Nova Scotia falls into the red for first time in eight years with $592-million deficit

HALIFAX, N.S. - Atlantic Canada's first NDP government tabled itsinaugural budget Thursday, a document Nova Scotia's finance ministerdescribed as a hand-me-down plan with a leftover $592-million deficithe has promised to eliminate by next spring.

HALIFAX, N.S. - Atlantic Canada's first NDP government tabled its inaugural budget Thursday, a document Nova Scotia's finance minister described as a hand-me-down plan with a leftover $592-million deficit he has promised to eliminate by next spring.

Graham Steele opened his maiden budget speech by declaring that the $9.1-billion budget was substantially the same as the one introduced in May when the ruling Conservatives were defeated in the legislature, triggering the election that brought the NDP to power.

"While this is the first budget tabled by this government ... we do not consider it to be our budget," Steele said.

Premier Darrell Dexter blamed poor fiscal management by the previous Tory government, as well as the global economic downturn, for the province's first deficit in eight years.

"I want people to understand that we were placed by the previous government in a very deep hole," Dexter said.

"The first thing we have to do is stop digging and then we have to get out of it and it's not going to be easy."

Though Steele's speech gave few details on how the government plans to keep its key campaign promise to balance the books for 2010-2011, the budget documents reveal that expenses would have to be cut by $570 million to reach that goal.

Before he delivered his budget address in the legislature, Steele declined to elaborate when asked where the provincial government planned to cut.

"The budget development process for next year starts tomorrow," he told a news conference. "Nobody said that it was going to be easy."

But his budget speech included a thinly veiled warning to the province's school boards, health authorities and other government-funded agencies, saying they had to learn to "spend smarter."

The budget documents also say that a committee consisting of senior government staff is already looking for ways to trim government fat, and there is a clear declaration that spending in several categories must not grow.

As well, the documents say the government will resume work on a tax review project, but there are no details of what that will entail.

"We must be prepared to examine every policy option open to us," Steele said in his budget speech.

Steele said the new government, elected in June, was left with little choice but to recycle much of the Tory budget because there's only six months left in the fiscal year.

Any big changes will have to wait until next spring, he said, adding that he didn't want to spook investors as the province recovers from the global economic downturn.

"We will not add to that anxiety by making drastic cuts to programs and services."

During the election campaign, Dexter promised to balance the books without raising taxes or substantially cutting spending. That commitment helped secure a majority government for the party.

But three members of an independent panel of experts advising the government have already come forward to suggest deficit financing may be inevitable, given the poor state of the economy.

The panel is expected to submit a report to Dexter next month.

Even the budget documents say that while balancing the budget is a laudable goal, the government has to be careful not to "damage the economy in the long term."

Steele balked when asked if he would restate the NDP's balanced budget promise, saying it remained the government's "operating principle."

Liberal Leader Stephen McNeil dismissed the budget as a political document aimed at shifting the blame for the province's sickly finances.

He said the NDP's budget doesn't create one job and the deficit figure was artificially inflated with a $341-million advance payment for next year's university funding.

"They're attempting to make the financial situation of the province look worse today, so they can blame it on the previous government," McNeil said.

"There's nothing new here. It's old-style politics at its best."

Interim Conservative Leader Karen Casey said she was pleased to see so many Tory commitments surviving after the election, but she criticized the NDP for driving up expenditures in the budget by $761 million from last year.

"Premier Dexter did not make the tough decisions that Nova Scotians were expecting him to make," she said.

One of the government's biggest challenges will be dealing with the demands of public sector unions, many of which are bracing for tough contract negotiations in the months ahead.

With that in mind, Steele took the opportunity to send a soothing signal to the NDP's allies in the labour movement.

"We also want to assure the public sector unions that we will bargain in good faith," he said.

The budget included a $54-million increase to a restructuring fund that will be used for a number of projects, including money set aside for higher public sector wages.

Joan Jessome, president of the 26,000-member Nova Scotia Government and General Employees Union, said she couldn't see how the government could make any cuts to the public service.

"I'm not seeing layoffs," she said. "I know people are stretched to the limit, so I can't see how they would find any extra room in the system."

But Steele said there is a need for restraint, adding that any contract agreements would have to reflect the province's fiscal position.

The budget also projects the provincial net debt to rise to $13.5 billion, the highest it's been in a decade.

 
 
Latest From ...
Most Popular From ...