The costs of a budget surplus
Cost-cutting measures led to an unexpected budget surplus, but also may have led to an exit of doctors, teachers and film industry workers
nova scotia’s reigning liberal Party has been predicting a budget surplus for more than a year. But even party leaders — including the province’s finance minister — were surprised at the extent of that surplus. Everyone else was equally surprised the financial windfall did not include higher tax revenue.
The audited financial statements for fiscal 2016-17 show that Nova Scotia has a surplus of almost $150 million. That’s $110 million more than the Liberals predicted during their recent spring election campaign. According to Finance Minister Karen Casey, volatility in the numbers made predicting the surplus with any accuracy difficult.
Casey also contends the yearend surplus is “the result of government working with Nova Scotians to create a more sustainable financial position.” Many industries would contend “working with” is a euphemism for “imposed.” Doctors signed a contract for a 2.5% wage hike over four years. Their professional association said the deal was not a good one, but also recognized a negotiation brick wall when hitting one. “This deal is the best that can be accomplished,” the Doctors Nova Scotia leadership stated in a letter to members.
Teachers hit the same wall, but they attempted to blast through. That effort resulted in the government passing unprecedented legislation forcing a deal upon Nova Scotia’s 9,300 public-school teachers. They will receive a 3% increase over three years. That was a move that cost the Liberals votes at the polls and, along with apparent penny-pinching on healthcare services, almost resulted in the election of a minority government.
Critics have been quick to point out that the cost savings come at the expense of health care, education and employment. New Democratic Party leader Gary Burrill told reporters the government’s priorities are misaligned. “In the face of the needs we have, particularly in health and also in education, [this] is no time for the government to say, ‘Yeah, for us, we have put more money in the bank,’” he said.
This is not the first time the government’s singular focus on finances has led to a public outcry. Two years ago, the government slashed the film tax credit — which had put the province on the cinematic map as a place to produce TV shows and films — and landed face to face with thousands of protesters. Premier Stephen McNeil did extend an olive branch and put in place a new fund for screen productions, but trust still is a rare commodity in that industry.
The pain associated with getting to a healthy bottom line may be one of the main reasons the government is not shouting about the surplus.
There is also another taxing issue. Tax revenue in this fiscal year was actually down $36.1 million. The main reason: a drop in personal income taxes and the HST. Peel the onion and the reason for the decline in revenue is a decline in the labour force. And the reason for the decline in the labour force is linked — at least, in part — to an exodus of doctors, teachers and film-industry workers from Nova Scotia’s workforce.