Getting Back to Balance
Back to Balance is a four-year plan, which started when the present government was elected in 2009. The plan has two key points that the government has followed. The first was aim to balance the budget by the Spring of 2013, which would prevent too much cutting in one year while not adding too much to the debt.
The second element was finding new sources of revenue. That’s where one per cent increase in HST and income tax on the highest earners came into play.
Both those revenue increases are in place, so now the government is looking at restraint. For every dollar of new revenue they added, $3-4 in restraint must be found.
Nova Scotia’s deficit when the 2011-2012 budget was presented was $389 million. Finance minister Graham Steele says those figures fluctuate throughout the year somewhat, but that is the baseline projection.
Back to balance website
One of the initiatives the government took late last year was to create the website https://backtobalance.gov.ns.ca This website came about from Steele’s consultations with the people of Nova Scotia two years ago. He found there was no way for everyone to get to the meetings, but there were still those who wanted to have a voice.
“We needed to supplement the face to face conversation with something online,” he said, adding Nova Scotia has over 95 per cent Internet coverage now.
What is unique about this website is anyone can manipulate the budget figures and see how it affects the overall budget. On top of that, it also has popups on each item, which explain what some of the consequences of moving dollar figures around might be. Though a simplified version of the actual budget, it does give people an idea of how the budget works.
The website cost $32,250 to create.
It is more than just a learning tool however. When results are submitted, they go to the Department of Finance to review. Steele says the results will be published shortly, and it will play a factor in how the budget is decided this year.
“It has an educational role, in showing people how the budget works, but it also is the centerpiece of this year’s budget consultation,” he says. “At the end of the day, it’s the people’s money.”
The problem with education from a financial point of view is costs keep rising, while enrollment is falling. Steele says in Nova Scotia, enrollment decreases by around 2000-3000 students a year. Over the past 10 years, education costs have also risen by 43 per cent, at the same time as test scores have not changed significantly, says Steele.
Student costs increases are usually justified by school boards because of an increase in program costs and targeting at risk students. However Steele says the money for schools is not infinite
“When you talk to educational professionals, they can give you 100 good reasons why education should go up. All I can say in my role of looking after the finances, is that it’s not sustainable.”
Health care is an ongoing issue, says Steele, and the costs continue to rise. Nova Scotia is not unique in this situation, and the recent changes by the federal government will create even greater challenges across the country.
Health care makes up the largest part of Nova Scotia’s budget, about 40 per cent or $4 billion. Of the $4 billion, the largest subcategory is doctors at $700 million. Steele says there isn’t much leeway in that area, since if doctors feel they aren’t paid enough it is very easy for them to find work in other provinces.
The next highest costs for the health care system are drugs, which also increase on average by nine per cent a year. Changes to how drugs were funded came in last years budget. This included a cap on how much the government would pay for certain drugs, while preventing pharmacies from raising prices.
Drug costs continue to rise however, because new drugs are coming onto the market every year.
“There has to be a limit to what we are willing to pay for together. But that’s not an easy conversation to have. All you need is someone in your family need a drug that may help you, and you say you want the government to help you,” he said. “It’s got to be a level of quality they can afford, but at a cost they can handle.”
The measures they have taken have slowed the rate of health care growth, but not stopped it, says Steele.
“I can assure people there are no cuts. They may be a reduction in a particular section, but overall health spending will go up,” he says.
This year it looks to be around two per cent increase for health, he says.
The budget for Nova Scotia will be presented to the house at the beginning of April.