Nova scotia, like the nation itself, is being run by a minority government. But John Hamm’s Tories, unlike Paul Martin’s Liberals, are in an enviable position. The province’s PC government and the premier himself are riding a wave of public support that makes both an apparent shoo-in should either the Liberals or the NDP be foolhardy enough to force a vote of confidence.

(Indeed, the NDP quickly backed down when the PCs recently called its bluff over an amendment to the provincial budget.)
Riding the crest of public approval has resulted in a balanced budget for Nova Scotia that, unlike Paul Martin’s overindulgence, gives a little, takes a little and attempts to address issues on the PC — and the public — agenda. For some business groups, however, the provincial government’s budget does not give enough or take enough.

“There’s a little bit of something for everybody, but not enough for the business community,” says Valerie Payn, president of the Halifax Chamber of Commerce.

“Nova Scotia needs to become more competitive,” she adds. “Movement is in the right direction, but we need to be more aggressive.”

Not surprisingly, education and health rank
at the top of the modest spending spree.
The budget to support students from primary grades to Grade 12 is increasing by $53.7 million. Included in this amount is more dollars to further reduce class sizes, hire more teachers and specialists, buy more books and teaching resources, help at-risk students, pilot a new preschool program and introduce new healthy-living initiatives.

Funding for post-secondary education is also up. Increased funding will go to advance the expansion of the Nova Scotia Community College, increase grants to Nova Scotia universities and provide more dollars for Nova Scotia’s student-loan and loan-forgiveness programs.

The budget has also earmarked $8.1 million for health promotion and disease and injury prevention and an additional $218 million to provide better health care to Nova Scotians, including new dollars to: further reduce wait times; recruit and retain more health professionals; purchase new equipment; and assist low-income diabetics, stroke survivors and newborns with hearing problems.

The province’s fourth consecutive balanced budget also attempts to boost revenue by fostering economic development. According to Finance Minister Peter Christie, “Improving the conditions to support economic growth in Nova Scotia continues to be a top priority. The 2005-06 budget contains no new taxes and will end the year with a $63.3-million surplus.”

The province intends to bring in legislation this year that will eliminate the business occupancy assessment tax, which exists only in Nova Scotia and is applied to occupied commercial property.

As well, the small business tax threshold has increased to $350,000 from $300,000.
Next year, it will climb to $400,000. For large non-financial corporations, there is also a small tax break. The capital tax rate will decrease to 0.275% from 0.3% as of July this year and fall to 0.2% over the next three years. The cost of the tax break this fiscal year is $4.5 million.

New spending has also been announced for the government’s trade strategy, “going global, staying local,” designed to help nearly 900 small and medium-sized exporters find international markets, and provide the funding and training they need to succeed in those markets.

One of the major bones of contention — for the business community, the public and Opposition critics — is the provincial debt, and paying down this debt, which is a cornerstone of the new budget.

In a gesture of largesse last year, the federal government promised Nova Scotia 100% of offshore revenue and a cheque for $830 million. (The cheque, it appears, is still in the mail.)

With the announcement of new-found wealth, visions of sugarplums — and every other kind of plums — danced in Nova Scotians’ heads. But it is not to be. The government has maintained from the outset that all the money will go to help pay down the province’s debt, which currently stands at almost $12.5 billion.

It is a tough decision, Christie acknowledges. “As a minority government, and at a time when demands are great and the dollars to meet them still in short supply, it could be awfully tempting to bow to the demands to spend some or all of the $830 million in new offshore money.”

@page_break@But by putting this money toward the debt, he says, the province will save $20 million in interest payments this fiscal year and $50 million next year.

Despite the interest-bearing argument, the decision to dump all $830 on the debt garnered mixed applause from the public and the business sector, but for different reasons. While many members of the public wanted some of this windfall to go to health care and other social programs, the Chamber of Commerce and its supporters want to know from what source the rest of the money is coming to pay down the debt.

“Our debt is choking us,” says Payn. And while the $830 million down payment is good, she wants to see more. “We were looking for a debt-reduction plan … Debt payment is the No. 2 expenditure in Nova Scotia.”

The province is moving to manage its debt and has been moving in this direction for a number of years, the government contends in its budget. It notes that Nova Scotia’s net direct debt/GDP ratio is projected to go down again — for the fourth year in a row — to a forecast of 39.6% this fiscal year from 46.8% in 2001-02. Foreign currency exposure has also dropped significantly to 16.2% today from 51% in 1999.

These are two important indicators of the government’s improved financial strength, says Christie.

Indeed, they are, says Payn, but they are not enough. “We’re pushing hard to make some of the tough decisions now, when economic conditions are good,” she adds.

Those decisions, it seems, will have to wait until next year. The budget has been approved despite nitpicking from the Opposition that could have toppled the government. The threat of an election effectively stopped the nitpicking and positioned the Tories as the front-runners to deliver next year’s budget in Nova Scotia. IE