The ritual of public consultation by government does not have a sterling reputation. Typically, members of the public are invited to submit ideas on a subject, sometimes at face-to-face meetings, often online. Then it’s usually the government that decides what if anything gets reported from those consultations. But at least people get to have their say. 

Unfortunately, the Houston government’s consultation on the 2027-28 Nova Scotia budget, wrapped up this week, doesn’t clear even that low bar. 

For this exercise in box-ticking PR, the government has come up with a nice inclusive slogan – “Building Our Budget Together.” Then it limits the building materials you can use: increasing taxes, fees or the deficit won’t be allowed, and participants can’t suggest cutting the budget for health, which consumes 28 percent of the provincial budget. And then it imposes a revenue ceiling assuming there will be no growth in revenue next year – this despite the fact that before dropping slightly in 2025-26 because of tax cuts, revenue increased by a robust average of 10.9 percent a year from 2021 to 2025.   

Coming up with a budget around the kitchen table with such limitations may make sense – average families can’t easily increase their revenues, their credit is maxed out and so the only way to stay solvent is to cut expenditures. But governments don’t face such restrictions – they can of course increase taxes and fees. 

The fact that the budget building exercise ignores the possibility of increased revenues – either through taxes and fees or projecting revenue growth more in line with past experience – shows clearly what the government’s up to. This year’s budget tried to cut over $300 million but reduced that by $53 million when people took to the streets in protest. Houston’s approval rating took a hit and the PCs dropped in the polls. 

The government wants to cut $622 million next year and has come up with a gambit to create the impression that Nova Scotians are on board with spending cuts – and even had some thoughts about where to hack – in an attempt to defuse the backlash that is sure to happen.

So far it doesn’t look as if many Nova Scotians are playing along. According to Jennifer Henderson’s report in the Halifax Examiner, as of October 6 just 228 people had shown up at the first five of six in-person sessions held around the province, while online participation totalled only about 1,800.

Legislature misled

But even if the costly exercise ends up – as it should – as no more than a line or two in the Finance Minister’s budget speech, the whole effort is yet one more example of the Houston government’s disdain for democratic institutions – in particular the Legislature. The show was launched on September 11 while  the Legislature was in session, awaiting presentation of the Public Accounts, which present in detail how the government spent in the 2025-26 and the Fall Fiscal Update, showing how things are shaping up so far this fiscal year.  

Given the uproar accompanying last Spring’s budget cuts and anticipation of more cuts in future budgets there was more than the usual interest in the Fall Fiscal Update. Indeed, when asked by the Opposition leader whether the update – legally required to be presented no later than September 30 – would be tabled while the legislature was in session the Premier replied, “absolutely.” . 

Houston was either lying or poorly briefed when he made that commitment. Later in the session, questions to the Finance Minister revealed some back-tracking. Tabling was no longer absolutely certain, but the government was working hard to meet the end-of-September deadline. But alas, all of that hard work was not enough to get the Update out before the misnamed “fall session” ended on September 18, after just nine days. The Update was finally released a week later, on a Friday, just when the weekly news cycle was coming to an end.

Anyone who thinks that it is all just unfortunate timing, forcing the Premier to go back on his word, would also be a prime candidate to buy the Brooklyn bridge, or Trump coin. Houston’s government likely planned it that way all along. They pulled the same stunt in 2024 – also conducting  a short 10-day “fall session” that ended on September 20. 

This year, with budgetary matters on the agenda of a public still angry from last Spring’s controversial cuts, tabling the Update and the Public Accounts for 2025-26 when opposition members and the media were not around to ask  probing questions was probably just too tempting. The PCs got away with a short late summer session once, why not do it again?

So rather than defend their record in the Legislature they opted instead to meet for a few days in late summer while launching, through a dubious consultation process, an effort to make Nova Scotia complicit in budget cuts made necessary by their mismanagement of public finances.

History of bad budgeting

By turning out the lights in the legislature before tabling the fiscal facts the government avoided questions on a number of areas, in particular its continuing inability to stick to its budget. Documents released with the Public Accounts reveal that in the last fiscal year Additional Appropriations – spending or spending commitments in excess of the budget approved by the legislature – hit a record $1.9 billion.

In recent years the Opposition has been vocal about additional appropriations, primed by regular recommendations from the Auditor General for government to follow the practice of most other provinces and require approval from the legislature – not just the cabinet – for the extra spending. 

A report this past January from the AG showed that under the PCs additional appropriations totalled $5.6 billion between 2021 and 2025. Results last year will bring the total to $7.5 billion, although in fairness, a sizeable chunk of the 2025-26  $1.9 billion increase is the result of an accounting adjustment for long term care facilities ordered by the the AG, as well as “restructuring” – an estimate of likely expenses from new wage contracts or the outcome of legal proceedings. 

But accounting adjustments and restructuring aside, over-budget spending by the Houston government is a well-established pattern. The PCs have presented a series of budgets to the legislature estimating that government departments will spend X amount, then end up spending X plus a whole lot more. Last year, the “plus” amounted to $1.13 billion, according to Public Accounts. And since 2021-22, again according to Public Accounts, government departments have overspent their budgets by a cumulative amount of more than $4.1billion. 

Calling the House of Assembly for an actual calendar-based fall session would have enabled the Legislature, following the AG’s advice, to debate and vote on the additional appropriations while also asking questions arising from the Fall Fiscal Update. That document, tabled one week after the late summer mini-session came to a close, shows that the Houston government, has yet to break the over-budget spending habit. 

The theme of last spring’s budget was austerity, an attempt to align current expenditure and vastly increased capital commitments with declining revenues from, among other things, ill-advised tax cuts and the elimination of fees on the Halifax Harbour bridges. So far the belt-tightening is not producing results. 

The 2026-27 budget included a four-year Fiscal Stability Plan (henceforth the Plan) which aims to reduce spending this year to $18.99 billion, rising to only $19.10 billion next year – a tiny increase to be achieved through $622 million in cuts in the 2027-28 budget. But the Update reveals that the Plan is already in jeopardy. 

According to the Update since April 1 the government has been overspending its budget, to the tune of $208 million. If that trend continues for the rest of the fiscal year – and based on past experience it is likely to accelerate – the Province will spend $19.19 billion this year, already more than the $19.10 billion the Plan says should be the spending limit next year. 

Hitting the Fiscal Stability Plan target would therefore mean spending less overall in 2027-28 than in 2026-27. Such a year-over-year reduction has happened only once in Nova Scotia since 2000-01, and that anomaly was due to a technicality involving transfers to universities. 

Health Care and Seniors

Even if the government does find $622 million in cuts somewhere in next year’s budget, that would not lead to an overall spending cut unless it puts a lid on health spending, an unlikely prospect. Estimates approved by the legislature called for a 5.9 percent increase this year, but the Fall Fiscal Update revealed that Health and Wellness is already $125 million over-budget, suggesting that health spending this year will come close to the 10 percent increase recorded last year. Trying to reduce those rates of increase to close to zero in 2027-28 would be politically fraught – not to mention painful for many Nova Scotians.

The PCs seem to be making progress on some surgical wait times, in matching physicians with patients and digitizing records. But it has been costly and issues keep emerging, including emergency room overcrowding, lack of resources directed towards women’s health and mental health services and delays in promised health facilities in places like Sackville and New Waterford.   

The Department of Seniors and Long Term Care has seen spending increases similar to those in Health. Since 2022, spending for seniors has gone up by a yearly annual average of close to 10 percent. The restraint-era budget estimated a smaller increase of 4.5 percent this year but the Fall Fiscal Update revealed the department is overspending that target by $62 million. Reducing the rate of increase in the department in next year’s budget would be unpopular enough, but actual cuts would be politically unpalatable.   

Between them, health and seniors account for 47 percent of departmental spending. There’s little chance the government will find any of the $662 million it seeks in those two departments. Opportunities and Social Development and Education and Early Childhood Development, accounting for 23 percent of departmental spending are also unlikely to offer much, if anything, in the way of cuts. Added up, those departments account for 70 percent of spending. Debt servicing, now costing more than $1 billion annually and rising, brings it to 75 percent. 

How high the debt?

Given the righteous uproar that accompanied the proposed $300 million in cuts last budget, the prospect of cuts of more than twice that amount in the upcoming budget would give pause to any legislator. Throw in the likelihood that most of the cuts would come from an envelope that will likely leave almost 75 percent of spending off the table and the problem becomes more acute. Saying no to the cuts – or at least cutting less deeply – would be an attractive political option. But there’s a problem.

If the numbers in the latest Fiscal Stability Plan can be believed, those spending cuts of $622 million next year, with deeper cuts planned for the two following years, will be needed just to keep the province’s net debt from growing by more than the 50 percent jump forecast in the Plan. If spending cuts occur as laid out in the Plan, program spending will increase hardly at all next year, followed by three per cent or less the next two years. But despite three years of austerity our debt relative to the size of our economy – the debt-to-GDP ratio – will grow relentlessly.

The PCs have talked about a “planning guardrail” of 40 percent of debt to GDP. A couple of years ago we were well below that  – 32.6  percent – but according to the Plan debt will soon crash the guardrail, hitting 42.5 percent in 2027-28, followed by 44.5 percent in in 2028-29 and 45.4 percent in 2029-30. 

We’ve been in the 40s before and made it through. Back around 2000 the PC government was faced with a debt-GDP ratio of around 48 percent. The John Hamm government created a special committee of notables that toured the province and came up with a manifesto calling for deep cuts. 

The exercise led to modest year-over-year spending cuts in the 2000-2001 budget but the Province was spared deeper cuts by the fact that the Sable offshore energy project was ready to go, producing jobs and, eventually, royalties. What’s Houston’s plan past 2030? The resource projects he has been touting won’t happen for many years, if ever. As for the latest economic saviour, military spending, if the past is any guide if it happens it will take a while to have an impact. 

So is a debt-too-GDP ratio something to be concerned about? Maybe not if you can see it dropping or slowing down in the future, but the current fiscal plan has no end in sight. What it does show is an increasing share of revenue going to debt servicing. It goes from 5.4 percent of the budget this year – just over $1 billion- to 7.2 percent of spending in 2029-30 – $1.46 billion. That’s over $400 million going to bond holders rather than to services like women’s health, mental health, social assistance and housing. 

And there is another issue that hasn’t receive much attention. In her January review of the 2024-25 Public Accounts Auditor General Kim Adair, as is her custom, listed a number of questions that “Nova Scotians May Want to Ask.” One of those questions was “How will the province pay for almost $30 billion in contractual obligations?” The A-G was referring to obligations consisting mainly of $15.66 billion for service agreements with long-term care providers and $7.1 billion for P3 arrangements for health facilities. 

According to Public Accounts, contractual obligations went up sharply from $11.03 billion in 2022-23 to $29.70 billion in 2024-25. Obligations rose again last year, reaching $35.64 billion – topped by $20.29 billion for long-term care and $6.54 for future commitments related to P3 arrangements. Maybe some Nova Scotians, even members of the legislature, have asked how the Province will pay for its contractual obligations, but I’ve not seen or heard the answer.

Raise revenue

At the risk of sounding like one of those people on the right who are always fretting about debt and deficit, it seems to me that the issue needs addressing – if for no other reason than, to use the reasoning of Tommy Douglas, it is better to spend public money providing services for people rather than paying interest to distant bondholders. 

Barring unexpected windfalls, or some accounting sleight of hand, there seems to be just one immediate path to avoiding a combination of recurring spending cuts and a growing debt ratio over the foreseeable future – increase revenue. It is obvious now and it should have been apparent two years ago when the PCs were putting together their election platform that there was little room to reduce revenue sources while facing years of growing debt from their ballyhooed record-breaking capital spending on health facilities, long term care homes and roads. 

But for reasons unknown – their re-election was never in doubt – the PCs campaigned on cutting the sales tax, abolishing  tolls on the Halifax Harbour bridges and absorbing the debt formerly carried off the books by the Bridge Commission. This came on top of the pre-election budget which indexed tax brackets to inflation and increased the Basic Personal Amount, billed by the PCs as “the largest tax break in the province’s history.”   

So it’s little wonder that instead of defending their record in the Legislature, denying elected members the chance to debate the PCs profligate past and perilous fiscal future, the government launched the farcical “Building Our Budget Together” public consultation on the 2027-28 budget. By ruling out revenue increases, participants will either have to cut certain programs or further run up the debt, giving the government the option of nickel-and-diming another round of cuts while glossing over the longer term implications. 

Opposition politicians will be faced with a choice between playing that game or advocating revenue generating schemes, including tax increases. That’s something that, after 40 years of  neoliberal thinking, is deemed to be political suicide. That notion will be put to the test later this month in British Columbia’s provincial election where both the NDP and the Greens are proposing to increases taxes on the better off – the NDP wants to raise the rates on anybody making more than $190,000 a year, while the Greens are promising a wealth tax.

Whatever happens in British Columbia, Nova Scotian can’t afford to ignore the fiscal challenge. In an ideal world in which elected MLAs had greater autonomy the Public Accounts Committee of the Legislature would have been charged with examining the details and conducting public hearings on the Fiscal Stability Plan and making recommendations for next year’s budget. That’s done routinely in Ottawa, while municipal politicians are fully engaged in budget decisions. It seems it’s only at the provincial level where the judgment of elected representatives is marginalized and replaced with flim flam consultations. 

-30-