Province projects $ 444.5 million deficit despite $ 397 million increase in spending
Instead of a deficit of $ 585 million forecast in the spring budget presented by the previous Liberal government, the province is now forecasting a shortfall of $ 444.5 million. Finance Minister Allan MacMaster provided an update on the province’s financial situation on Wednesday.
The improvement occurs despite the $ 397 million increase in departmental spending. Much of this relates to the expenses associated with the pandemic. For example, the Department of Health and Wellness spent $ 117 million more than expected: $ 36 million for COVID-19 testing and $ 8 million for vaccination clinics. Wage deals negotiated with several health unions just before the provincial election cost $ 11.8 million and a change in the way doctors choose to be paid added an additional $ 8.1 million.
But not all of the additional expenses are related to the pandemic. Since taking office in August, the Progressive Conservatives have added $ 32 million to a new grant to help seniors stay in their homes longer. MacMaster said details of this program will be announced in a few weeks.
The Houston government will also spend an additional $ 7.8 million on paid time off (overtime) for essential health workers working today on the new National Day for Truth and Reconciliation. Today’s new holiday is expected to cost taxpayers around $ 9.4 million.
Other new spending was added to federal programs to help municipalities and $ 53 million to eventually establish child care programs at $ 10 per day; both these expenses will be recoverable from Ottawa. Since the Progressive Conservatives were elected in August – in a provincial election that cost $ 13 million – the government has spent $ 80 million more than what was budgeted last spring.
In addition to the $ 32 million grant to prevent seniors from attending nursing homes, new funds were allocated for gravel roads, rural skating rinks, online doctor’s appointments, an advertising campaign. to attract more people to Nova Scotia and $ 5.5 million to start the process of lifting the Cobequid Pass tolls. No date has yet been set for the lifting of the toll; 2026 was the initial date of the agreement with the Highway 104 Western Alignment Corporation before the PCs promised to end it “immediately”.
Keep your election promises
Journalists asked MacMaster if the province’s financial situation is strong enough for the PCs to keep all the financial commitments they made during the election campaign.
“Even though we’ve made a commitment to spend the deficit, if necessary, to fix health care, we still have to watch every dollar that comes out,” MacMaster said. “Even though we are in the middle of a fiscal year, it’s time for us to put our stamp on things as a new government and some of the changes we want to make, I believe Nova Scotians are looking for.
NDP Finance spokesperson Lisa Lachance issued a press release criticizing the PC government for not spending more to fight climate change and affordable housing.
“Nova Scotians expect the Conservatives to act on these two pressing issues,” said the MP who toppled former MP and Finance Minister Labi Kousoulis in Halifax. “COVID-19 has had an unprecedented impact on the finances of the province. The fight against housing and climate crises must be part of our recovery plan for the future. “
The Liberals have added $ 23 million since the spring budget to address the recommendations of the Affordable Housing Commission. Very little additional money has been spent on tackling climate change. Prior to the minister’s speech, senior finance ministry officials presented reporters with some of the figures. Real gross domestic product (GDP) actually declined less in 2020 than forecast in the previous budget; a contraction of 3.2% instead of 5.3%. The spring budget took into account a potential third wave of COVID restrictions, but did not plan for a fourth wave this fall.
Finance ministry officials expect it to be 2022 before the economy returns to what it was before the pandemic. And as economic activity continues to fluctuate based on measures imposed to limit virus outbreaks, provincial economists say tourism, retail, financial and insurance services will face challenges in the future. long term as these industries adapt to people working from home and more. online shopping.
Another wild card is how much the province can lose in taxes paid by corporations. Corporate income tax is down $ 7.6 million from budget this year, but a rule that allows businesses to carry losses over three years could have a much bigger impact on provincial revenues next year.
A little good news
The reason Nova Scotia is not as badly off as expected is in large part because it receives money from Ottawa; at least $ 210 million. $ 103 million was paid as a one-time increase in health transfer payments, $ 35.6 million under the COVID-19 Safe Restart Program, and a deferred payment of $ 85.6 million. dollars from a federal-provincial offshore natural gas royalty sharing agreement.
On the provincial revenue front, Nova Scotians contributed an unexpected $ 86 million more in personal income tax, and the province received a windfall of $ 88 million when an investment from its venture capitalist, Innovacorp, has proven to be a winner. Innovacorp recently sold its stake in Meta Materials, a Dartmouth-based company that designs a suite of products using light and nanotechnology, for a profit of $ 101 million.
Meanwhile, the provincial debt has reached a staggering $ 12.9 billion. The fact that interest rates remain low means the cost of debt servicing (paying interest on the principal) is expected to be $ 22 million lower this year than forecast in March. This may be a small consolation given that the bill will run into the billions – and rise – when it finally comes due, but for now, that doesn’t seem like a major consideration.
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