It’s a small accounting quibble, but it’s already caused the downfall of one government and continues to determine what will happen to millions of dollars.
But it’s about to end. Nova Scotia had been the only province in Canada to have two definitions of a balanced budget. The NDP will soon make it only one – the one easier to meet.
It started in 2005 when Premier John Hamm snagged a unique deal for $830 million of offshore money from the federal government. Hamm put the money on the province’s massive debt and decreed it should stay that way.
The problem was despite laws already requiring a balanced budget, under Generally Accepted Accounting Principles (GAAP), chunks of the offshore money would show up as revenue on the books for years to come.
So Hamm passed a law that the offshore ‘revenue’ could not be spent.
This spring when Rodney MacDonald’s Tories realized they needed that money to balance their budgets they tried to change the law, sparking their defeat in the legislature and subsequent exile to third-place party status.
But the two definitions of “balanced budget” remained – a looser GAAP one that let governments re-borrow debt, and the stricter rules created by Hamm.
That sparked a bizarre disagreement on last year’s budget where the Tories said it was balanced, the Liberals in deficit and the NDP both.
In opposition, the NDP attacked the Tories for being disingenuous when they tried to switch to GAAP rules. But as early as next week they will pass a bill that, among other things, repeals Hamm’s law in favour of GAAP, claiming it’s about clarity.
“There’s one standard that’s recognized nationally and we’ll be judged by that one standard,” Finance Minister Graham Steele said.
“It’s become very complicated and we’re trying to reduce the complexity and make it very simple.”
The move makes things easier on the NDP. They’ll need help to meet their promise of balancing the books next year despite stagnant growth and rising costs.
