Premier Darrell Dexter and Finance Minister Graham Steele will be holding a joint news conference this morning to respond to the Economic Advisory Panel's gloomy report that outlines the next steps to address the province's financial challenges.
The report released Friday was put together by a panel of economic experts and proclaimed Nova Scotia's finances are in such poor shape Dexter should consider cutting spending, raising income taxes and increasing the harmonized sales tax by two percentage points.
Dexter, who became the first NDP premier of Nova Scotia in June, had promised during the election campaign to balance the province's books next spring without raising taxes or cutting spending.
Faced with shrinking revenue and a ballooning deficit, the NDP has little choice but to scrap its key commitments and forget about eliminating the deficit until 2012, the four-member panel said.
“You can't build a progressive government on a mountain of debt,” said panel chairman Donald Savoie, an expert in public administration at the University of Moncton.
Dexter told the Cape Breton Post Friday he would be looking for advice from Nova Scotians before considering things like raising taxes.
He also said the budget could be balanced next year but it would create “severe economic disruption.”
“This report has a lot of pain in it,” the premier said. “The question is can we come to a conclusion that it means that we share this broadly so that no group is affected unfairly.”
Liberal Leader Stephen McNeil said the NDP leader knew he couldn't keep his promises even before the election campaign was over.
“Prior to the election campaign, Nova Scotians understood the difficulty we were facing and the only one who seemed not to was the present premier,” he said. “Today, he's got cover to break those promises.''
Savoie said Dexter couldn't have known how bad the province's finances were because he didn't have access to all of the province's financial data when he was Opposition leader.
- with files from The Canadian Press and Cape Breton Post.