Fi­nance mes­sages stand in con­trast

Cape Breton Post - - COMMENT -

Nova Sco­tians next month will wit­ness the pe­cu­liar in­ver­sion of a Con­ser­va­tive gov­ern­ment in­sist­ing that large bud­get deficits are noth­ing to worry about and an NDP gov­ern­ment say­ing we’re at se­ri­ous risk of drown­ing in red ink.

The op­ti­mists are the fed­eral Con­ser­va­tives who in­tend to bring in a bud­get March 4 that in their view will stay the course, and in the view of the op­po­si­tion will do noth­ing. It’s been pur­posely leaked that there’ll be no new tax in­creases or spending pro­grams and the $19-bil­lion re­main­der of the pre­vi­ously an­nounced eco­nomic stim­u­lus pro­gram will be com­peted in the com­ing fis­cal year.

The bud­get is to be ac­com­pa­nied by a multi-year plan to bring the gov­ern­ment out of deficit through spending re­straint, ex­empt­ing health care, ed­u­ca­tion and pub­lic pen­sions. The pro­jec­tions will be closely scru­ti­nized be­cause there’s con­sid­er­able skep­ti­cism among economists that the gov­ern­ment can trim its way out of a deficit po­si­tion that stands at $56 bil­lion for the cur­rent year.

Mean­while, back in Nova Sco­tia, Fi­nance Min­is­ter Gra­ham Steele will de­liver his sec­ond bud­get (the first, if you ac­cept the NDP gov­ern­ment’s ar­gu­ment that the de­feated Tories are wear­ing the 2009-10 bud­get) a lit­tle more than three weeks af­ter the fed­eral one.

In con­trast to fed­eral coun­ter­part Jim Fla­herty, Steele has been on tour sell­ing the case that Nova Sco­tia is in se­ri­ous struc­tural deficit re­quir­ing a tough, multi-year plan of action start­ing in 2010-11. In town hall meet­ings around the prov­ince, Steel ham­mers on a con­sul­tant’s pro­jec­tion that the deficit of $525 mil­lion will bal­loon to $1.4 bil­lion by 2013 in the ab­sence of decisive mea­sures.

In re­cent days, to no one’s sur­prise, Steele has sug­gested that there’s a pub­lic con­sen­sus to ac­cept a two-point in­crease in the har­mo­nized sales tax which would bring in an es­ti­mated $345 mil­lion an­nu­ally. What­ever grand de­sign the fi­nance min­is­ter may have had for bring­ing Nova Sco­tians around to the wis­dom of higher taxes has been se­ri­ously com­pro­mised by con­tin­u­ing pub­lic fury over ex­ces­sive MLA ex­penses but he may just have to clench his teeth and get on with it.

Scarcely dis­cussed in the pol­i­tics of bud­gets is why deficits mat­ter, and some peo­ple think they don’t. But de­mo­graphic re­al­i­ties are fi­nally start­ing to break through. With var­i­ous lev­els of ur­gency, the im­pli­ca­tions of an ag­ing pop­u­la­tion, de­clin­ing work­force and so on are beginning to im­pinge on pub­lic and po­lit­i­cal aware­ness. The fi­nan­cial health of gov­ern­ments mat­ters be­cause there are no cred­i­ble sce­nar­ios that say main­tain­ing es­sen­tial pub­lic ser­vices is go­ing to get any eas­ier over the next 50 years. It’s go­ing to get a lot harder at ev­ery level. Canada weath­ered the re­ces­sion rel­a­tively well be­cause na­tional fi­nances were in de­cent shape. The chal­lenges ahead will be more ser­vice and longer.

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