Graham Steele: Diana Whalen is in budget prison

Stephen McNeil is a new premier, Diana Whalen is a new finance minister, and we have a new Liberal government. So the obvious question about today’s provincial budget is: Does it signal a new direction?

CBC's political analyst reflects on the Liberal government's inaugural budget

Stephen McNeil is a new premier, Diana Whalen is a new finance minister, and we have a new Liberal government.

So the obvious question about today’s provincial budget is: Does it signal a new direction?

No, it doesn’t.

But that’s not the McNeil government’s fault.

On the simplest level, I could not find anything in the budget that will make an immediate difference to regular folks on the street. There are no tax cuts or tax increases. The efficiency charge will come off power bills in January — as the finance minister promised again — but that’s not a budget measure. There are no new programs that would have province-wide effect.

There are plenty of small, good things sprinkled around — interest comes off student debt, the age of eligibility for the children’s dental program rises to 14, money will be spent to try to reduce wait lists for early intervention in schools — but the amounts are modest and few people will notice.

The reason this budget doesn’t signal a new direction is because Whalen is operating under very significant constraints.

She’s in budget prison. 

Consider this: There is $455 million of new spending in this budget, compared to last year. A five per cent increase — in a province with anemic economic growth and weak government revenue. That’s not sustainable. It can’t continue.

The problem

Here’s the problem: All but $80 million of that new spending was non-discretionary. They had no choice. That’s just the machinery of a behemoth government, chewing up new money and spitting it out. That kind of money should buy us new, better ways of doing things. But it doesn’t. For the most part, it only reinforces the status quo.

For example, it looks like there is $110 million of new money for education, but that’s a mirage. Half of it is a transfer of responsibility (and money) from the Department of Community Services for early childhood programs. Another $40 million is wages. Only $18.6 million is genuinely new money.  

New money is good — depending how it’s spent, of course — but remember the overall public school budget is closing in on $1 billion. So $18.6 million is a marker of what’s to come, a symbol.

The biggest culprit, when it comes to spending growth, is the Department of Health and Wellness, which already consumes more than 40 per cent of the provincial budget. Across Canada, annual health-care spending growth of between five and seven per cent has been the norm. Attempts to suppress costs work for a while, then spring back.

That is by far the biggest issue facing our provincial government, no matter what political stripe: How are we going to pay for the burgeoning cost of our cherished publicly-funded health-care system?

If we could figure that out, most other finance issues would evaporate.

But this budget doesn’t tackle that one big issue of sustainable health-care funding. 

Health care

The questions that will really make an impact on health spending are hard, so hard that politicians will do anything to avoid them: What are we going to do about end-of-life care? How are we going to contain drug costs? How much and on what basis are we going to pay our physicians, which is the largest single program item in the provincial budget? How are we going to keep up with medical technology? How are we going to begin to tackle the health infrastructure deficit, which runs into the hundreds of millions?

There are hints in the budget of doing things differently, but no details. We’ll have to wait for the next budget, at least, to find out what that means.

Yes, Diana Whalen’s in budget prison, and getting out is going to be much tougher than the McNeil government has so far let on.

And so today’s budget is just about what I would expect from a new finance minister in a new government: a sprinkling of small platform-related goodies; not much in the way of restraint or tough decisions; a big deficit that can still be plausibly pinned on the previous government; and plenty of vague talk about how this time, with this new government, it will all be different.

Now that I think about it, it’s a lot like the budget I delivered on behalf of another new government in 2009.

About the Author

Graham Steele

Political analyst

Graham Steele is a former MLA who was elected four times as a New Democrat for the constituency of Halifax Fairview. He also served as finance minister. Steele is now a political analyst for CBC News.