Budget will set table for an election
How large will government will allow deficit to grow?
The budget that Finance Minister Labi Kousoulis will deliver next week, offers Iain Rankin’s Liberals the best chance they’ll get — short of an election campaign — to show Nova Scotians what they’re about. It’s an opportunity they’re unlikely to squander.
The 2021-22 budget is expected Thursday and it will be, without much doubt, the one and only from Rankin’s government before the still shiny-new premier calls a provincial election. So, while it will — rather obviously — address COVID and recovery first and most, it will also set the table for that election.
Premier Rankin, a disciple of Stephen Mcneil’s style of fiscal restraint, has said that the budget will include a path back to a balance. But while Nova Scotians might glimpse the trailhead in the budget documents, they won’t be strolling along or, more likely, struggling to climb that path until after the next election.
Indeed, one thing many observers will be looking for is just how large the Rankin government will allow the budget deficit to grow. Will it be larger than the deficit Stephen Mcneil’s government rang up in 2020-21 after the coronavirus crashed the party?
Close observers with long memories will recall that just over a year ago, then-finance minister Karen Casey brought down a balanced budget — the Mcneil government’s fourth straight — just weeks before the virus arrived and, over time, blew that budget to smithereens.
BIG NUMBERS
The last official accounting, in Casey’s December fiscal update, forecast a 2020-21 deficit sneaking up on $780 million. But before he left office, Mcneil suggested that his ever-frugal administration wrestled it back to something closer to $500 million.
If Mcneil’s reckoning turns out to be correct, the deficit in the Rankin government’s first budget will eclipse that of Mcneil’s last.
Kousoulis’s budget deficit will top a half-a-billion dollars but won’t get too perilously close to the psychologically jarring $1-billion mark. It will fall somewhere in between.
The budget itself will be mostly about health and help for those most in need, if I’m correctly reading the subtle and not-so-subtle hints from the premier.
Rankin says Nova Scotians can expect “significant investments” in those areas of the health system that were exposed as weaknesses by COVID, if not before.
Long-term care, where 53 of the province’s 66 COVID deaths occurred, is in for an overdue infusion of money to start the process of renewing Nova Scotia’s aging nursing homes, to address chronic staffing issues and, we can only hope, to increase the pay levels of LTC workers.
NO TAX/FEE INCREASES YET
Mental health and addictions, another chronically underfunded piece of the health system, will also get a major boost, and Rankin himself has emerged as a champion of better programs to treat addicts.
In addition to improved health services, a major thrust of the budget is expected to be helping those Nova Scotians who were most seriously impacted, economically, by the pandemic.
The government has already started the ball rolling with property tax rebates for the hospitality sector, and the premier’s hinted that more help is on the way, although he didn’t specify when, how much or to whom.
There won’t be any tax or fee increases in the budget because, like most governments, Rankin’s believes that this is not the time to pile new financial burdens on folks.
But you have to think that the path back to balance will be marked by tax and/or fee hikes that Nova Scotians won’t hear about until they chose their next provincial government.
WHAT’S MISSING?
What’s been missing from all the pre-budget musings from Rankin and company is an indication of how and by how much this budget will advance the government’s three self-proclaimed priorities, economic equality, respect for the environment and inclusion.
Rankin’s already made headway by introducing environmentally friendly legislation, government restructuring to bring more focus to the priorities and some funding announcements, like $3 million to help African-nova Scotians get clear title to land they and their ancestors occupied for generations.
But, given that “these (three elements) are the threads of steel that support the foundations of our plan,” as the government wrote in its throne speech, one would expect the budget to strengthen those threads.
For those Nova Scotians who still worry about the province spending much more than it takes in, Rankin assures us that the massive back-to-back deficits are not structural.
What he means by that is that most of the deficit spending is in response to the pandemic or resulted from lost revenues when the economy tanked.
The deficits, therefore, are event-driven and time-limited (we hope) so when the pandemic recedes so too will some of the spending it demanded, and revenues should recover as well.
The implication there is that the path back to a balanced budget should not be all that painful, but that’s not something we’ll know for sure until we’re trying to get there.
At any rate, the budget Nova Scotians see next week might be called a health budget, or a recovery budget, but it will almost certainly be called — correctly — an election budget.