Latest Public Accounts Shows Improvement, Op-Ed

NOTE: The following is an op-ed piece by Finance Minister Graham Steele.

I am pleased to inform Nova Scotians that government is making real and significant progress in getting back to balance by keeping a tight rein on expenses and growing the economy.

As you know, government inherited a very significant fiscal challenge.

After taking office, we learned that Nova Scotia was on an unsustainable path. Spending and revenue patterns were pushing Nova Scotia toward a $1.4 billion deficit within three years.

Since that time we've taken on the hard work to get back to balance.

That included the most extensive financial consultation in the province's history – the Back to Balance tour – and I delivered a budget last April that was firmly grounded in that consultation. It also outlined a four-year plan to get the province's finances back to balance.

We are still early in the drive to get back to balance, but the financial figures that were just released show progress is real.

We've reduced expenses and increased revenues and -- I am proud to say -- we are the first government in a decade to control unbudgeted spending.

When we first took office we made it clear that government needed to live within its means. For example, we reduced political staff and cut MLA expenses.

I am glad to say that Nova Scotians are now starting to see the results of our focus on controlling expenses and growing the economy.

We closed the financial books on 2009-10, our first year in office, on July 29th. The Public Accounts – the province's financial statements -- show expenses were reduced by $128 million from the last public forecast.

This is the first time since 2005-06 that expenses went down from the forecast, rather than up.

That is good news for Nova Scotians. We are on our way to getting back to balance.

It is also important to note that funds used to cover unbudgeted expenses and spending – called additional appropriations – are down significantly when compared to the previous 10 years. The average for additional appropriations during that period is $277 million per year.

In 2008-09, for example, the previous government spent $408 million in additional appropriations.

Government sliced appropriations down to just $24 million last year. It took hard work and sharp pencils from government and the civil service, but it was necessary.

We required that each department manage their budgets wisely. It was typified by our message to departments that there would be no more March madness.

We made sure that savings achieved through the year were used to reduce the deficit. A penny saved should be a penny saved — not a penny spent elsewhere.

That is a fundamental difference in our approach to finances. Had other governments been as disciplined during the past 10 years, the debt could be up to $2.5 billion lower.

While expenses declined, revenue increased $155 million compared to the last forecast, including an increase of $76 million in personal and corporate income tax revenue.

It seems clear that government stimulus efforts played a significant role in softening the effect of the global recession on Nova Scotia.

Our economy grew modestly – but it grew, even during a recession.

The financial picture of the province is good news for Nova Scotians. It shows that we are starting to see the results of our focus on controlling expenses and growing the economy.

Tough spending choices are being made. And more tough choices are to come this year and in the years ahead.

Nova Scotia continues to face a significant structural deficit. Revenues will not be able to keep up with expenditures. Offshore royalties are declining.

We still have a difficult financial situation to address.

We need to continue with our balanced approach of restraint, efficiency and good management, while increasing revenues and growing the economy in order to get this province back to balance. We have developed a four-year plan that will guide us through some difficult spending choices as we reduce government spending by $772 million.

This plan will ensure we have the money we need to protect important services such as health care and education.

I am confident that we will be successful. The financial statement shows that we are headed in the right direction.