Auditor suggests some financial planning
Province needs strategy to meet needs of a burgeoning seniors population
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.