HALIFAX – The provincial government will take in more money and spend a record amount on infrastructure this year, while economic growth in Nova Scotia will slow significantly.
The province released its 2020-2021 budget today. It promises more than $1-billion in capital spending over the next year, including more than $200-million to support health care facilities, $265-million for schools, and another $85-million for roads, highways, and bridges.
The province is also upping its spending on tax breaks for low-income residents, programs to create affordable housing, and initiatives to bring more doctors and nurses to the province.
The splurge in spending is made possible by a 5.3 percent increase in revenue. All told, the province plans to spend $11.5-billion over the next year, and leave itself a small, $55-million surplus.
“I am hopeful and optimistic about the future of our province,” Finance Minister Karen Casey said as she introduced the budget. “With our stronger economy and our positive fiscal position we want to share this economic success.”
While population growth, shipbuilding contracts, and other infrastructure investments kept the province’s economy humming in 2019, the outlook for this year is less rosy.
Thanks in part to the closure of the Northern Pulp mill, the province expects growth to slow significantly in 2020. It believes exports will slow, wages will go down, households will spend less money, and unemployment will go up.
Growth will pick back up in 2021, but will still be lower than previous projections.
Federal money drives revenue increases
The 5.3 percent in additional provincial revenue this year is largely due to more money from the federal government.
This year, the province says it will be getting $191-million more from federal sources like transfer payments. Meanwhile, the amount of money the province brought in on its own dipped fractionally.
Tim Houston, the leader of the Progressive Conservative Party and official opposition leader, said this is a worrying sign.
“What we’re seeing is Nova Scotia is not in the great shape that the government would have you believe. Look at the money coming from the federal government in transfer payments. It’s going up and up every year and the reason that’s going up is that Nova Scotia is falling further behind,” he said.
Part of the dip in provincial revenue can be chalked up to lower corporate tax rates, which Premier Stephen McNeil first announced earlier this year. In total, those tax cuts cost the province $70.5-million.
But Casey says those tax cuts came after suggestions from the business community and are key to helping the province’s economy grow.
She said they will “help businesses become more competitive, to innovate, and to reinvest.”
The Atlantic Chamber of Commerce agrees.
Today, the ACC applauded the provincial budget, and said the business tax cuts will “improve the attractiveness of Nova Scotia as a place to invest and create jobs.”
Government debt up $2.6-billion in next four years
While the government’s fiscal plan shows small surpluses and balanced budgets over the next four years, it also projects a steady climb in the provincial debt.
At the end of the 2019-2020 fiscal year, the province was in debt $15.2-billion. That debt took an $856-million chunk out of its yearly revenue.
Under the government’s current plan, that $15.2-billion will climb to $17.8-billion by the end of the 2023-2024 fiscal year. That’s a hike from a 33.8 percent debt-to-GDP ratio to a 34.5 percent debt-to-GDP ratio.
That jump means the province will miss the target set in the One Nova Scotia report, which called for a 30 percent debt-to-GDP ratio by 2024.
Paige MacPherson, the Atlantic Director of the Canadian Taxpayer Federation, said the province’s growing debt is “concerning.”
She pointed out that government debt is projected to go up by $2.64-billion over the next four years, and argued there is “no plan to pay that off.”
She said the government is calling its spending plans “generational investment” but that “without a plan to pay off that debt we’re calling it intergenerational theft.”
In a February 25 speech at the legislature, Finance Minister Karen Casey defended the government’s decision to let the debt-to-GDP ratio go up.
“There’s good debt and bad debt. Borrowing money to pay for lights and groceries is not good debt. We have been able to move away from the practice of deficit budgeting and move into balancing the books, living with our means.”
She said that has led to lower interest rates on government borrowing, meaning the actual costs of paying the interest government debt will go down over the next four years.
She said that the debt-to-GDP ratio will climb in the short term, but that the government expects that to “level out” after three years.
“We want to make clear that the 30 percent was not our government goal, that was One Nova Scotia,” she added.
by Trevor Nichols
https://huddle.today/n-s-introduces-11-5-billion-budget-with-1-billion-in-capital-spending/
-
N.S. Introduces $11.5-Billion Budget With $1-Billion In Capital Spending
Wednesday, February 26, 2020
-
Business Truth & Reconciliation
The Atlantic Chamber of Commerce is taking proactive steps to promote reconciliation and respect for Indigenous rights within the corporate sector. In response to the Truth and Reconciliation Commission's Call to Action 92, the Chamber urges its members to embrace the United Nations Declaration on the Rights of Indigenous Peoples as a guiding framework. This entails a commitment to meaningful consultation, fostering respectful relationships, and obtaining the free, prior, and informed consent of Indigenous peoples before embarking on economic projects. Moreover, the Chamber advocates for equitable access to employment, training, and educational opportunities for Indigenous communities, ensuring they reap sustainable benefits from economic development initiatives.
Recognizing the importance of education, the Chamber encourages businesses to provide comprehensive training for management and staff on the history of Indigenous peoples, including the legacy of residential schools, Indigenous rights, and Aboriginal-Crown relations. Emphasizing intercultural competency, conflict resolution, and anti-racism, these efforts aim to foster a more inclusive and harmonious corporate environment rooted in mutual understanding and respect.
Learn more click here