Every year the Chamber releases a pre-budget submission outlining what we are looking for in the province’s spring budget. The submission also serves as the basis for our advocacy work over the coming year. The following is an excerpt from our submission that was released earlier this year.
The government’s announcement last April that the 2014 budget would include a $279 million deficit was certainly disappointing to the business community. Even more so was their projection that they would not be able to balance the budget until 2017. It felt like we were starting back at square one.
Therefore, when the most recent fiscal update revealed that the provincial deficit was at $220 million it was both a relief that things had not gotten worse and a reminder that the books still need a lot of work. With the provincial debt approaching $15 billion, it is clear that Nova Scotia can ill-afford more financial setbacks. To reduce the province’s fiscal vulnerability, the government needs to move from “managing the store” to bold action.
Arguably, the most critical recommendation of the Charting a Path for Growth report is its call to freeze government program spending for the next five years. The report estimates that this will free up over $1.1 billion in revenue that can be spent on reducing the tax burden, paying down the provincial debt or on transformational investments for public service delivery in Nova Scotia.
There is no hiding the fact that freezing program spending for five years would be a difficult task. The Now or Never report made it quite clear however, that we cannot continue to do things the same way as before and expect different results. Luckily, where Nova Scotia has have failed in this regard other provincial governments have succeeded. Roy Romanow’s government in Saskatchewan froze or reduced program spending from 1991-1998. During the 1990s, the federal government also faced down a difficult economic situation and succeeded in putting its finances in order. We support the government’s program review and urge them to look even harder at how they can find savings.
If Nova Scotia is going to get its finances under control, labour costs, which are 58% of the budget, will have to be part of the discussion. Specifically, the disparity in benefits between the public and private sector needs to be addressed as a long-standing concern for our members. Furthermore, the provincial government needs to be able to control the size of its workforce; and its current Memorandum of Agreement with public sector unions makes that impossible.
Controlling program spending will put Nova Scotia on the path to sustainable balanced budgets and give government the financial flexibility to deal with some of the long-term challenges facing our province. We cannot stress enough how important it is that our provincial government begin doing things differently. It will not be easy; but meaningful change seldom is.
The Chamber recommends that the province: