Tough work over NS budget
by Fred McMahon
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08/08/1999
The Moncton Times and Transcript, The Halifax Daily News
Does John Hamm have the toughness to handle the fiscal crisis Nova Scotia faces? The summer’s feel-good election left Nova Scotians poorly prepared for the drastic measures the province must take to free us from crippling economic policies of the past.
In an interview last week with New Brunswick journalist Don Cayo, former Nova Scotia Premier John Savage revealed Nova Scotia was nearly bankruptcy when he became premier in 1993. Bond rating agencies, the former premier said, warned him the province would soon have the lowest rating in the land and have trouble finding any lenders.
The situation improved under Savage and deteriorated under Russell MacLellan. Billions have been added to the province debt.
Even the province’s dishonest books show the debt increasing by almost $2 billion over the next three years. Honest numbers would be closer to $3 billion if school construction, crown corporation losses, health board losses, the cost of the tar pond clean-up and the cost of either closing or sustaining Sysco were honestly accounted.
Nova Scotia pays $750 million in debt servicing costs each year. That’s set to rise to over $1 billion a year, once the new debt is added and the cost of school leases counted. That’s a devastating fiscal drag on the province’s future.
The only way to head off disaster is a dramatic round of cuts. This would spark cries of outrage from interest groups across the province. The demonstrations which so damaged Dr. Savage would look like a stroll in the park compared to the anger which would greet Dr. Hamm.
Can a gentle country doctor withstand such pressure? Nothing in the campaign provided Nova Scotians with an understanding of the province’s desperate situation. That’ll make tough decisions tougher.
One consolation for Hamm is that Dr. Savage’s political fate – oblivion – was the exception, not the rule, for leaders who try to bring government under control.
Other governments faced the same angry protests, but emerged stronger, and with a new consensus about fiscal responsibility, ultimately shared even by their political adversaries.
This is true whether with Frank McKenna in New Brunswick, now succeeded by a fiscally responsible Conservative government; Mike Harris in Ontario, who battled a Liberal party that had largely lifted his platform; and with Alberta’s Ralph Klein who might as well remain premier for life.
It was true with the always-unpopular Margaret Thatcher, who nonetheless became the longest serving British Prime Minister this century. She so converted the opposition that today’s Labour Party is to the right of the pre-Thatcher Conservative Party.
The same story could be told in the Netherlands where budget-cutting Prime Minister Ruud Ludders faced devastating protests in the early 1980s and became the longest serving Dutch Prime Minister. Union leader Wim Kok, whose only complaint was that Ludders hadn’t cut deep enough, succeeded him. Kok engineered what today is termed the “Dutch miracle,” massive new employment and economic growth.
The same could be said of Irish Prime Minister Charles Haughey and his finance minister Ray “Mac-the-knife” McSharry. Two days after McSharry was appointed finance minister in Haughey’s minority government, he killed a pay raise for senior civil servants. That was a small taste of the slash-and-burn to follow. Instead of being an economic laggard, today Ireland is in the forefront of worldwide economic growth.
This could happen in Nova Scotia, but gentle John will need some of Mac-the-knife’s steel.
Hamm’s election may be the best or worst thing to happen to Nova Scotia, quite literally this century. If the good doctor takes charge of the province’s finances, we have a chance to reverse Nova Scotia’s decade long slide. Even New Brunswick, once Nova Scotia’s poor cousin, has exceeded Nova Scotia’s per capita economic activity.
If Hamm is indecisive or prepared to retreat in the face of interest groups, Nova Scotia faces a dreary tomorrow. No political party will be left to support fiscal prudence, but soon the bankers will come knocking. That will spell disaster for our ability to fund health care, or education, or any of the other government services we depend on.