Getting There, Slowly

The value of the wafer thin surpluses forecast in the Liberal budget is more symbolic than substantial.

The government clearly disclosed that $110 million of the coming year’s projected surplus was an accounting oddity related to contributions to the convention centre from other levels of government.

The net of that the surplus is predicted to be $17.1 million this year and $20.8 million the next. Both amounts are less than the government spends in one day. That increases to three days’ spending in the third year and five days’ spending in the fourth.

Needless to say, the predictions are never that accurate. Changes in interest rates can affect borrowing costs. Changes in resource prices or production volumes can affect royalties. If the lobster landings were to become less bountiful than the excellent levels of recent years, there will be less income tax paid by fishermen and their suppliers. Most significantly, the cost of public wage settlements could exceed what has been provided.

These factors produce variances in the tens of millions. For example, the 2015-2016 personal income tax is now forecast to be $57 million different (fortunately to the good) than estimated just four months ago. Things could easily go the other way in future years, producing deficits. Unlike the federal counterpart, the provincial Liberal budget lacks a substantial provision for adversity.

That said, the government has clearly labelled fiscal soundness as a core commitment. One of the key contributors to improving results is the cessation of accruals of public sector retirement allowances, a benefit virtually unknown in the private sector.

It has also stuck to its position that the private sector, not government handouts, should be the engine of economic growth.

(Excepting of course the Yarmouth ferry for which $9 million of preparation costs are being charged to 2015-2016 for a total of over $20 million, followed by $10.2 million in 2016-2017.)

The biggest spending increases are in education, and measures to help young people get job experience.

The wine industry is to receive $3.5 million in research and marketing support.

Likewise, aquaculture is cited as an important opportunity, and $2.8 million is provided for research and development. But no applications to build new facilities have been received since the regulations ending the moratorium were finally released last October.

The mining industry continues to be disappointed that a promise to rebate its fuel taxes has still not been fulfilled.

As a practical matter, employment levels have not changed much in the past year, and forecasts for next two years are for anemic growth.

Health care continues to represent more than 40% of expenses. The most important announcement of the week was the plan to replace facilities at the decaying Victoria General Hospital.

The government has wisely rejected the idea of replacing them with a large new structure in downtown Halifax. Rather, many of the treatments now being done at the VG will be dispersed to other areas including Dartmouth General, the Hants County Community Hospital, and Scotia Surgery, also in Dartmouth.

This has two advantages. First, by breaking it into smaller projects the new facilities can be ready sooner, and the risk of cost overruns is reduced. Secondly, for many patients, the new locations will be much more convenient.

With underemployed facilities in Truro and elsewhere, there are further opportunities to diversify where care is delivered.

The budget document was, of necessity, a list of small initiatives. It signalled that the government feels balancing the books is important, but does not yet put achievement of that goal on a sure footing.

The hospital announcement represents a major long term change in the way health care will be delivered to Nova Scotians in the coming decades.


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