Health Costs Are Biggest Budget Challenge; LeBlanc

Bringing rising health costs under control is the biggest challenge the government faces in pursuit of a balanced budget, Finance Minister Neil LeBlanc said Friday.

"For more than a decade, governments in Nova Scotia have fought a losing battle with the deficit. They lost for one reason -- they couldn't bring health spending under control," the minister told the Metropolitan Chamber of Commerce in Halifax.

Mr. LeBlanc noted that in the past year the government has made progress. This fiscal year, spending on health care will remain relatively flat, compared to fiscal 1999-2000. However, between 1997 and 2000, health costs grew on an annual basis by some 10 per cent. That trend is cause for concern, he said.

The minister said the government is not talking about cutting health funding, but rather slowing the expenditure growth rate. While health costs were growing at 10 per cent a year, the provincial economy is growing at a rate of three per cent or less.

"At that rate of growth, within a decade health costs will consume every other service of government, said the minister. "At what point does that become a crisis? When we have to stop plowing and repairing our highways in order to pay for health care? When we can no longer police our streets or provide assistance to the poorest of the poor? Or when we can no longer keep schools open and teachers teaching because all the money is needed for health care?"

The time to act, said Mr. LeBlanc, is clearly before any of those "admittedly dramatic decisions" are required.

He said the government intends to manage growth in health spending through a combination of measures that include instilling more accountability in the system itself; by basing spending decisions on the best available evidence; and through innovation and creativity.

Mr. LeBlanc told the chamber the government is on track to hit its four-year financial goals. The government proposes to cut the deficit to $91 million in fiscal 2001-02, from the current year's $268 million. The red ink will disappear in 2002-03, and the following year a 10 per cent provincial income tax cut is planned.

The minister said in addition to "the big challenge" -- controlling health spending -- other challenges facing the government this year are interest charges that are nearing $1 billion annually; pressures to increase spending in education and other areas; and pending collective agreements with thousands of public-sector employees.

He emphasized that sound provincial finances are essential to continued economic growth and the security of vital public services, like health and education.