Au­di­tor sug­gests some fi­nan­cial plan­ning

Prov­ince needs strat­egy to meet needs of a bur­geon­ing se­niors pop­u­la­tion

Truro Daily News - - Opinion - Jim Vib­ert Jim Vib­ert grew up in Truro and is a Nova Sco­tian jour­nal­ist, writer and for­mer po­lit­i­cal and com­mu­ni­ca­tions con­sul­tant to gov­ern­ments of all stripes.

Nova Sco­tia’s fi­nan­cial con­di­tion de­te­ri­o­rated in the last decade, but the pace of the de­cline slowed over the past five years, ac­cord­ing to Au­di­tor Gen­eral Michael Pickup.

That’s about as good as the news gets in Pickup’s an­nual re­port on the fi­nan­cial shape of the prov­ince, and given what the fu­ture holds, he thinks Nova Sco­tians need to talk.

“The prov­ince’s fi­nances are an area that all Nova Sco­tians likely have an in­ter­est in,” says the re­port, sug­gest­ing that its au­thor doesn’t get out much. Or, per­haps by “have an in­ter­est,” he means have a stake in, rather than cu­rios­ity, in which case he’s right.

The news in the re­port – aside from a cou­ple of pricey par­ties, in­clud­ing an $ 8,500 Christ­mas bash for 150 Health Author­ity staffers – isn’t new. But Pickup has a point.

Nova Sco­tians do need to talk, or at least hear more from the gov­ern­ment about how it plans to meet the fi­nan­cial pres­sures pre­sented by a grey­ing pop­u­la­tion.

Nova Sco­tians over the age of 65 ac­counted for 15 per cent of the prov­ince’s pop­u­la­tion in 2008, are 20 per cent now, and will ex­ceed a quar­ter of the to­tal pop­u­la­tion by 2030.

This is a prob­lem for a cou­ple of rea­sons. Most folks re­tire around 65, if not be­fore or soon af­ter, and pay less in­come tax, so the prov­ince’s rev­enues may suf­fer at the same time health costs will in­crease be­cause, as Pickup notes, 52 per cent of the health bud­get is spent on peo­ple over 65.

Mean­while, the re­port notes the prov­ince’s younger pop­u­la­tion is shrink­ing. Since 2008, the num­ber of Nova Sco­tians un­der 18 de­creased by 10 per cent, from 180,000 to just 162,000 now; the num­ber aged 18 to 65 de­creased by two per cent, from 613,000 to 601,000; while the num­ber of Nova Sco­tians over 65 in­creased by 36 per cent, from 143,000 to 194,000.

Health al­ready con­sumes about 40 per cent of the prov­ince’s an­nual spend­ing of nearly $ 12 bil­lion and, with se­niors’ ranks swelling, pres­sure to in­crease health spend­ing will only in­ten­sify.

The Lib­eral gov­ern­ment can le­git­i­mately make the case that Nova Sco­tia is bet­ter po­si­tioned to meet that pres­sure than it was in 2013, when Stephen Mcneil be­came premier, but the trends re­main trou­bling.

For ex­am­ple, in the past decade, gov­ern­ment spend­ing in­creased faster than its rev­enue.

Be­tween 2008 and 2018, spend­ing in­creased by 32 per cent, from $8.9 bil­lion to $11.8 bil­lion an­nu­ally, while rev­enues in­creased by just 29 per cent, from $9.3 bil­lion to $12 bil­lion a year.

And, while the gov­ern­ment has re­cently cur­tailed the growth of the pro­vin­cial debt, the net debt grew by 24 per cent since 2008, to about $15 bil­lion or $15,682 for ev­ery man, wo­man and child in Nova Sco­tia.

In­ter­est on the debt costs the prov­ince more than $700 mil­lion a year.

Pickup’s re­port flags more risks than an ag­ing pop­u­la­tion.

He notes that the teach­ers’ pen­sion fund re­mains in dire straits and while teach­ers are re­spon­si­ble for half of the fund’s li­a­bil­i­ties, Nova Sco­tian tax­pay­ers are on the hook for the other half.

The teach­ers’ pen­sion plan is $1.4 bil­lion in the red.

Teach­ers who re­tired since 2006 have never seen an in­crease in their pen­sion cheques and they won’t un­til and un­less the prov­ince and the Nova Sco­tia Teach­ers Union fig­ure out how to re­store the plan to fi­nan­cial health.

The au­di­tor gen­eral seems frus­trated by the in­ac­tion, given the gap­ing hole in the fund and the sig­nif­i­cant risks that deficit poses.

He raises the is­sue ev­ery year, and yet “noth­ing con­crete is done about it.”

The plan is only 78 per cent funded – has as­sets suf­fi­cient to meet 78 per cent of its obli­ga­tions – and that’s a risk both for teach­ers whose pen­sions hang in the bal­ance and for the prov­ince.

“The prov­ince and the Teach­ers’ Union need to come up with a plan, so peo­ple un­der­stand what’s needed to fix it.”

A plan sounds like a great idea. And while the gov­ern­ment is mak­ing plans, it might want to hatch one that shows Nova Sco­tians how it plans to meet the health care and other needs of a bur­geon­ing se­niors pop­u­la­tion, and still keep the lights on in the rest of the gov­ern­ment.

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