‘Balanced budget’ is really a sham.
by Don Cayo
In the low farce that passed for his budget day news conference last week, Nova Scotia Finance Minister Don Downe gave one – and only one – insightful answer. A reporter was pressing him on the key question of the day: Did his budget show a surplus or a deficit?
The minister replied with a single word: “No.”
He may, after a pause, have added something more than that. But I – and many like me – were laughing too loud to hear. Sad to say, we were laughing at him, not with him.
In my 30 years of attending a lot of often-pointless news conferences, this one was an all-time low. Reporters asked some serious questions about the government’s stewardship of Nova Scotia’s finances; Mr. Downe responded – except for what seemed to be one slip-up when he admitted the books weren’t balanced – with nothing but scripted bumph.
For those who haven’t followed the budget coverage – or for those who have and can make no sense of it – let me summarize the situation. Mr. Downe is touting the MacLellan government’s second consecutive “balanced budget” – actually a million and a half dollar surplus, he says. The NDP opposition is furiously indignant because of the little matter of $600 million in health care spending that the Liberals don’t count as part of the budget, so it will be added to the province’s debt over the next three years. The Tories are dithering, trying to figure out how many seats they might win or lose if they admit the budget is unbalanced and force an election, as they have repeatedly promised to do.
Meanwhile, almost everyone’s missing an even more important point – that Nova Scotia’s finances are in far worse shape than even the NDP says they are.
The cold, hard fact – buried in a complex chart on page 37 of one of a huge pile of documents distributed to reporters on budget day – is that the MacLellan government’s first two “balanced budgets” will drive the province’s net debt up by a total of $850 million. That’s an average of $425 million a year. That’s a 10 per cent increase in the amount of money that Nova Scotians owe. That’s almost as much as John Buchanan used to add to the debt each year in the bad old days of the early ’90s. (Or maybe those days weren’t so bad – Mr. Buchanan’s record deficit was $615 million in ’92-’93, but at least he used to admit it.)
If it makes no sense to you that a province could have both a modest surplus and a massively increased debt load in the same year, then you understand this situation perfectly. What we’ve seen in the past week is nothing more than a shameful charade. It’s an insult to Nova Scotians.
Nova Scotia has balanced budget legislation – a law that requires governments to, over time, spend within their means. If they run a deficit, they have to pay it off within two years.
This budget – or, more precisely, the legislation allowing the $600 million in spending that won’t be considered part of the budget – gives the province a full 14 years to pay the money back. You can – and perhaps we, as a society should – argue till the cows come home about the wisdom of a legislature passing a law that binds future governments for all time the way balanced budget legislation does. But the law is the law. And the fact that it is so ludicrously easy to get around makes this one a farce.
And even broader worry here is that if one government gets away with this kind of blatant chicanery, will others be far behind? If one constraint on government – the balanced budget law – can be ignored with impunity, will other constraints be subject to similar end runs?
I don’t suggest – or believe – that many, many governments of the past haven’t behaved as badly. But this is a new era, one where a majority of voters have come to understand the need for fiscal prudence, and one in which the political parties all feel compelled to pay service to it. The purpose of putting governments through costly and complex accounting processes, like the one that produced this budget, is to ensure that voters know what they’re getting and can make informed choices.
So the choice for Dr. Hamm’s Tories – to call a spade a spade and force an election, or to pretend everything’s OK and support the status quo – should be an easy one. Because if this issue does spark an election, it will not be about health care, as the Liberals hope. It will be about credibility. And the Liberals will be limping as they start the race.