This is a guest post from T4G Limited
(Member since 2004)
Let’s get our fiscal house in order
We all know what will happen if we don’t plan properly. Really, we do.
As in your own businesses, relentless attention to debt, how it accumulates and how to reduce it is not just common sense — it’s how you stay in business.
Managing the provincial budget is no different.
If Nova Scotia’s long-term debt were shared among all Nova Scotians, we would each owe more than $16,000.
All of us.
This should frighten you. For a jurisdiction of our size and makeup, a provincial long-term debt of more than $15 billion is more “Halloween” than “Spring Budget.”
Don’t get me wrong — I know the business community is well aware of the nominal value of our debt and the efforts they have made to communicate its dangers. The fact remains that we need to get our fiscal house in better order. Because of this, reducing the tax burden and debt reduction have been a part of the Chamber’s strategy as long as T4G has been a member.
But we need to do more. Each of us in the business community needs to ask for more from our government.
As I have previously written, the One NS Collective reports on how well we are doing in terms of the goals outlined in the Now or Never Report. They can be seen online at www.onens.ca. The 19th (and final) goal on the list is: “By 2024, the Province of Nova Scotia’s net debt to GDP ratio will be 30 % or less.”
We are currently at 37.5 per cent.
And the status of this goal? “Not Progressing.”
In all fairness, this is much better than where we were in 2000 at 47.5 per cent.
On top of the work we have to do, we can foresee that the macroeconomic underpinnings that make up this ratio are shifting and specifically how they are shifting — shame on us if we do nothing about it.
Dan Ariely is a leading expert of behavioural economics at Duke University. He is the co-founder of a truly unique research centre and body of knowledge, The Center for Advanced Hindsight (www.advanced-hindsight.com). His work is fascinating.
The centre studies how to plan for and impact a collection of common irrational human behaviours that relate to having the insight to accurately foretell how a current decision will negatively impact a future result, yet remain powerless to do anything about it.
We have all been there: “I don’t think that individual is a good hire for [these] reasons,” or “I really don’t think we should further diversify our product set — it will confuse our customers and employees,” or perhaps the broader, “This is not going to end well.”
We have all been in a situation that fits this description. These are situations where the learnings from The Center for Advanced Hindsight could have helped.
Consider this: we know we have an aging population. We know that the taxpaying workforce as a percentage of Nova Scotia’s population is shrinking. We know that this means less tax revenue (don’t get me started on short-sighted tax increases to offset). We know the population that isn’t generating as much tax revenue as it previously did will require supports at a greater level (i.e. healthcare). We know more long-term debt is not acceptable.
We need to take action. A shrinking workforce population means we need to reduce government spending. We need to take any surplus from a better-than-balanced budget to pay down long-term debt. We need to live within our means, which means a highly efficient public service today and a smaller (even more efficient) one tomorrow.
This concerns all of us — and many of us have the power to see into a future that isn’t the one we deserve. Inaction will lead to economic disaster.
I beg you, do not allow Nova Scotia to become a case study for The Center for Advanced Hindsight. Let’s use the insight that we have today to make the right kind of change. We have the power to do that.
Mark Fraser is Chair of the Board of Directors of the Halifax Chamber of Commerce and Executive Vice President at T4G Limited. Follow Mark on Twitter at @mark_fraser.
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