Houston government tables $14.4 billion budget, heavy on health care spending, not much for poor people

The province is bringing in a $14.4 billion budget for next year, with a forecast deficit of $278.9 million. 

Total spending by all government departments is up by 11.5%. 

Reflecting the Houston government’s pledge to “fix health care,” budget documents are labeled “More Healthcare, Faster.” And indeed, the largest department budget is for Health & Wellness, $4.85 billion. That’s an increase of 13.8% compared to last year.

The budget document expands “health care” expenditures to include capital expenditures (for example, for the new Halifax Infirmary) and expenses under other department budgets (for example, increased spending for nursing training). That calculation brings a total “health care budget” of $6.5 billion, which the government says is a $1.2 billion increase from two years ago, the last Liberal government budget.

The budget “is focused on fixing health care and giving people more options for health care system that Nova Scotia families need,” said Finance Minister Allan MacMaster.

Examples of new spending on health this year includes more money for retaining nurses ($110 million), more for home care ($25.9 million), a second plane for Emergency Health Services ($22.6 million), and covering the cost of a free high-dose flu shot for seniors next fall ($4.7 million).

Help for poor people

In terms of how it affects the poorest citizens, the budget released today is a mixed bag.

The budget does not increase monthly income assistance cheques to the absolute poorest citizens. And those payments are not indexed for inflation.

Income assistance payments were last increased by the former Liberal government.

Asked why his government has not increased income assistance payments for two years, even in the face of increasing inflation, MacMaster replied that “we’re providing targeted assistance and we’ve provided [that] in many forms throughout the past year. And there are other forms of assistance in this budget that are targeted to help people who are most in need.” 

But why not simply increase the dollar amounts of income assistance cheques?

“The federal finance minister and the governor of the Bank of Canada targeted supports to those who are most in need or an effective way to help people at a time that we’re experiencing inflation,” said MacMaster. “We know certain people are affected by it more so than others, and we want to target to support those people.”

The budget also does not include any money to building new public housing, albeit there is $21.6 million allocated for 1,000 new rental supplements.

The budget does add $8 million to increase the Nova Scotia Child Benefit for families with income below $34,000 a year. For a household earning $34,000 with two children, that works out to an additional $375 next year. 

There is new funding,$3.9 million, for a program to help support 120 young adults who “age out” of care provided by Community Services and are at risk.

The budget contains $8.2 million for homelessness and supportive housing.

There is a $23.3 million increase in the Disability Support Program to help people with intellectual and physical disabilities but only $4.4 million to support adults moving out of institutions and into community settings.

The overall economic picture

Budgeting is an imperfect science. No one expected the pandemic or the war in Ukraine or the banking crisis, and there might be still more unexpected events that bring increased inflation, or deflation, or new costs.

Still, the Department of Finance says the inflation rate was 7.5% in 2022. Staff say they expect a “soft landing” — that is, central bank policies around the globe will restrain inflation without causing a recession (two quarters of negative growth) — and so forecast that inflation will be 3.7% in 2023 and 2% in 2024. 

Future budgets depend on future political decisions among other factors, but for planning purposes, the Department of Finance projects overall budgets for four years.

Over that period, the department expects the provincial debt to grow from last year’s $18.186 billion to $23.257 billion in 2026-27. About half of the debt increase reflects the costs of new hospitals and schools. And the rest reflects increased spending on health care.

Economists think of debt in terms of the debt-to-GDP ratio — is servicing the debt affordable? 

Over the four-year planning period, Nova Scotia’s debt-to-GDP ratio is forecast to grow from 32.5% to 36.2%. 

In context, the debt-to-GDP ratio was 38.1% in 2013, and as recently as last year was forecast to be 40% in 2025/26. 

So, say staff, the provincial debt is reasonable and manageable.

In terms of how the economy is reflected in people’s lives, a better indicator is the Gini coefficient, which measures inequality in a society.

That’s because it doesn’t matter if the economy is growing at a fast pace if all the increased wealth goes to a few already wealthy people and not at all to people who are struggling.

Simply put, the Gini coefficient works on a scale of 0 to 1. A perfectly equal society, where everyone has the same share of wealth, is measured as 0. A perfectly unequal society, where one person has all the wealth and everyone else has nothing at all, is measured as 1.

The Halifax Examiner has been asking that the Gnni coefficient be included in budget documents and planning scenarios. That way we could see if government policies are benefiting the bulk of the population or just a select few. So far that suggestion has not been taken up by government.

We did learn today, however, that in 2020 the after-tax Gini coefficient in Nova Scotia was 0.281, which Finance staff characterized as reasonably good. There’s no indication of how that figure might change because of the new budget.

Education and child care

Next year’s budget for the Department of Education is set at $1.87 billion, compared to the $1.77 billion forecast budget for this current fiscal year.

That includes $47.1 directly to schools to help with increasing enrolment and “inflationary pressures.” 

Increases to the capital budget, announced earlier this month, include $240.8 million allocated for building and renovating schools, of which $40 million is for module units.

To implement the agreement with the federal government for lower day care costs, $42.1 million is allocated for new day care and after-school spaces, and another $40 million is dedicated to increasing day care workers’ pay.

Environment

Spending at the Department of Environment and Climate Change is increased by just 6%. There is $41.4 million earmarked to deliver on commitments made under the province’s Climate Change Plan tabled last December.

Exactly what projects and programs will be funded through this expenditure remains to be seen and will be revealed later this year, according to the Environment department’s associate deputy minister Jason Hollett. Spending on the enforcement of environmental regulations has declined by $655,000.

Other budget particulars

• Tax incentives for the film industry have been increased $14 million, from $25 million to $39 million.
• The total provincial share of the costs of the Mass Casualty Commission is estimated at $24 million; $11.2 million of that is budgeted for next year.
• Events East, the organization that operates the Halifax Convention Centre, is expected to have a $6.5 million budget deficit in 2023/24. The provincial and municipal governments split the cost of covering the deficit.