Nova Scotia's robust economy and growing population help boost government revenue

HALIFAX -

For the second time in three months, Nova Scotia's finance minister has reported $1.3 billion in additional provincial revenue, thanks mainly to a surging economy.

Allan MacMaster revealed the latest find Tuesday, as he released details of a favourable budget update for the fiscal year ending March 31, 2023.

"I will say that it's a pleasant thing to see increased revenues because we know there are areas where we can spend those revenues to help people," MacMaster told a news conference.

With the latest revenue boost, the size of the deficit for the 2022-23 fiscal year is expected to be much smaller than was forecast when he tabled his budget in March. The province is now expecting a $142.6-million shortfall -- $363.6 million less than the original estimate.

MacMaster said the positive outlook is based on strong economic activity, which has helped increase the province's revenue by $1.3 billion -- most of that money coming from a higher-than-expected take from personal, corporate, sales and gas taxes.

The finance minister told a similarly rosy story in early September when he announced that the 2021-22 fiscal year ended in a "surprise" $350.9-million surplus. That figure reflected the final budget tally calculated through the public accounts process. MacMaster's original forecast was for a $584.9-million deficit. The resulting $936-million swing into the black was the largest in the province's history.

At the time, MacMaster said provincial revenues for the 2021-22 fiscal year had increased by $1.3 billion compared to what was originally estimated, due to higher tax revenues, the forfeiture of offshore gas licences and federal transfers.

On Tuesday, the minister again marvelled at the province's good fortune.

"Our fiscal position is much better with these increased revenues," he said. "We were committed to deficit spending to fix the health-care system, and we continue to be committed to that. I feel positive about this increase in revenues because it does put us in a much better position."

According to government figures, the province's real gross domestic product -- a key measure of economic output -- grew by 6.2 per cent in 2021 and 2.9 per cent in 2022. But those numbers jump to a whopping 10.9 per cent and 6.8 per cent respectively when inflation is factored out.

The growth in 2021 was spurred by a rapidly expanding population, a return to pre-pandemic employment levels, an increase in consumer spending and a rise in wages. And while growth has slowed this year, mainly because of higher interest rates and inflation, the trend continued upward for Nova Scotia's population, employment, wages and residential construction.

Still, MacMaster acknowledged this has been a difficult year for many Nova Scotians, given the rising cost of living. But he said the province's stronger-than-expected economic activity has allowed the government to provide more support to people in need while also increasing investments in health care, housing and infrastructure.

In other words, the extra $1.3 billion for 2022-23 fiscal year has already been spoken for.

Departmental expenses are projected to be $13.4 billion, which is $949.5 million more than budgeted in March.

Last week, Nova Scotia Premier Tim Houston announced $115.4 million in one-time funding aimed at helping low- and middle-income earners cope with inflation.

Until then, Houston's Progressive Conservative government had faced criticism from opposition leaders, who called attention to the fact that Nova Scotia was among the last of the provinces to offer that kind of assistance.

NDP finance critic Lisa Lachance said Tuesday she can't understand why it has taken the government so long to offer more help to Nova Scotians.

"They have been waiting all year long," she said in an interview. "When the government is talking about increased revenues, that's actually coming from Nova Scotians through sales, fuel and income taxes."

Lachance said Houston and his government could have also used the extra money to given Nova Scotians some relief from pharmacare co-payments or by increasing income-assistance rates.

"It's taken them a long time to act and there's some measures that they could take that would make a real difference to Nova Scotians," Lachance said.

The budget documents released Tuesday also point to $140 million for households switching from heating oil to a more energy-efficient source; $135 million for COVID-19-related measures; and $134 million to cover damage caused in September by post-tropical storm Fiona.

As well, Lachance pointed to $768.4 million in departmental spending that was approved by a cabinet order without discussion or debate in the legislature.

Earlier this month, Nova Scotia's auditor general accused the provincial government of lacking accountability and transparency, saying the province is unique in Canada when it comes to approving extra spending when departments have blown their budgets.

Kim Adair said the province's Finance Act allows for extra spending to be approved solely by the government of the day without being subjected to a review, vote or approval by the legislature. In the past 10 years, successive provincial governments have used vague cabinet orders to approve $4.7 billion in over-budget spending.

On Tuesday, MacMaster said he has no problem with Nova Scotia remaining an outlier.

Lachance said that has to change.

"If we know better, we can do better," she said. "If all other jurisdictions have found a way to have all of the budget part of debate and discourse in the legislature, then we can do the same."

This report by The Canadian Press was first published Dec. 20, 2022.