Nova Scotia Budget Highlights, April 11, 2000

Text of the Nova Scotia budget highlights.

Finance Minister Neil LeBlanc has tabled a budget for the 2000 01 fiscal year that addresses the priorities of Nova Scotians, while beginning the process of restoring fiscal stability to Nova Scotia. It follows through on the government's commitment to balance the budget in 2002 03.

There is increased spending in children's programs, education, and rural initiatives. Overall spending is reduced by $295 million, including a modest decline in health care spending.

Families, Children, and Learning

There is a special emphasis on families, children, and learning. Government is investing $10.7 million in programs that will teach children to read at an early age, expand early intervention, and assist low-income families with children.

More than $1 million is being directed to day-care and education-upgrading programs to help Nova Scotians move from social assistance into the work-force.

Cash spending on education is up from 1999 2000, including an additional $4 million in operating funds to universities and an increase of $2 million to community colleges. The public school capital construction program will continue.

Health Care Costs Reined In

The government is making efforts to rein in spiralling costs and ensure that health care dollars are directed to front-line care. Nova Scotia spent more per capita on health care in 1999 2000 than any other province.

A clinical services review underway at the Department of Health and the proposed Health Authorities Act will help to improve the quality and level of health services available to Nova Scotians and to ensure a sustainable health care system.

The total health care budget reflects a decrease of 2.9 per cent from 1999 2000, following increases totalling nearly 38 per cent over the past three years.

Cost of Government Reduced

The budget follows through on the commitment given in the 1999 2000 budget address to reduce the cost of government. Every effort was made to reduce administrative and other overhead costs, before service reductions were contemplated. More than 70 per cent of the cost of government is salaries. It is not possible to reduce spending without reducing the payroll. About 1,600 public-sector positions will be eliminated, many through natural attrition.

The government announced a review of its role in the warehousing, distribution, and retail functions of the Nova Scotia Liquor Commission. Nova Scotia is the only province in Canada where government wholly owns and operates every aspect of the liquor business.

Support for Rural Nova Scotia

Nova Scotia's farmers will benefit from a $1.9 million increased commitment to assist with changes to market conditions. There is also a new $600,000 program to assist young farmers with financing costs. An additional $9 million has been budgeted to improve secondary roads.

Four-Year Fiscal Plan: 2000 01 to 2003 04

The Four-Year Fiscal Plan will see deficits eliminated and replaced by a small surplus in 2002 03, followed by a surplus and tax cut in 2003 04. Under this plan, revenues, fuelled by private sector led economic growth, will increase while government expenses will be controlled.

As revenues continue to grow, a larger surplus will enable government to return increased revenues to Nova Scotians in the form of a 10 per cent personal income tax cut in 2003 04.

The size of Nova Scotia's debt means that debt-servicing costs will remain high throughout the four-year plan. Debt-servicing costs will start to decline once deficit financing is eliminated and surpluses can be applied to principal repayment.

Government Restructuring

Critical to the four-year plan is a major restructuring of government announced March 30, 2000. This restructuring will reduce the number of government departments from 21 to 14 and is designed to create a less costly government, concentrating on the priorities of Nova Scotians. The result will be a more efficient, service-oriented government that operates within its means.

Revenues

Ordinary revenues for 2000-01 are estimated to be $4.79 billion, an increase of $11 million over the 1999 2000 forecast. Revenues from provincial sources are estimated to increase 2.6 per cent over the previous year's forecast to $2.98 billion. Federal source revenues are estimated to decline by 2.9 per cent to $1.8 billion.

Expenses

On the expense side, Net Program Expenses are estimated to be $4.16 billion, a reduction of $116 million from the previous year's forecast. However, that number does not tell the whole story. The province also had to cover additional spending commitments, including debt-servicing costs, which increased by $85 million, and reductions in federal transfer payments. Taken in total, this budget includes some $295 million in spending reductions.

An important note is that 2000 01 marks the introduction of reporting on Tangible Capital Assets (TCA). This change follows the government's decision in September 1999 to bring its accounting policies into compliance with generally accepted accounting principles.

TCA replaces the policy of having the entire cash cost of a capital purchase, such as a building or vehicle, recorded in the year the purchase was made. Rather, the government will record the dollar value that has been lost or used up that year.

The largest single net expense in 2000 01 is health care (33.2 per cent of net expenses), followed by education (20.4 per cent), and debt-servicing costs (20.2 per cent). In 1999 2000, Nova Scotia's debt-servicing costs as a percentage of revenues (19.3 per cent) were the highest of any province in Canada.

As a result of the difference between revenues and expenses, the province is estimated to record a deficit of $268 million on a fully consolidated basis in 2000 01. Net direct debt will reach $11 billion by March 31, 2001.

Economic Indicators

Nova Scotia's economy continued to do well in 1999. The province's Gross Domestic Product increased 3.6 per cent. Personal income, on a per capita basis, increased 4.2 per cent, and employment grew by 2.4 per cent. Housing starts increased 35.5 per cent, and exports of goods and services were up by 10 per cent over 1999 levels.

Tax Credit Review

The results of the first phase of a review of all provincial tax credits and rebates are included in the budget. In this phase, six credits and rebates were dealt with. There are changes to the Equity, Film Industry, Research and Development, and Manufacturing and Processing tax credits. There are no changes to the Harmonized Sales Tax Rebate to municipalities, academic institutions, school boards, hospitals, and qualifying non-profit organizations. Also, the ISO 9000/14000 credits will expire as planned at the end of 2000.