The elevator conversation critique of the Houston government’s second budget practically writes itself – money for everything but the wellbeing of those who need it the most. The budget, which the PCs seem intent on pushing through the Nova Scotia legislature ASAP, manages to be both parsimonious and profligate.
The tightfistedness is most blatant in the refusal to increase income assistance rates. As the NDP’s Gary Burrill put it, failure to at least index assistance to inflation is “a scandalous and a shocking moral failure.”
Meanwhile, extravagance characterized much of the remainder of the budget. The Premier seems to be interpreting general acceptance of his pledge to spend whatever it takes to fix health care as a licence to spend, period. Liberal Fred Tilley suggested that instead of of the clunky “More Healthcare Faster” the budget should bear the title “More Debt Quicker.”
Purchasing power eroded
Dealing first with income assistance, Nova Scotia has a long and notorious record of providing among the lowest assistance rates of any province. A deathbed repentance by the Liberals in 2021 led to their proclaiming an “historic” increase in rates. But that increase failed to significantly improve our ranking, according to the latest “Welfare in Canada” report from the Caledon Institute of Social Policy. Worse, the increase has been eaten up by the 15 percent increase in food and shelter costs over the last 20 months. Now with inflation for this year projected at 3.7 percent, there will be further erosion of purchasing power.
According to the calculations Gary Burrill put on the legislative record, the freeze in rates, combined with inflation, will result in the following:
- A single adult receiving $748.92 a month will see a $27.71 reduction in real income;
- A single adult with a disability will lose $37.48 in purchasing power from a monthly stipend of $1,012.97;
- A single parent with one child will lose $19.70 a month in real income, even after the budget’s modest increase in the Child Benefit is taken into account; and
- A couple with two children will lose about the same amount per month, $19.64.
The PCs justification for this approach seems to be that by adding to assistance recipients’ economic misery they will be encouraged to get a job. Community Services Minister Karla MacFarlane responded to criticism of the rate freeze by saying: “We know that everybody wants to live in dignity. We know that everyone wants to support themselves.” (We’ll return to this later).
Finance minister Allan MacMaster offered a different excuse. He argues that everybody, including people in need of income assistance, will benefit from all the money the PCs are putting into health care. That may be so but the rationalization shows a lack of awareness of the connection between poverty and poor health. A health care “fix” that fails to address the determinants of health is doomed to fail.
When it comes to income assistance, the Houston government’s self-reliance stance is at least consistent with the small “c” conservative tradition. Its approach to government spending and government debt, not so much.
Spending like the 80s
Nova Scotians who came of age during Stephen Harper’s reign and therefore associate Conservatives with fiscal restraint may be baffled as they see the Houston PCs opening the spending taps in ways that even the NDP never contemplated when they were in power. Those of us who have been around longer and lived through the 1980s will experience no such bewilderment. We’ve seen it before with the PC government of John Buchanan. At that time, in addition to dispensing patronage, the spending spree was a fruitless attempt to fix our economy, whether by bailing out failing industries like steelmaking and coal mining, or force-feeding new ones.
As readers will know, I’ve never been an admirer of the balanced budget fixation of Harper or our own Stephen McNeil. Indeed, their fiscal policies are responsible for many of the health care problems that need fixing. However, acknowledging that doesn’t mean endorsing Houston’s “spend whatever it takes” mantra for health care while ignoring other priorities and the need for accountability.
Nova Scotia’s budget was among half a dozen provincial budgets brought down over the last week or so, and it was a fiscal outlier. Most provinces have abandoned balanced budgets as the fiscal Holy Grail and embraced flat or declining debt-to-GDP ratios as a measure of fiscal prudence. On that score, Nova Scotia projects the ratio of 33.6 per cent for 2023-4 to rise to 34.8 next year and to 36.2 in 2026-7. With Newfoundland and Labrador the exception, five other provincial budgets brought down recently go in a different direction on debt than Nova Scotia.
- Quebec now at 37.4 has set a target of 35.8 per cent for 2028;
- Ontario is aiming to reduce its debt-GDP ratio from 37.8 this year to 36.9 in 2025-6;
- Manitoba projects debt-GDP in the 34-35 range each year to 2026-7;
- Saskatchewan, with resource revenues booming, expects to run surpluses over the next three years.
Prince Edward Island, where there is an election campaign underway, has yet to present a budget, but our other Maritime neighbour has tabled one telling a very different story than that unfolding in Nova Scotia. Like Nova Scotia, New Brunswick has enjoyed a surge in revenues over the last two years. Unlike Nova Scotia, New Brunswick has used some of that windfall to significantly reduce its debt-GDP ratio which has dropped from 30.1 last year to 24.9 per cent for 2023-4 and is projected to drop further to 23.4 per cent in 2025-6.
Despite this restraint, New Brunswick – which historically has had a worse record in this regard than has Nova Scotia – increased income assistance rates by 7.3 per cent. And the Higgs government is building more public housing, another initiative sadly missing from the Nova Scotia government’s budget.
Clearly the Houston government’s “laser focus” on health care should not provide an excuse for neglecting other needs. Nor should their quest for a “fix” become a blank cheque.
There have already been examples of the PCs playing fast and loose with public money – the tax break for Michelin and the purchase of an unfit-for-purpose hotel as a “transitional care facility” come to mind. And then there are the no-strings-attached retention/thank you bonuses for nurses and other health and social assistance workers. The gesture, with a potential cost of $330 million, was rolled out with no evidence that such largesse will prevent further migration to retirement, new careers or the private health care sector.
The health care bonuses and the income assistance freeze appear as different sides of the same coin, that being the belief that money – whether dispensed or withheld – is a source of “dignity.” The PC government seems to think that more money in the form of bonuses will somehow restore the dignity for workers in public health care, while the prospect of less money will encourage those on income assistance to embrace the dignity of supporting themselves. Carrots for some, the stick for others.