Nova Scotia

Budget aimed at health care, education and poverty likely to fuel N.S. election talk

If Nova Scotia Premier Stephen McNeil hoped to quell recent talk of a pending provincial election, his government's budget on Tuesday won't help.

Fallout from Northern Pulp closure and coronavirus could hurt province's economic growth

Finance Minister Karen Casey presented Nova Scotia's 2020-21 budget on Tuesday. (Michael Gorman/CBC)

If Nova Scotia Premier Stephen McNeil hoped to quell recent talk of a pending provincial election, his government's budget on Tuesday won't help.

With estimated expenses of $11.5 billion and a $55-million surplus, the 2020-21 budget sees major infrastructure projects beginning to ramp up, further increases in spending on health care and education, and the McNeil government's most targeted effort to date in trying to reduce poverty, all while some economic uncertainty looms.

In her budget speech, Finance Minister Karen Casey said that while the province might be in a "positive fiscal position," the budget is intended to support people "who may not have been feeling the success of the province."

To that end, the government will spend $18 million to increase the low-income threshold for the Nova Scotia Child Benefit, extending it to families with incomes below $34,000. The change is expected to help 28,000 families and 49,000 children.

The standard household rate will become fully funded this year thanks to an additional $17.3 million and there's $16.6 million for the Disabilities Support Program.

Among other things, the government is promising that new money will help transition residents from larger care facilities into community-based living. In her speech, Casey said 50 people would make the move this year, with more in the following three years.

Help for homelessness

Housing Nova Scotia will add 560 new rent supplements, 120 of which will be directed to people who are homeless or at risk of homelessness. The government is also planning to spend $20.5 million in the next five years for the Integrated Action Plan to Address Homelessness. The intention is to help people find permanent, stable and safe housing.

Community Services officials said the increased funding reflects how stubborn the poverty issue has been and that efforts to date haven't moved the needle far enough. Nova Scotia has lagged behind other provinces in recent Statistics Canada reports on poverty rates for children and families.

"We saw numbers come out that saw us drop — the largest drops inside of Canada, but it's still too high," McNeil told reporters.

"And this is an acknowledgement of that and this is an investment in those kids, kids in our province who are living in poverty."

Health spending

Health care, as always, gobbles up the largest proportion of the budget.

This year, the Health Department's budget will hit $4.8 billion, almost 42 per cent of the total.

There's $75.3 million more for doctors following the recently announced new master agreement. There's also previously announced money for more seats at Dalhousie University's medical school and for resident training, and money to create 70 new nursing seats — 62 at Cape Breton University and eight at Dalhousie's satellite campus in Yarmouth.

There's more money for a variety of drug programs and $1 million for a new ovarian cancer research program at Dalhousie.

The Nova Scotia Health Authority will see its budget increase by $77.7 million, while the bottom line at the IWK Health Centre will go up by $8.4 million.

The government will also spend $3.2 million to implement the new Human Organ Tissue Donation Act, money that will go toward doing more transplants.

The budget includes money to roll out pre-primary to all schools in Nova Scotia. (CBC)

The Education Department's major increases include $21.5 million to complete the rollout of pre-primary and another $15 million for the recommendations in the Commission on Inclusive Education's report.

The student loan forgiveness program is increasing by $2.2 million to now include graduates of the Nova Scotia Community College, a move that should affect 1,400 people as of this summer.

Then there's the capital plan.

A woman holds an e-cigarette device and exhales a puff of vapor.
The Nova Scotia government is introducing taxes on vaping and will require retailers to have permits. (Craig Mitchelldyer/The Associated Press)

As Casey announced last week, it will hit $1 billion this year, driven primarily by hospital construction and renovation, buying and building 46 schools, and work on highways, roads and bridges. This year's operating grant for the Nova Scotia-to-Maine ferry is $16.3 million.

There's also about $40 million dedicated to green programs, such as energy efficiency programs and community-based projects to address climate change.

The spending is helped by $395 million more from Ottawa this year, including more money for equalization ($200 million) and the federal health transfer ($41.3 million).

Opposition reaction

Opposition leaders and others were critical of the budget, saying it either didn't go far enough on certain issues or placed too much emphasis on some things at the expense of others.

Tory Leader Tim Houston called the document an election budget filled with investments that should have come "years ago."

Houston pointed to the $700,000 to create the new nursing school seats as an example.

"They could have easily started that three years ago and we'd be graduating nurses today instead of trying to look for someone to go in the program," he said.

Tories say higher transfer payments show N.S. finances not so rosy

Houston said the level of transfer payments the province is receiving from Ottawa is proof that things aren't as fiscally strong as the government would have people believe.

"There is huge headwinds before this province for sure and easily our economy could shrink this year and that's a major concern," he said.

NDP Leader Gary Burrill called it a tale of two budgets, with "a great banquet feast" laid out for the business community while the most needy get "crumbs."

"It has the character of a fiscal deathbed confession," he told reporters.

"After years in which the province has really been starved for social spending, now, on the front porch of an election, we have all these crumbs being tossed in all kinds of different directions. So the spending, yes, fine, but it's a little bit little and it's a whole lot late."

'Not going to see the trickle down'

Christine Saulnier with the Canadian Centre for Policy Alternatives said the new funding aimed at addressing poverty doesn't go far enough.

"We need to do much more than wait for a business sector to do something with a tax cut," she said.

"We've had 30 years to know what they're going to do: they're going to sit on it, their shareholders are going to be enriched, maybe some of their top employees, but we're not going to see the trickle down that apparently the premier thinks will be different here."

Health-care advocates said there were some things to be happy about, such as extending dialysis to rural communities, but both Nan McFadgen of CUPE and Chris Parsons of the Nova Scotia Health Coalition were concerned there aren't any new long-term care beds included in the budget or support for the workers who staff those homes.

"It's a problem for anybody that wants access to any kind of health care because it just flows through all of the system," said McFadgen.

Hike in tobacco taxes

The government may be opening up its wallet, but this budget will require people who smoke and vape to do the same. All tobacco taxes will increase as of Feb. 26. That includes a two cent increase per cigarette, increasing the tax on cigars from 60 per cent to 75 per cent and an increase on fine cut and other forms of tobacco to 40 cents per gram.

Vape products will begin being taxed in September and retailers will require a permit, the cost of which has yet to be finalized, in July. The vape tax, the second in the country after B.C., will include $0.50 per millilitre of liquid and 20 per cent of the retail value of all devices. For example, the taxes would amount to $10.40 for a $45 starter vape kit.

"A small price to pay for our youth health," Casey told reporters.

Casey said the measures, along with a previously-announced ban on flavoured vape products, are intended to target youth vaping rates.

The premier's previously announced tax breaks for small business (down from three per cent to 2.5) and the reduced corporate rate (down from 16 per cent to 14 per cent) are included in this budget, moves that will cost $81 million.

Other tax measures include a five-year extension of both the digital media tax credit and digital animation tax credit. The Nova Scotia Film and Television Production Incentive Fund will rise to $25 million.

Coronavirus and Northern Pulp

There are risks in this budget, as with any. The government has not accounted for the short-term effects of the coronavirus outbreak, and that includes what effect it might have on seafood exports to Asia, a market that in recent years has been the engine for economic growth.

There is also the question of the long-term effects of Northern Pulp's closure. The government estimates the tax hit of losing the mill is about $32 million, something Finance Department officials say is offset by an otherwise strong economy. But offsetting mitigations and transitions related to the mill closure are not factored into the budget.

McNeil told reporters the shutdown of Northern Pulp had no correlation with the increased capital spending, other than money tied directly to already-announced funds and initiatives designed to help the forestry industry transition.

The province's real economic growth is expected to slow to 0.4 per cent in 2020 before reaching 1.2 per cent in 2021. The 2020-21 debt is estimated to hit $15.7 billion, with the debt-to-GDP ratio coming in at 33.3 per cent.

The debt is projected to increase in each of the next four years, driven by construction of hospitals, highways and schools. The government is also projecting balanced budgets in each of those years, aided in part by favourable debt servicing costs as long-term high-rate loans come off the books and are replaced by loans at much lower rates.