Nova Scotia·Opinion

Graham Steele: Budget is creditable effort from sophomore government

The budget delivered today by finance minister Diana Whalen gets most things right, takes a few gambles, and gets one thing calamitously wrong.

Political analyst says most things right, 1 thing calamitously wrong in Liberal budget

Nova Scotia Finance Minister Diana Whalen delivered a budget that gets most things right, takes a few gambles and gets one thing calamitously wrong, says political analyst Graham Steele. (CBC)

The budget delivered today by Finance Minister Diana Whalen gets most things right, takes a few gambles and gets one thing calamitously wrong.

I can look at this budget, having delivered four myself, and say that it is a solid achievement. Public services are largely maintained. There's some trimming, which is very tough for the people or places being trimmed, but nothing to cause concern to most Nova Scotians.

Except for smokers, taxes tomorrow will be pretty much the same as they were yesterday. The deficit is relatively small, at only one per cent of overall spending.

On the surface, then, this budget is going to be an easy sell.

But just below the surface are some nagging questions.

A conjuror's trick

On the spending side, the cost of health care is nearly frozen. That's easy to say but almost impossible to do. How are they going to pull it off? The details are sketchy.

There's a reason why health spending is by far the largest part of the provincial budget, and by far the fastest growing.

The cost of doctors, nurses, lab staff, drugs and equipment goes up every year. People are getting older. You can't just say, "Don't be any more sick than you were last year, OK?"

Contract negotiations with doctors are already underway. Contract negotiations with the four big health unions are just getting started. There's no way these groups are going to agree to a wage freeze.

Pretending to freeze health spending is a conjuror's trick. The cost is still there, just hidden. It can hide in longer waiting lists, cancelled appointments and surgeries, overflowing emergency rooms, unrepaired equipment and health professionals who leave or can't be enticed to come.

Broten recommendations are dead

On the revenue side, the existing tax structure turns out to be a reliable cash cow.

The finance minister projects $159 million more this year in revenue from personal income tax (including a subtle $30 million from small business owners) and $59 million more in sales tax.

Add a new $45 million from the federal government under the Canada Health Transfer and Diana Whalen has an extra $263 million of revenue to work with.

The McNeil government hired Laurel Broten, a former cabinet minister in the Ontario government, to review the entire tax system. Her recommendations, delivered last November, were sweeping. The most transformative would have been a pollution tax, with corresponding reductions in income tax and sales tax.

In the end, the McNeil government adopted almost none of Broten's tax recommendations. Instead, they're being sent for further study. Nobody has been named to do the study — and there is no deadline.

In other words, the Broten tax recommendations are dead.

Gambling with tuition and development

There are some gambles in this budget.

It's a gamble to mess around with post-secondary tuition. The McNeil government will allow a one-year "market adjustment," which means the tuition cap is off and the universities can hit the reset button. The tuition cap for students from outside Nova Scotia will be removed permanently.

What effect will all of this have on enrolment and the quality of our universities? It's a roll of the dice.

It's also a gamble to mess with economic development. The old department has essentially been blown up and the pieces distributed around government. There aren't many people who will defend the old system. I'm a former minister, and I won't.

Fresh eyes and fresh approaches are needed, but nobody knows if this new structure will work better.

That leaves the one calamitous mistake. The McNeil government is making big changes to the film industry tax credit. Maybe the tax credit needs to be reconsidered, but the government is attacking it in a way that may kill the industry.

That's real people with real jobs. At the very least, we should have expected careful planning and consultation.

The bottom line

It is simply impossible that any two people should agree on every detail of a $10-billion budget. We can argue over details, but overall the budget is a very creditable effort from Nova Scotia's sophomore government.

In the midst of it all, though, is this awful, clanging error with the film tax credit. This could be the Liberals' own ferry debacle.

I have never seen a budget changed after it was introduced. There's a first time for everything — and this is the time.


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.


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