Don't balance N.S. budget for next year: expert
One of the four experts hired to advise the NDP on coping with its tight finances is warning against keeping one of the Nova Scotia government's main promises — balancing the 2010-11 budget.
Donald Savoie, a political science professor at the University of Moncton and an expert in public administration and public policy, said Tuesday that trying to balance the budget next year would cause irreparable harm to Nova Scotia’s economy.
"You would increase taxes to the point that I don’t think Nova Scotians could really compete in the private sector. So, over the shorter term, no," Savoie said.
"I think you’re dealing with a deck of cards that is pretty difficult. If you were to push me and say, 'Look would you recommend a balanced budget or some kind of surplus over the next 18 months,' my answer is no."
Finance Minister Graham Steele revealed Monday the province will have a $590- million deficit for 2009-10. The previous Tory government had projected a $4-million surplus.
The deficit projection includes paying for NDP election promises like taking the HST off electricity.
But Steele blamed the Rodney MacDonald government for the large deficit by overestimating revenue from offshore gas, and underestimating costs for swine flu and education.
Steele said $341 million will be included in the 2009-10 budget to meet its obligation for university funding, made by the previous government.
The new government is reviewing expenses, Steele said, and has not given up on balancing the 2010-11 budget.
But, he said, revenues aren’t expected to grow for two years.
A study by Deloitte Touche said if the NDP spends at the same rate as the Tory government, the deficit for 2010-11 would grow to a whopping $1.3 billion.
'Change is ahead'
One of the government’s biggest challenges is what to do about health-care spending, which accounts for 43 per cent of the provincial budget.
"Change is ahead, and it won’t always be popular change," Steele said Monday. "But we will never get a mastery of the books of this province if we don’t find ways to deliver health care differently."
He gave few hints about where or how spending on government programs would be cut.
Liberal Leader Stephen McNeil accused the finance minister of playing politics with the province's finances.
The NDP government chose to pay the $300-million bill for the universities a year early, McNeil said, so voters would blame this year's deficit on the Tories.
"If you look at the memorandum of understanding with the universities, it ran until 2011," he said. "What this government has done is book the remaining amount due next year on this fiscal year, which will allow them to come closer to balancing the books next year as they promised.
"They’re doing a sleight of hand trying to make it look worse, like the previous government had ballooned this deficit out of control."