The Cape Breton Post – 22 April 2008

When the Nova Scotia legislature starts its spring session Thursday, the opposition parties will be out to paint Premier Rodney MacDonald as a throw-back, political heir not of his immediate successor but of the free-spending John Buchanan. It’s amusing to hear opposition critics recalling almost with reverence the name of Progressive Conservative premier John Hamm as an icon of fiscal responsibility for having made a big payment on the provincial debt and for passing a law — with opposition support — requiring that future windfall revenues also go to the debt. They do this to set up the contrast with the MacDonald government’s decision to spend a hefty portion of unbudgeted revenues that turned up late in the fiscal year ending last March 31.

The government announced $300 million in additional spending on April 1. The opposition accused the government of violating the spirit of the law passed in 2005 when the Hamm government put an $830 million payment from Ottawa under an offshore accord settlement to debt payment, saving the province $50 million in annual debt servicing costs, according to estimates at the time.

No one’s offering much criticism on the government’s spending targets, including $165 million for a freeze on university tuitions, $26 million for infrastructure, and $25 million each for trust funds to protect wilderness and boost offshore technical research. This last item attempts to answer a long-standing complaint from Nova Scotia’s offshore petroleum support sector that the government has been doing too little to foster continued interest in offshore oil and gas, the golden goose that is in danger of expiring through lack of exploration activity.

The criticism is generally on two themes: that the spending spree betrays the 2005 commitment to debt retirement, and that it’s all done without legislature scrutiny or government accountability.

The first criticism isn’t persuasive because it rests on the assumption that the 2005 law dedicating all future “extraordinary revenue” to debt payment is a wise piece of legislation. It isn’t.

In fact, passing a law that seeks to commit future governments to dispose of revenues of unknown size, from unknown sources and at unknown times, in a particular way, independent on the circumstances at the time (including the government’s debt position and general financial condition) makes no sense at all. This isn’t government. We pay our politicians to make balanced decisions, taking into account all circumstances at the time. The government is still committed to putting $136 million on the debt this year, and at least 70 per cent of the anticipated Crown share payment will go to the debt.

Ian Munro, research director for the Atlantic Institute for Market Studies, criticizes the MacDonald government for reneging on the 2005 commitment but also admits that the government’s debt reduction strategy “has borne fruit,” effecting a nearly 40 per cent improvement in five years in the proportion of provincial revenue going to service debt (Nova Scotia Should Stick to Legislative Commitment to Put Extras on Debt Payment, April 18).

Criticism over the lack of accountability in the spending of money through supplemental appropriations has more merit, and the premier doesn’t excuse the practice by pointing out that every government does it. The tougher question, though, is whether legislatures really do provide meaningful scrutiny and accountability on government spending. If people had more faith in that process they’d be more insistent that it be respected.