some of it will be pure hyperbole and political grand standing. But the harsh reality for Premier Dexter is that none of it will matter. In four years time when his government faces the electorate again any deficit, any debt, and any “harsh” fiscal medicine will be his and his alone to defend.
This is both political and practical reality. Like John Turner and the infamous Senate appointments that some argue gave us the first Mulroney government, Premier Dexter “has a choice, sir”. Indeed, unlike Mr. Turner, Premier Dexter has already committed to the choice he intends to make. His party was elected on a platform of fiscal prudence, restraint and “conservative progressivism”. Nova Scotians know we are living beyond our means and we were looking for the next incarnation of John Hamm to help correct an increasingly unstable fiscal ship.
This will be no mean feat for Premier Dexter partially because the vaunted fiscal prudence of the Hamm government is largely overblown and, where it existed at all, the MacDonald government blew it away. Goodbye debt reduction plan, so long crown share, bye bye offshore accord. All of it was spent not to enable us to sustain critical programs next year and the year after, but to fund new ones last week and last month.
The vaunted age of smaller government, less regulation and the unfettered free market never reached the shores of Nova Scotia (not that it ever existed anywhere else either). Our government, and our government spending is huge; $8963 on a per capita basis, with 97 public servants for every one thousand Nova Scotians. Spending has grown over and above inflation for seven of the last nine years.
This is both good news and bad news for Premier Dexter. It is good news in that with a government this large in a province this small there are lots of ways to reallocate resources to priorities without increasing overall spending. It is bad news in that “reallocating spending” means cutting programs, programs that matter at the very least to the people delivering them and to the people receiving them – regardless of whether or not they matter to the rest of us.
Increasing overall taxes is not an option, Nova Scotia is already among the highest taxed jurisdictions in the country and, indeed Canada remains one of the highest taxed jurisdictions in the world. Yet taxes and user fees will rise (anyone want a smoke?). The tax review currently underway was basically window dressing for the Tories, launched largely to show they were “doing something” in response to the massive tax restructuring being discussed at the time in New Brunswick. With New Brunswick’s taxes now actually falling, with jurisdictions around the globe following suit, and with demographics telling us we simply can not carry on as we have been, that review is now not only critical for the NDP but urgent for you and me.
It is also not enough. Some programs, simply put, must be publicly funded or at the very least publicly supported, and so tax cuts have a finite limit beyond which they can not go. But because we must fund programs we need does not necessarily mean we should fund every program we want. Premier Dexter and his colleagues have, so far, offered some early indications that they may well understand this distinction. The fact that the highway program this summer appears to be smaller then what was promised by the profligate Tories is, contrary to what has appeared in recent commentary, actually good news.
Nova Scotia, while not unscathed, has been largely cushioned from the current economic downturn. That does not mean the pain has been any less for those who have lost their jobs or seen their companies go under, but it means that we have had far fewer of those cases then many other provinces and states. We did not need the massive, debt financed, program threatening, future mortgaging stimulus package proposed by the former government. We did not need it then and we certainly do not need it now.
Premier Dexter has gone from saying he would reintroduce the wasteful and ultimately government killing budget of the Tories, to saying he will focus just on the actual “commitments” made, to now talking about focusing on a budget largely in line with the previous plan’s objectives. Let’s hope by the time the budget comes before a new House this fall it is a plan fit to our actual circumstances and our true means.
Charles Cirtwill is the Executive Vice President of the Atlantic Institute for Market Studies, a non-partisan, independent public policy think tank based in Halifax.