Budget Backgrounder: Fiscally Responsible Health Fund

Nova Scotia's $600-million Health Investment Fund will not only improve the quality of care, it is the fiscally responsible thing to do, Finance Minister Don Downe said today.

Investments from the fund will result in better management of health care dollars. Over time, it will reduce the rate at which health spending increases, by putting in place more alternatives to hospital-based care.

Those alternatives are often more cost-efficient. They include nursing home beds, broader home care services, and more community-based care, all of which will relieve demand on the more expensive hospital system. The result will be more appropriate care for individuals, a more affordable system for taxpayers, and improved access to all types of care for those that need it.

Nova Scotia's health care budget has been increasing at a rate of more than 11 per cent a year. If that trend continued, within four years it would cost $2.7 billion, an increase of more than $1 billion from today's budget. The province could not sustain that level of cost increase, the minister said.

"By managing health care more wisely, we can improve the quality of care and ensure the health care system is more secure, more sustainable for the future," said Mr. Downe.

The fund, unveiled in the provincial budget, is created with borrowed money, but the debt will be paid in full within 14 years.

"Our Health Investment Fund will operate like a mortgage," said Mr. Downe. "It will not permanently increase the debt of the province. Legislation will be introduced to ensure every penny borrowed to invest in nursing homes, home care, hospital equipment, or management systems will be paid back."

The payback schedule includes several important measures:

• Beginning this year, budget surpluses will be used solely for debt reduction.
• Until the health investment is repaid, the net royalties from Sable gas will be directed toward debt repayment. This alone is expected to fund more than half the required repayment by the year 2012 13.
• Legislation will be introduced to require a schedule of principal payments to be included in the budget starting in the year 2003 04. This will take into account the impact of expected Sable royalties and budgetary surplus payments, and establish a repayment schedule to allow for complete payment by 2012 13.

These measures are designed to ensure the government remains on a track of financial and social responsibility.

"No government will be able to simply refinance this special borrowing," said Mr. Downe. "This legislation will ensure the fund is paid off."