Avalon

The Canadian Centre for Policy Alternatives (CCPA) released their Alternative Budget for Nova Scotia this week.

It is good to see at least one group making an effort to have some debate around the government’s not-to-be-debated budget. The problem is the CCPA’s Alternative Budget is no different in spirit than the current or previous budgets.

After a decade of out of control spending, projected deficits and record debt levels what is CCPA’s solution? More spending! $150 million to be precise. How to pay for this? Raise taxes of course.

Here is a response to the Alternative Budget’s spending initiatives;

1. A subsidized rural bus system. If the rural bus system is no longer sustainable as a private venture then investing taxpayers money in it is just a recipe for losing money. The Saskatchewan Transit Corporation cited as the model not surprisingly operates at a loss. Also it discourages people in rural areas from moving to population centres where services can be provided more efficiently by government.

2. Over half a billion in new taxes from the top 40% ‘wealthiest’ Nova Scotians. The median household income in Nova Scotia is probably around $60,000, the top 40% might start at $65,000 or $70,000, that’s hardly ‘wealthy’ and given our high-cost high-tax environment this will simply impoverish citizens and accelerate the exodus out of the province.

3. Government owned auto insurance. Government already takes up more than half of the economy here in Nova Scotia and we are in striking distance of having the largest public sector percentage in Canada (and in the OECD!). Government taking over auto insurance will increase the size of government even more and squeeze out private enterprise, in this case the auto insurance industry. A 2004 New Brunswick study on government run auto insurance estimated start up costs actually in the range of $120 million to $190 million.

4. Fifteen million in new spending to create subsidized ‘co-operative’ jobs. In order to give government must first take. When government ‘creates’ 10 jobs, 15 jobs could well be destroyed in the private sector. The negative impact on the private economy usually out weights the positive impact of government subsidies. Everybody knows this, the only reason business subsidies occur is for political gain.

There is no difference between this CCPA budget and a budget from any of the three political elite parties. They all believe in high taxes, big government and politically driven (that is wasteful) spending.

The one advantage to our collapsing fiscal house of cards is it reveals just how bankrupt the old fashioned thinking of the political elites including the CCPA is and why they must be opposed and defeated in order to save Nova Scotia.

Jonathan Dean, Leader of the newly registered Atlantica Party challenges the Premier and Finance Minister on the scope of the report from the Nova Scotia Economic Advisory Board.

In November of 2009 the Board delivered a report called ‘Addressing Nova Scotia’s Fiscal Challenge’. The report has been used to frame the subsequent discussion on fixing Nova Scotia’s fiscal mess.

For those deeply troubled by Nova Scotia’s deteriorating fiscal position and the proposed solutions (tax increases and lack of comprehensive spending cuts) one need look no further than the mandate of the report.

‘It is beyond the scope of the panel’s mandate to put forward detailed proposals for specific tax increases or spending cuts, or to propose the sale of certain government assets.’

“Why was the scope of the report so limited?”, asks Jonathan Dean, Leader of the Atlantica Party.

“Such limitations hobble the public debate. Discussion would benefit from additional options such as tax cuts, sale of government assets, downsizing of government to encourage growth of the private sector tax base over time. Discussion is further unbalanced since the report does make detailed tax increase proposals but only vague comments on lower rates of spending growth. So it appears government will propose the old fashioned tax-and-spend approach.”

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The Man of Steele

I recently went to the Upper Tantallon public consultation on Nova Scotia’s fiscal crisis hosted by Finance Minister The Honourable Graham Steele. I met with a few from Taxed Enough Nova Scotians (TENS) an hour before the meeting at the local Tim’s and serendipitously Mr. Steele and his assistant were also there, so we had a impromptu discussion.

He is affable and open, as was the consultation. The turnout was good with a great cross section of the public and they all appeared to have an earnest interest in the topic at hand. A brief overview of the problem by the Minister; our growing mismatch between expenses (growing 5% a year regardless of income growth) and income, followed by small group discussion on solutions. Each table was tasked with answering these four questions:

1. What should government do to increase revenues and reduce spending?
2. What changes should be made to programs and services?
3. What investments should be made today that will help grow the economy in the long term?
4. How soon should government bring Nova Scotia’s finances back to balance?

My table had great people. Social worker, a nurse, a retired teacher, a plumber. All fine and good. However there was a problem. None of us had ever been a Nova Scotian Finance Minister! Increasing revenues is a no brainer, raise taxes. But how would any of us know how to reduce spending by the appropriate amount? There was a strong opinion, at least at my table, that spending should be cut, but how? The Finance Minister should have presented a number of reduced spending scenarios for us to discuss. Mr. Graham also, perhaps subconsciously, discouraged talk of reduced spending. Cutting health, the largest government expenditure, was described in terms of ‘denying our elderly mothers the drugs they needed’, ‘cutting beds for our retirees’, and ‘not buying the best medical equipment for sick people’. Mr. Graham said repeatedly ‘cutting spending is hard’.

Since none were presented a reduced spending option was probably never in the cards. The NDP would prefer not to do something ‘hard’. The inevitable result was a very reluctant acquiescence to higher taxes but only because no other viable alternative on the spending side was presented. And that is a shame since there is no future in this.