Optimizing resources among Chamber pre-budget recommendations

Optimizing resources among Chamber pre-budget recommendations

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Contributors:

Jon Tattrie

The Halifax Chamber of Commerce has prepared its annual pre-budget submission to the government of Nova Scotia.

The chamber speaks for more than 1,650 companies that employ a total of more than 65,000 workers. It hosts more than 100 events each year and lobbies the government on behalf of its members. It wrote its 2019 pre-budget submission along the lines of the chamber’s own 2019-2023 strategic plan.

Patrick Sullivan, President and CEO of the Halifax Chamber of Commerce, says the four key recommendations are:

  1. Optimize government resources to reduce the impact on Nova Scotian businesses and entrepreneurs, and reduce government expenditures
  2. Reduce the friction businesses face during daily operations
  3. Continue to reduce the tax burden for Nova Scotians
  4. Outline a strategic plan for the growth and support of businesses and entrepreneurs in Nova Scotia that reflects the current and future programs, projects, grants and collaborations between government and stakeholders

Sullivan says optimizing the size of government could be one of the best ways to improve the province’s finances. “What areas do the government need to be in and what areas can it step away from?” Sullivan asks.

For example, He looks at Access Nova Scotia, which sees the government offer services done by the private sector in other provinces. “Are those tasks government employees need to do, or can it be outsourced?”

He also thinks that as the federal government legalizes cannabis products such as edibles, it could be a chance to think about handing some of that work to the private sector, rather than keeping it solely with the Nova Scotia Liquor Commission.

The chamber also takes an active interest in the electoral boundaries commission, which has provided options to increase the number of MLAs from 51 to 56. That would be a 10 per cent growth in the Legislature at a time when the population increase for the province added only 0.07 per cent more people. “That’s a worry for us. Do we need bigger government at a time when Nova Scotia’s population is increasing fractionally?” Sullivan understands some big rural areas feel poorly represented, but thinks adding money to rural MLAs’ budgets and opening satellite constituency offices would work better than adding MLAs.

The chamber thinks the electoral boundary review can find ways to adequately represent all Nova Scotians, including Acadian and African Nova Scotian communities, without increasing the number of MLAs.

While representation often focuses on rural Nova Scotia, the chamber’s report points out that HRM holds
47 per cent of the province’s population, but only 43 per cent of the seats. Given that Halifax is growing faster than any other region, that imbalance is likely to increase. That would mean some rural MLAs would represent as little as 2,600 people, while an urban one represents 14,000 or more.

Optimizing government does not mean that the provincial government continue to increase spending by three to four per cent per year, about double the rate of inflation as they do. In addition, supporting that spending requires a corporate tax rate in Nova Scotia that remains higher than eight other provinces. Nova Scotia’s rate is 16 per cent; six provinces set the rate at 12 per cent. “It doesn’t make Nova Scotia a compelling place to set up your business.” The chamber wants the rate reset at 14 per cent.

Sullivan notes that the businesses that make up the chamber have a mindset that each year they need to plan to reduce operating costs. “I think the government does not have the same mindset,” he says. “Government’s natural tendency is not to reduce costs.”

Sullivan says there are lots of reasons to be upbeat about business in Nova Scotia. The population reached an all-time high in 2018 and Standard and Poor’s, the bond-rating agency, upgraded Nova Scotia’s long-term credit rating to AA-, its best rating in history. In January, the Canadian Federation of Independent Businesses gave the premier and Mayor Mike Savage the “Golden Scissors” for cutting red tape to help businesses.

The chamber president says it’s wise to focus on financial responsibility during these good times, as with 75,000 Nova Scotians set to hit retirement age in the next decade, the workforce would well shrink at a time when health-care costs rise to treat the aging population. We still owe $15 billion in debt and the chamber says using surpluses to pay that down will benefit future generations.

Paul Bent, the chamber’s chair of fostering private sector growth task force, wants to see a continued sense of financial responsibility and balanced budgets. “We’re balanced, but we have a substantial transfer payment from the federal government. That transfer payment adds up to approximately $2,100 for every person residing in Nova Scotia. As our population continues to age, we certainly see concern down the road,” he says.

He agrees with the premier’s idea that the government’s role is to manage the social programs and “get out of the way” of business activity. The Golden Scissors show success on that front. Bent says Halifax is set to account for half of the province’s population in the next
few years and it creates about 45 per cent
of Nova Scotia’s business activity. He’s
eager to see how the Cogswell Interchange demolition and rebuild go
ahead, and how the port develops.
“I think there’s a real positive vibe in Halifax and it’s been growing for a while,” he says.

Byron Rafuse, the province’s deputy minister of finance, says the government has received and read the chamber’s pre-budget submission. The government’s main goals remain fiscal responsibility, generating surpluses, and bringing down the debt-to-GDP ratio to the Ivany report’s 2024 goal of 30 per cent or under. In 1981, the ratio sat at about 17 per cent, but rose 47 per cent by 1999. It’s now about 35 per cent and falling on a pace to reach the 2024 goal.

Rafuse says the reduction in red tape came from the work of the Office of Regulatory Affairs. Fred Crook, the chief regulatory officer, and his staff were given the job of reducing the burden on businesses. “The government did set an objective of measuring the reduction to businesses – that objective is $25 million by this fiscal year,” Rafuse says, adding that they reached that in 2019. It means businesses are spending less money to get government services, or to get regulatory approval to run their companies.

As for privatizing some of Access Nova Scotia’s work, or edible cannabis products, Rafuse says the government has been open to the idea. He says they studied the prospect of privatizing Access Nova Scotia, but decided it would make better fiscal sense to get Access Nova Scotia to spend less.

As for cannabis, he says the government weighed the financial side against the safety side. They found public support for giving cannabis to the NSLC, which has a good reputation for safely selling alcohol. “The priority is keeping the product out of the hands of youth, ensuring that a safe product is delivered to consumers, and they’ll make the decisions on the retail model based on those overarching priorities.”

He wouldn’t comment on electoral reforms, but did note that the cost of an
MLA makes up a tiny part of the
$12 billion operation that is the provincial government.

Overall, Rafuse says the province’s finances are in good shape, as shown by the higher Standard and Poor’s rating. The agency looked at publicly available records and also internal documents. “They really liked what they saw,” he says. “They look at Nova Scotia as a good place for investors to go.” The better rating lowered the cost of borrowing.

Rafuse says that financial planning includes preparing for the 75,000 people reaching retirement age in the next decade. “It is embedded into our thinking and the long-term planning of government.”

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