Financial Measures Act Introduced

New laws requiring balanced budgets, limiting new programs to existing budgets and reducing foreign currency exposure are among the highlights of financial accountability legislation introduced today.

Finance Minister Neil LeBlanc said the Financial Measures Act will enforce accountability in government and require a balanced budget to be tabled in 2002-03.

"Our government has shown from day one that financial responsibility is very important to us," Mr. LeBlanc said. "Running up deficits threatens the very programs and services Nova Scotians depend on. The deficits will stop in two years."

Accountability for the use of public funds is at the core of the legislation. Any spending in excess of an appropriation requires the responsible minister to file a report with the House of Assembly. A balanced budget will be required with the tabling of the 2002-03 budget. If a deficit occurs, it must be accounted for in a report tabled in the legislature, or with the chief clerk when the House is not sitting. Any deficit must be recovered in the next fiscal year unless it is caused by a natural or other unanticipated disaster, unforseen increase in debt-servicing costs, or one-time costs associated with closing or selling a Crown corporation, agency, board or commission.

Accountability also means responsible, long-term planning, which is also a feature of this legislation. The government will be required to release a four-year fiscal plan with the annual budget. The plan must include four-year fiscal projections, economic assumptions and a business plan.

"To further encourage accountability, government will also be required to publicly report on the outcomes of the previous year's projections," said the minister.

Another key element of the legislation is the requirement that any new program or service must be financed out of a department's existing budget.

"For too long government has added to its costs by coming up with new programs without dropping something else to pay for them," Mr. LeBlanc said. "This measure will enforce accountability and a sense of priorities by requiring that the money to pay for any new program must be found in the department's current budget."

The legislation will require that refinancing of existing debt be done in Canadian currency. Government has been steadily reducing Nova Scotia's exposure to foreign currency. In 1995, 72 per cent of the debt was in foreign currency. Last fall, it was 46 per cent. Today, that figure is 36 per cent and the government is set to achieve the goal of 20 per cent by 2005.

Other accountability measures include amending the Provincial Finance Act to give cabinet the authority to require its approval for any financial transaction, and to require cabinet approval for any financial obligation that has not been budgeted for.

The act will revoke the appointments of the chair and vice-chair of the Alcohol and Gaming Authority and provides for severance compensation for the chair as outlined under the Civil Service Act. It was announced in the budget address that the functions of the authority would be divided among the Utility and Review Board and other departments, removing the need for a chair, vice-chair and board members.

Among other issues this legislation addresses are items that were referenced in the April 11 budget. This will require amending the following legislation:

• The Halifax-Dartmouth Port Development Commission Act to wind up the commission.
• The Income Tax Act to ensure consistency with the Federal Income Tax Act and to provide for the switch to tax-on-income.
• The Provincial Finance Act to allow the minister of finance to delegate certain duties relating to time-sensitive money market transactions.
• The Summary Proceedings Act to increase court costs on summary offence tickets from $50 to $100.
• The Senior Citizens Financial Aid Act to enable people who became seniors since 1995 to be eligible for the property tax rebate.
• The Emergency Measures Act to allow for cost-recovery of 911 service.
• The Victims Rights and Services Act to ensure standard compensation by removing the ability of the director to vary awards.
• The Workers' Compensation Act to require that the cost of the Workers' Advisory Program is paid from the employer-contributed Accident Fund. This brings Nova Scotia in line with all other provinces.
• The Corrections Act to remove a requirement for government to pay the full cost of arbitration hearings, and Teachers' Collective Bargaining and Trade Union acts to remove a requirement for government to pay one-third of arbitration costs.
• The Assessment Act to allow municipalities to tax machinery and equipment. Municipalities are currently paid a grant by the province in lieu of taxes. With this amendment, the grant will be eliminated and individual municipalities will have the option of taxing machinery and equipment.
• Amendments to effect the various changes to tax credits announced in the budget.

The legislation also contains housekeeping items, such as giving the minister of finance authority to determine financial management systems, consistent fiscal years and financial accounting policies and procedures of school and health boards, Crown corporations, and government agencies boards and commissions. With the move to generally accepted accounting principles and consolidated financial statements, it is important that these organizations and government use consistent accounting procedures and information systems.